Typical Prop. Mangement Fee for 100+ Unit Apt. Complex

[Adanna Davis]

Multifamily Real Estate Investors, 

What is the typical percentage that Property Management Companies receives for managing a large multifamily complex (100 units or more).  I interviewed a management company and they initially told me 4% (in addition to paying for the site manager and maintenance salary).  After explaining the low occupancy rate and the renovations needed for the complex and possible phasing of work, they responded that it may be 6% instead of the 4%.  What is a typical or average % that they will charge for a complex this size?

[Ben Leybovich]

Originally posted by @Tyler Blackwell:

Hey @Jonathan Twombly (and others), how does that compare to a smaller commercial multifamily, say 25-50 units? I pay 8% for my residential multifamily, but it sounds like the fees are lower for larger buildings?

 Tyler - you are focused on percentages. I am focused on my quality of life.

In a 24-unit you cannot afford proper management infrastructure. Namely, you cannot afford payroll. This essentially means that managing 24 units is no different from a 4-plex.

I've written about this so many times on BP. Costs in multifamily are dollars not percentages. For a building to run as a building should you need 2 people on payroll at the minimum - an on-site manager, and maintenance. Their salaries + FICA + bonus + health is going to set you back a certain amount at the minimum - let's call that minimum $120,000, though to get good people in competitive markets it'll be more than that.

So, the first question is - how much GCI do you need to absorb this payroll? And the secondary questions is - how many units does this take?

The answer is - depends on your average rent. But, if your average rent is $800 - $900, you are talking 100 units.