Thread: Property Management Expenses

Gents, I was curious about Property Management fees. About a year from now I'll be looking to rent my current home and I'm wondering about the costs associated with property management fees. My goal right now is to refinance to drop my payments as low as possible to create a future rental property. I have already attempted to sell my property but I never received any offers so I'm looking to take advantage of the current low interest rates. Looking up my house on Zillow, the estimate for rental is about $200.00 more than my future payment. What I'm wondering about now is how much property management fees will eat up that profit. Another question is about taxes. I was told that tax deductions for interest on Mortgage rental property isn't deductible like it is with a occupied home, is that true? Also, is it possible to deduct property management costs on my future taxes?

If you're rental price is lower than your monthly payment. You don't have any profit to begin with..... Or did I read your post wrong?

Sounds like you should not be renting this home out.

Maby he means this is his auxiliary home and even if hes essentially paying someone 200$ a month to live there he will show a net profit by negating his losses while this home is unused.

That was my slip up, I meant to say the Zillow rental estimate is $200 MORE per month than what my future payment will be.

$200 a month is not much. I'd personally rent it out myself. Especially if it's in the same area/state.


But why are you renting it? Are you moving and simply cannot sell?

Originally Posted by Forfend

$200 a month is not much. I'd personally rent it out myself. Especially if it's in the same area/state.


But why are you renting it? Are you moving and simply cannot sell?

I realize the profit margin is small or possibly close to zero. I'm in the military and I won't live in the house for more than the next 12 months. I'm attempting to set of the property for rental. We attempted to sell already however the housing market is saturated with homes and no offers ever came in. I could up the incentives for a sale, but then I would be paying around $10k or more to just get rid of it. To me it makes more sense to rent it at zero profit and attempt to mitigate as many costs as possible than to take a $10k hit.

You should be able to write off all expenses associated with the rental property including mgmt fee but to protect yourself from both tax liability and legal liability insulate the property under an LLC. Any lawyer can deed it over pretty quick and cheap unless there's a mortgage involved which would then have to be re-financed.

Expect to pay between 4 and 9% of the monthly rent to a property mgmt company. Some places charge a flat fee of $100-250 a month. It all depends on your market and your property's value. Just know the mgmt fee does not include your repairs or renter's broker commission if repped or anything else like that. If it's just one property find a renter yourself on craigslist and don't go with a company.

Thanks for the advise!

Originally Posted by BogeyBoy82

You should be able to write off all expenses associated with the rental property including mgmt fee but to protect yourself from both tax liability and legal liability insulate the property under an LLC. Any lawyer can deed it over pretty quick and cheap unless there's a mortgage involved which would then have to be re-financed.

Expect to pay between 4 and 9% of the monthly rent to a property mgmt company. Some places charge a flat fee of $100-250 a month. It all depends on your market and your property's value. Just know the mgmt fee does not include your repairs or renter's broker commission if repped or anything else like that. If it's just one property find a renter yourself on craigslist and don't go with a company.

Are you saying I would need to sell the house to "myself" under an LLC to take advantage of those tax breaks? Can't you take advantage of those benefits being a owner not under an LLC? I'm new to this, so please bare with me.

I'm kind of tempted to rent it myself, however I wont be living in the area so it will be difficult for me to manage should something break.