Flat Fee or Percentage: Which Property Management Fee Works Better?

Pricing tenant placement, renewal and maintenance coordination fees

A leasing or tenant placement fee, also called a lease-up fee, pays for the burst of work when a door turns; a renewal fee pays for the renewal; a coordination fee or markup pays for arranging repairs. The same SEC-filed form shows one shape: a leasing fee set as a percentage of one month’s base rent, earned once a new tenant has paid the first month’s rent and the security deposit, and a flat renewal fee charged at the start of a new lease of 12 months or more. Lohmann’s company has never charged a leasing fee, on the argument that a large fee at every new lease rewards turnover, so his flat monthly fee carries the leasing work. Either shape can work if the hours behind it are counted.

Price each event from its hours. The Bureau of Labor Statistics puts the median wage for property, real estate and community association managers at $33.65 an hour in May 2025, and its June 2026 employer cost survey found wages were 70.0 percent of private employers’ compensation costs, benefits the other 30.0 percent. As a stand-in until the company’s payroll replaces it, that makes a manager’s hour about $48.

• Tenant placement: pricing and listing, showings, applications and screening, the lease, the move-in inspection and keys. Illustrative example: 13 hours, about $624, before photos, listing services and screening paid out of pocket.
• Renewal: a rent check and an owner call, the offer, signing and posting. Illustrative example: 1.5 hours, about $72.
• Maintenance coordination: the vendor, the schedule, the owner’s approval above the repair limit, the resident update. Illustrative example: 30 minutes a work order, about $24.

Set each figure against the fee meant to pay for it. In this example, half a month’s rent is $550 on a $1,100 house, below the $624 the placement costs in time, and $1,300 on a $2,600 house for the same 13 hours. A flat placement fee, a percentage with a minimum, or a monthly fee that carries the work can close the gap; the choice is the broker-owner’s. And a price is only half the job, because a renewal fee that never posts or a markup that never reaches the owner bill pays for nothing.

Which doors lose money at today’s fee, counted from workload

Start with revenue per door per month: a year of management, leasing, renewal and other owner fees, maintenance revenue left out, divided by the average doors managed and by twelve. Lohmann published his company’s 2025 figure: about $2.03 million over an average of about 700 doors, or $241 a door a month, with no leasing fees. That is one company’s number, not a benchmark, and an average hides which doors pay their way. So build it per door, one row each, from the rent roll, the ledger, the work orders, the phone system and the shared inbox, for the last twelve months:

• Door, owner, rent, and the fee model and rate in that owner’s signed agreement.
• Fee income from every owner fee, divided by twelve, and the vacant months.
• Work orders, owner and resident calls and messages, turns and renewals.
• Hours a month, from the minutes-per-task worksheet in the doors-per-manager guide, timed on two ordinary weeks.
• Monthly contribution: fee income minus hours times the loaded hourly cost, before software, insurance and office rent.

Sort lowest first. Illustrative example: 8 percent of collected rent, staff time at $48 an hour, other fees left out. Door A rents for $1,100, pays $88 and takes 2.5 hours a month, $120 of staff time: it costs $32 a month before overhead. Door B rents for $2,600, pays $208 and takes 45 minutes, $36: it contributes $172. At a flat $150, Door A contributes $30 and Door B $114. Same doors, same work; the model only moves who pays for it. Re-run the bottom twenty rows each month after owner statements close, and write a reason next to any door kept below cost on purpose.

What the management agreement allows before any fee changes

Read four clauses in each owner’s signed version, not the current template: the fee schedule, the term and renewal date, termination and its notice, and how amendments are made. The SEC-filed form renews “for successive twelve (12)-month periods until terminated,” lets either party end it or remove a property “for any reason or no reason without penalty” on at least 60 days’ written notice, and requires amendments, like every other notice, to be in writing and signed by the party giving them. It has no clause that lets the manager change the fee on its own. Under terms like those, a new fee goes to the owner as a written amendment to accept, and an owner who does not accept can leave on 60 days’ notice.

State rules sit on top. Three examples, quoted rather than interpreted, each limited to its own state; this is not legal advice.

• Arizona, A.R.S. §32-2173: the agreement shall “State the terms and conditions of compensation the property owner pays for services pursuant to the property management agreement,” and may renew automatically “if the property management firm sends the owner a reminder notice at least thirty days before the renewal date.”
• Nevada, NRS 645.6056 and 645.6057: the agreement must include “The fee or compensation to be paid to the broker,” and the property manager must disclose “Each source from which the property manager will receive compensation as a result of the agreement.”
• North Carolina, 21 NCAC 58A .0104: an agreement “to procure tenants or receive rents for the landlord’s property may allow for automatic renewal so long as the landlord may terminate with notice at the end of any contract period and any subsequent renewals,” and an early-termination penalty must appear “in a clear and conspicuous manner.”

