I have a 12 unit apartment under contract and I am looking for a property manager. I would say it is a class B area and a class A building. The rent averages $950 per month. What do you think are fair fees? The fees I am getting quotes for seem to be more like what I would expect to pay for single family.
-% of collected monthly rent
@Brad T. I own a property management company and this will probably be 6/6.5%
I would shop it around and let us know what you find out. I've seen rates around 3% and there's a website called cozy.co that helps landlords & tenants come together.
This is one of the problems with buying small. Aside for the % fee, you'll be charged leaseups and R&M coordination fees, and a building as small as that can hardly support these.
Don't buy into low 3% - 6% management fees. One - you get what you pay for, and two - they will eat you with hidden costs. Management on this will run all in 10% - 12%. And, this is the big problem - more than likely, you won't be satisfied with the management!
Sadly, a 12 unit complex in the eyes of a PM company is probably worse than a SFH... more headache / phone calls / issues with the 12 units, but not enough units to make the management fee worth it (50+). You will get what you pay for, this is true. I would budget closer to 12-15% of gross on your pro forma because no matter what the PM % is, they will charge by the hour for everything "above and beyond the norm". If your management fee is 3% - just about EVERYTHING is suddenly "above and beyond the norm". Less so at 6-8%, and less again at 10%, though it will still happen.
Thanks everyone. Your info has been a great help. The best guy I have been working with has given me a quote of 8% of collected rent plus 50% of one months rent per new lease. I think he will do a great job and I feel this is fair compensation.
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing