Glossary

Management Fee

Also known as: Property Management Fee

The compensation paid to a property management company for day-to-day operation of an asset, most commonly a percentage of collected effective gross income, sometimes with a monthly minimum or per-unit floor, and distinct from the separate asset management fee paid to the sponsor overseeing strategy.

Property management fees typically run roughly 2% to 6% of collected revenue depending on property type, size, and market, and are calculated on collections rather than billings so that the manager's incentive stays aligned with actual cash recovery rather than gross billed income; smaller multifamily deals sometimes use a flat per-door fee instead. This is distinct from the asset management fee, paid to the sponsor or asset manager for portfolio strategy, reporting, and capital decisions on behalf of ownership or investors, commonly structured as a percentage of asset value, gross revenue, or committed equity rather than collected income — the two fees are separate budget lines and are frequently confused by less experienced readers of a property's operating statement. Leasing commissions and construction-management fees are almost always separate line items outside the base management fee, and some agreements layer an incentive fee tied to exceeding NOI targets specifically to counteract the base fee's revenue-growth bias, since a pure percentage-of-revenue structure does not automatically reward expense discipline.