A property management fee is the amount the management agreement pays you for operating the property. Calculate it from the base the agreement names, on the money you actually collected, and take it from the trust account as its own transfer. Do not invent a percent on the owner statement that the agreement does not contain.

An open ledger book lying flat, ready for a fee calculation.
Image: John Carlin, via The Metropolitan Museum of Art · CC0 1.0

What is a property management fee?

The fee is your compensation. Common shapes are a percent of rent collected, a percent of rent charged, a flat amount per unit, or a flat amount plus a leasing fee when you fill a vacancy. The agreement picks one. The statement follows the agreement. "Property management software" is a different search, about 14,800 times a month in the US, and it is a product comparison. The fee is the contract between you and the owner.

This article uses an 8 percent example. It is not a survey of what managers charge, and it is not advice on what you should charge. Price the fee in the agreement, then do the arithmetic the same way every month.

Which base do you use?

Write the base in one sentence. Three versions produce three fees on the same building.

Base in the agreement April figures Fee at 8 percent
Rent collected $2,551.61 collected $204.13
Rent charged $1,850 + $1,600 charged, vacant unit not billed $276.00
Rent collected plus parking collected $2,551.61 and $0 parking $204.13

Charged and collected diverge when a tenant pays late. An 8 percent fee on rent charged bills the owner for money that is not in the trust account yet. Some agreements do that on purpose. Most small managers use collected rent so the fee leaves the account only after the rent arrives. If your agreement says charged, follow it, and be ready to explain a fee in a month when cash is short.

Leave these out of an "8 percent of rent" fee unless the agreement adds them: parking, pet rent, laundry, security deposits, and owner contributions. On the Unit 2 example, $48.39 of an April payment cleared old pet rent. That $48.39 is not rent. The fee base used $951.61 of April rent plus Unit 3's $1,600.

A leasing fee is separate. If the agreement pays half of one month's rent when you sign a new lease, a $1,700 vacancy filled in April adds an $850 leasing fee on top of the monthly percent. Post it on its own line so the owner can see it once, not every month after.

How do you take the fee without mixing owner cash?

The fee is a transfer from the owner's trust funds to your operating account. It is not a tenant charge, and it is not a vendor bill you invented.

  1. Close the rent figure for the month from the ledgers.
  2. Multiply by the percent, or apply the flat fee, using the base in the agreement.
  3. Round once, to the cent. Eight percent of $2,551.61 is $204.1288, which is $204.13.
  4. Move $204.13 from the trust account to your operating account, dated the day of the statement.
  5. Show that transfer on the owner statement as the management fee, not as a repair.

If you manage several owners, each fee leaves that owner's trust balance. A single transfer of "all the fees" with no owner split will not survive a reconciliation. The owner statement for Helen Cho shows $204.13 and no one else's fee.

Tivio records the management fee on the property's trust ledger, next to reserves, vendor bills, and the owner payout. The monthly statement PDF lists the fee on the rent you posted. Set the percent in the management agreement first. The software does not choose the price. You do, in writing, before the first statement goes out.

Round once, exclude deposits, and use the same base in January that you used in April. That is the whole calculation.

How do you handle three owners in one week?

You manage Helen Cho, Mark Adeyemi, and a small LLC, Priya Shah. Each agreement says 8 percent of rent collected. None of them include parking. In April:

Owner Rent collected Fee
Helen Cho $2,551.61 $204.13
Mark Adeyemi $4,200.00 $336.00
Priya Shah $900.00 $72.00
Total transferred to you $612.13

Three transfers, three statements. A single $612.13 withdrawal labeled "fees" will not tell you, in November, which owner paid which dollar. The bank line can be one deposit into your operating account if your accountant wants it that way, but the trust ledger still shows three lines. Each owner's balance falls by that owner's fee only.

Priya's $900 is a single unit that paid in full. Helen's number is lower than her contract rent because Unit 2 paid only part of April and Unit 4 was vacant. You do not charge Helen 8 percent of the vacant unit's $1,700. Nothing was collected. If her agreement had said "per unit, occupied or not, $80," you would charge $80 for Unit 4. The agreement chooses. The vacancy does not.

A leasing fee sits beside the percent, once. You filled Priya's second unit on April 20 at $1,400 rent. The agreement pays half of one month when you sign the lease, so you add $700 that month and never again. The May statement shows the 8 percent only, unless you sign another lease.

Round each owner separately. Do not add the rent of all three owners, take 8 percent, and then split the fee by guess. Eight percent of the sum can be a cent off the sum of the rounded fees. The statement each owner reads is the rounded fee for that owner.

Tivio records each fee on that property's trust ledger and shows it on that owner's PDF. Take the fee in the month the rent was collected, from the base the agreement names, and leave every other owner's cash where it is.