PM vs Site Manager

6 Replies

Hi Everyone,

 For a while now, I thought that property management company (PM) and site manager are the same.  But after reading numerous posts and threads, I'm not so sure anymore.  

Please correct or clarify.

I could hire a PM company that charges 10% of gross revenues, for instance, and they will take care of the property.  If its a small property like less than 20 units, then they could manage from their own office/headquarter.  If its a larger property like more than 40 units, then they will send a site manager or resident manager??? Will I be paying additional for the site manager or resident manager or is that fee included in the total 10% that they are charging already?  

I'm hoping from these questions, you'd be able to explain or correct me if I'm way off base. Thank you in advance.

Jen

Whether or not you have an on-site manager is basically up to you and whatever arrangement you negotiate with the property management company.

If it's a small retail/office site, then it's probably not cost effective to have an on-site manager. If it's a larger site, then it would be cost effective to have an on-site manager, but the cost will be built into whatever agreement you make with the PM company.

The 10% is not set in stone and is also based on the size and scope of the job. If it's a large property they will probably negotiate a lower management fee but then add on the costs of operating the building, including an on-site manager. Most or all of the building operating costs will be recouped from the tenants through the CAM fees built into their leases.

Does that make sense?

@Fred Heller  Thank Mr. Heller! Yes, somewhat.  What is the difference between onsite manager and resident manager? I was guessing an onsite manager works onsite for a certain numbers of hours each day or week but goes home? And a resident manager would live on the property?  Onsite manager would require an office onsite and resident manager would live in one of the units, and whether they get to live there for free would be an arrangement with the PM company?  Thanks for your response.

Jen

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Your understanding is absolutely correct. A resident manager lives on the property and receives free or deeply-discounted rent as part of their compensation. There is usually a small salary involved as well.

Onsite managers work out of an office on the property and they work a regularly scheduled business day.


@Jennifer Johnson  most sites cannot sustain the overhead of a full time site manager until you are reaching roughly around 80-90 units depending on the market you are in. I think it is more important to separate the skill sets a PM brings versus what a Site Manager brings.

In general, a property manager or management co oversees the entire operations of the asset from leasing, collections, capital improvement projects and financial planning & budgeting. These folks typically have started on the site level and have worked their way up the property management ladder. You will pay a fee but they will also assign someone to your site whether as a rover leasing agent or a full time site manager- again, depending on size.

As for a site manager, if you have property consisting of say 20 units you would not need a site manager. With that said, it is often times better to have someone onsite to be the eyes and ears. 

In my market with someone being onsite taking care of leasing, tenant relations and cleaning/caretaking we look at a compensation of around $20-30 per door. On average, $13 per unit is dedicated the managerial role for the property and $15 for the caretaking including common area cleaning, vacant cleaning, lawn and snow etc. 

This is usually in the form of a rent credit. I never understood why managers/owners give away an apartment to a caretaker/manager free of charge. 

If your property has an office it is usually for the onsite manager.  Whether you have somebody at the property all day depends on a lot of factors in the setup.  Any variable that will affect rentals and cost need to be evaluated.  But basically if your property is larger than 60 units then you will need someone onsite.  You will need a maintenance person as well.

Calling someone an onsite manager does not mean that they live there.  I don't like my managers to live on the property.  I like maintenance to live there though.  Maintenance does not do evictions and such thus are less likely to have any retaliation done to them.  But they can still watch the property.

I give a 20% discount to them as an employee discount.

You will still need to pay the onsite staff.  But your management fees should go down to about 3-5% depending on the size.

Since we are in the multifamily, I will answer from the prospective of apartments.  In Los Angeles County, all multifamily buildings with at least 17 units must have an live in manager.  This would typically be your onsite manager who are typically compensated with free rent and/or salary.  If you own some a building like this, you could "self manage" it by doing bookkeeping, overseeing turnovers, leasing etc.  Most times, the onsite manager could handle some of these regular duties.  You as the self-manager would have to keep an eye on profit and loss, etc.

A property manager would charge you between 3-10% to manage the building and manage the onsite manager.  They would be responsible for your P&L as well as held accountable to all the costs, however, typically you wouldn't expect them to live in your property.  They would have a corporate office per se.  

Hope that makes sense.