@Frank Shaw this question depends on a lot of different items. How many units are you looking to have managed? Management companies do not likes small properties, as it is much easier to manage a 50 unit than a single family home. Secondly, what quality of property are you buying? Is it in a good area, or is it in a tougher area?
I have a management company for my Indiana property, and I am paying 5% for management with 1/2 months rent for each lease up. I have been doing research on this topic in my local market as I am under contract to purchase a 19 unit deal in Berwyn in the Chicago suburbs, and I have been quoted as low as 5% and as high as 7.5%.
As @John Warren pointed out it really depends on the type of property.
It's common for property management to charge 10% of gross rents for SFH's and small MFR's.
As you get into larger commercial MFR deals that number will drop slightly due to economies of scale.
Given I am a lender and have seen 1000's of rent rolls across the nation, IMO this number will range from 8-12% depending on the factors @John Warren mentioned above.
I would also agree with Bob, Brian and John. You will want to get on the same page as far as policies and procedures. The goals should be to get it under management, stabilize it and make a capital improvement schedule based upon tax advantages and exit strategy. Also, ask them their procedure to get the property rent ready once a tenant moves out. There are many other items I could list but this post would turn into a novel. Please feel free to call me if you have any questions.
All the Best!
@George Hoover I agree, theres really so much that a property manager can do. It's a different story what they will do. Having policies and documentation will spell out expectations which is important for both parties. Thanks for your advice. I'll definitely give you a call. I'd love to learn about the OH investment property scene ;)
@Frank Shaw others have chimed in with lots of good advice. Use all of these data points as you explore your options. The main reason that SFR and small multis are less attractive for out of state investing (in my opinion) is how much more expensive management is. It is not uncommon to get charged 10% plus a lease up fee.
I was recently quoted 5% management (no lease up fees) by a reputable management company here in the Chicago market. This number is very achievable once you hit a certain scale. As you grow, you will be quoted even smaller numbers (3-4%), which is why I love multifamily so much!