What are typical fees for a 22 unit property mgmt?

Question

Hi everyone,

What have you seen as a typical fee structure for a professional property mgmt company to manage a 22 unit?

Joel Owens · Answer

Yeah that 6% rate you do not see typically on one building of that size. With scale of other properties you have given them it might make sense.

Phillip Bashaw

"they have really high occupancy rates."

Check their operating statements for the last 2 years. You want to see high occupancy and very low turnover. Current high occupancy means nothing. They could have ran deals to slam tenants in and have poor screening. As the market gets saturated with supply in the coming years makes sure to use realistic projections such as 10% vacancy and flat rents to 2%. 4% rent growth each year and 3% vacancy is a bubble right now and not sustainable historically over the long term with cycles.

Joe Fairless · Answer

A sincere thank you to @joel

@Joel Owens, @Jeff Kehl, and NA Beard for the insight. Much appreciated and this is very helpful.

Jeff Kehl · Answer

For my 20 unit I pay 6% flat on gross rents no leasing or maintenance fees but I have quite a few other rentals with the same PM.

Joel Owens · Answer

Depends on tenant type. Could be 12% if in a bad area with multiple evictions, 2 to 3 times traveling to collect the rent, constant repairs, etc.

If the 22 unit is newer in an affluent area then maybe 7 etc.

It varies across the board. Rents per door matter as well. 22 units at 500 is 11,000 a month. If the same complex has 1,000 per door rents then double the income to the PM company based off of 10% so they may take less.

Philip Bashaw · Answer

What about a crappy apartment complex in a good area? Is 10% the average? I'm about to jump into apartment investing in the next few months in Atlanta (intown Atlanta) and have seen a lot of older buildings that need updates. For some weird reason, they have really high occupancy rates. Must be location...

Good info guys! I'll have to adjust my budget for my first building

Joel Owens · Answer

Yes J I know. I am giving a very basic example but thanks for pointing out to others. The point I was trying to show is not just number of doors but quality of the area and rents per door potential matters a lot to a management company. What is the PM's return and how hard do they have to work to get it is the focus for many.

I do nothing with PM and only do the transactional side but have a lot of friends that work that side of the business.

Obviously with 22 units a complex is not going to maintain 100% occupancy on a continual basis. People die, move out of state, etc. so turnover is inevitable.

California has some weird rules so it doesn't surprise me.

On retail centers for instance the percentage is based on base rent and not CAM added onto it.

Jeff B. · Answer

PM is a commission on rents collected, not unit count.

However, there are rules requiring an onsite manager and that's a game changer, as they become an employee (at lease in Calif).

What are typical fees for a 22 unit property mgmt?

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