How Is a Property Management Company Compensated?

How Is a Property Management Company Compensated?

For many new or “accidental” landlords, the decision to hire a property management company often comes with one big question: How do property managers get paid? Understanding how compensation works is essential because it not only explains the fees you’ll see but also helps you recognize the value a management company brings to the table.

At Team Gibson @ WSR Property Management, we believe in being transparent with our clients. After all, our success depends on your success. We only make money when you do, and many of our clients and tenants stay with us for years—often decades—because they see the value in that partnership.

In this article, we’ll break down the most common ways property management companies are compensated and give you an inside look at how WSR structures our fees.

1. Percentage of Collected Rent

The most common form of property management compensation is a percentage of the rent collected. This ensures that the manager is incentivized to keep your property rented, your tenants paying, and your investment profitable.

• Industry Standard: Typically 7%–12% of monthly rent.

• WSR Real Estate: We usually charge 8% of collected rents, though this may vary slightly depending on the area.

Because our compensation is tied directly to collected rent, we’re aligned with your goals. If your property is vacant, we don’t get paid—so we’re motivated to keep your property leased with qualified tenants.

2. Tenant Placement Fees

Placing the right tenant is one of the most important jobs a property manager performs. Screening applicants, verifying employment, checking credit, reviewing rental history, and ensuring legal compliance takes time, resources, and experience.

• Industry Standard: Many companies charge the equivalent of one month’s rent or more.

• WSR Real Estate: We charge a flat $500 tenant placement fee.

That’s it. We don’t inflate the cost, and we never cut corners. The benefit of proper placement shows in our results: many of our tenants stay for 5 years or longer, and some stay up to 15 years or more. We recently had a tenant move out of the second home that he rented from WSR. We stopped to do the math and he had been with WSR for over 18 years.

3. Lease Renewal Fees

Some property managers charge landlords a fee every time a tenant renews their lease. This can add up over time, especially with long-term tenants.

• Industry Standard: $150–$500 per renewal, or a percentage of rent.

• WSR Real Estate: We do not charge lease renewal fees.

We view long-term tenant retention as a win for both you and us, not as another opportunity to bill our clients.

4. Maintenance Fees

Every rental property requires ongoing maintenance, from small repairs to emergency calls. How these services are billed is an important piece of the compensation puzzle.

WSR Real Estate Approach:

• We use in-house maintenance staff for many jobs, which keeps costs predictable and ensures quality control.

• For specialized work, we partner with trusted outside contractors. Some of these contractors pay us a 10% marketing fee, but that does not increase the bill you receive.

• Our priority is to ensure the right person handles the job, whether it’s one of our skilled staff members or a vetted vendor.

This approach keeps your property well-maintained while avoiding surprise costs.

5. Set-Up or Onboarding Fees

Many management companies charge landlords an initial setup fee when they first sign up.

• Industry Standard: $200–$500 upfront.

• WSR Real Estate: We do not charge any setup or onboarding fees.

When you choose to work with us, we don’t believe you should pay extra just to get started.

6. Early Termination Fees

Most management agreements include an early termination clause. While these fees are intended to protect the company from lost income, the way they are handled can tell you a lot about the company’s philosophy.

• WSR Real Estate’s Perspective: Our agreements include an early termination clause, but we have never charged it. If we cannot meet your reasonable needs, we want to part ways on good terms. At the end of the day, a management relationship should work for both parties.

7. Long-Term Relationships: The Real Value

Compensation structures matter, but the real story lies in the results. At WSR Real Estate, we’ve built relationships that last:

• Many of our tenants stay 5+ years, with some remaining in our properties for more than 15 years.

• Many of our client owners have stayed with us for over 10 years, and some have partnered with us for more than 20.

This loyalty speaks volumes. Our clients and tenants stick with us because they know we manage with fairness, transparency, and professionalism.

Final Thoughts

Property management compensation may look straightforward on paper, but it’s really about alignment. You want a company that gets paid when you get paid, that charges reasonable fees, and that focuses on long-term success rather than quick profits.

At WSR Real Estate, our philosophy is simple: we only make money when you do. Our fee structure is designed to be fair, transparent, and aligned with your goals as a property owner. That’s why our clients and tenants stay with us for years—and why we’d love to earn your trust as well.