Other states have their own texts; the list for the company’s states is the designated broker’s or attorney’s to give. Bring three questions with the agreements: can the fee change mid-term or only at renewal, what notice is required, and does the change need the owner’s signature.

How to raise management fees on existing owners, and the letter

Count first, then decide owner by owner. Lohmann lists raising the fee on existing owners among the ways to lift revenue per door, with exceptions made freely and every change disclosed and agreed by both sides. The order below keeps it that way.

• Choose owners from the per-door list, lowest contribution first, and decide for each: raise the fee, switch model, narrow what the fee includes, or leave it, with the decision written next to the row.
• Date each change from that owner’s agreement, at the next renewal or with the notice it requires, and group owners by month so replies do not all land in one week.
• Call before the letter where an owner has several doors or a long history, so the letter confirms a conversation.
• Change the fee in the platform only for signed amendments, from the effective date, and check the first statement at the new fee before it goes out.
• Each week until the round closes, count letters sent, amendments signed, owners declining or silent and termination notices, and answer every reply within one business day.

A property management fee increase letter fits on one page: the owner, the properties and the agreement date; the current and new fee in dollars per month; the effective date under the agreement; what the fee includes and what stays the same; one reason that is true for the company; what the owner signs, by when, and a named person to call. Sample, to adapt and have reviewed by the designated broker or attorney: “Dear [name], under our management agreement for [address] dated [date], the monthly management fee will change from [8 percent of collected rent, $144 last month] to [$165 a month] starting [date], the start of the agreement’s next term. [One true reason, for example: our cost to manage each door has risen since your fee was set.] What we do for the property does not change. To accept, please sign the enclosed amendment by [date], or call me at [phone] with questions.” Decide before the first letter which doors the company is willing to lose: a door that costs more than it pays stops costing the company when it leaves, and every termination that mentions the fee goes in the churn count as its own reason.

What owners compare when they shop, and what to show them

An owner comparing managers sees the monthly fee first, but the annual cost also turns on placement and renewal fees, any repair markup, fees in vacant months and the cost to leave. In Nevada, the statute quoted above already requires the property manager to disclose each source of compensation to the parties to the agreement. Todd Ortscheid, who runs a property management business and writes an industry newsletter, argues for giving the price plainly when an owner asks rather than holding it to the end of a sales call.

Show an annual cost on a sample property. Illustrative example: a hypothetical $2,000-a-month house, vacancy left out, a new tenant every two years and $3,000 of vendor repairs a year. Company X charges 6 percent, one month’s rent to place a tenant, $300 to renew and 10 percent on vendor bills: $1,440 in management fees, $1,000 a year of placement, $150 of renewals and $300 of markup, about $2,890 a year. Company Y charges 9 percent with placement included and no renewal fee or markup: $2,160. The higher headline rate costs this owner $730 a year less.

• The sample rent and the monthly fee in dollars at that rent.
• Placement, renewal and setup fees, and when each is earned.
• The repair markup or coordination fee, and the limit above which the owner approves.
• Any fee charged in a vacant month, and every other owner fee by name.
• The term, the renewal, the notice to end the agreement, and the annual total.

Hand the page over with the rental analysis, so the owner compares annual totals instead of headlines. It also answers the owner who asks why the company is not the cheapest: what it charges for, in dollars, next to what it does.

When not to change the fee, and where the Review fits

Leave the fee alone when every door pays for its hours with room to spare. Skip the per-door count when the book is small enough that the broker-owner already knows each door’s work. Do not move the whole book to the other model in one round; try it on new owners and compare a year of the per-door list. Put agreements in several versions into one list before changing any of them. And if a sale of the company is close, ask its advisers how a buyer will read a fee change first.

For a property management company, the Revenue Review counts this under the Quote → Contract hand-off, where the agreement sets the price. From read-only access to the platform, the signed agreements and the ledger, it builds the per-door list above, lists the agreements by fee terms, renewal date and notice, and finds the fees the agreements allow that never posted. It sets no fees, writes no letters, contacts no owner client or resident, gives no legal advice and moves no money. It takes two weeks and ends in a written report the company keeps. Lumina does not manage property, and there are no client case studies on this site yet.

The per-door count can be done in-house, and with clean exports it should be. If it is unclear whether any of this is worth a fee, the next step is a free 20-minute call, where a company too small for the arithmetic is told so.