Property management bonus?

Question

I am selling over 100 MF units today to a private equity firm. I’m selling in large part because the management expenses got out of control. I really liked the ladies that worked on my properties and did the books, but their dad, the owner, is a jerk. I finally got fed up with him and decided to sell. I purposely didn’t use him to sell even though he always assumed I would. We were well down the road of due diligence when he found out and he tried to stop the sale by denying my broker access to the units. First he said I had to get the keys in person and they couldn’t be released to any one else (I couldn’t travel due to COVID and he knew that), then he later said due to COVID he couldn’t allow access. I eventually won that argument by finding legal reasons, but he refused to allow the lady who runs the office on-site (one of the few who is not his relative) accompany my broker in the walkthrough with the buyer even though I pay her FT hourly, medical, 401k match, etc. and the contract says she is my employee.

I say all this to point out that he didn’t make this sale easy. Yesterday his daughter emailed and asked for a sales/closing bonus for the staff. I had planned to give a nice bonus to the two ladies who worked their tail off at my place. But not to the owner and his daughters. The last owner sold about half the number of units as me, used the owners company to sell (so they made the commission) and gave $3000 in bonuses. Based on that I think they are assuming $7-8k in bonuses. Is this typical?

Nathan Gesner · Answer

You don't like him. You're selling the property because he wasn't do that great a job. Why would you give him a bonus?

Whether you pay him or not, he's going to think the same way about you. Keep the money, spend it on a nice vacation or other reward for yourself, and move on.

Erika Lee · Answer

OP here. Thanks all. Closing went through so I’m officially not at his mercy anymore, which is what the last 5 years felt like. I made a good sum into my 1031 account so I’m sending a healthy amount to the two ladies that were great until the end.

My question was never whether to send him a bonus, that was out of the question, it was more if a large bonus was typical in these situations. I received some private feedback that it is IF the management company helps the sale along, I.e. makes it easy and keeps vacancies down, rents up, etc.

Anyway, thanks for the inputs! I’m soon done with multifamilies (just 18 left if anyone is looking!) and on to NNN.

Brian Briscoe · Answer

Give bonuses to those you think went the extra mile.  I'd suggest you remind him that you paid his company for services rendered and leave it at that.  In this case, if you want to give bonuses to specific people, make them personal gifts and don't tie them to job or performance.  Take them to lunch and give them a "Labor Day" present for being your friend.

Josh C. · Answer

I would lose it if someone called me and asked for a bonus. This sounds insane. If you want to take care of those two ladies email them and ask for their Venmo account or home address and send them money directly. If you send to the company it will go to the jerk. I’m a property manager and would never think of calling someone asking for a bonus regardless of quality of work. You pay for services rendered. Period.

Unless any of my clients are reading this if which case  I do expect bonuses please email me for my home address. :)

Erika Lee · Answer

@Laticia Braxton

Thank you so much! I got their home addresses and mailed them each a check and thank you note. I can’t write it off, but they won’t pay taxes on it either. I’m happy with the end result of everything.

Thank you all for the inputs!

Laticia Braxton · Answer

Totally agree with @Josh C..  Hopefully, you were able to pay them through a personal payment processor such as PayPal or Venmo. That guy is something else!  A true professional would NEVER ASK for a bonus even if they had provided stellar service while under contract.

Congratulations on your sale and welcome to the world of CRE!

Laticia

Theresa Harris · Answer

I'd make sure if you give the two ladies the bonus, that you tell them it is for them and only them.  I'd be afraid the owner and his daughter would try to take some of it from them.  I'm glad you don't have to deal with them and agree with the others.

Dave Foster · Answer

@Erika Lee, I'm trying to get my jaw off the ground.  I can't decide what more amazing - That they could have been so unaware of the service ( or lack of) that they were giving, or that they could be so audacious to ask for a bonus when you wouldn't even give them the listing !!!  Congratulations on being done with them.

Sarah Brown · Answer

I agree with Nathan.  I couldn't have said it any better.

Joyce Tavares · Answer

In agreement with Nathan too!  You don't OWE anyone anything...nice of you to give a bonus to those who helped you.  That is what I would do.  Sorry you felt like you had to sell...hope you did an exchange into something that makes you happy.

I have found that doing videos prior to renting really helps, especially when selling.  You could also ask each tenant to take a walk-thru video...you could even pay them something to do this.  Be creative!!  :0)

Property management bonus?

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