When do I have leverage on Property Manager

9 Replies

I have 4 single family homes and just closed on number 5 - I plan to keep going. When do you think I have enough to negotiate rate/fee reduction with my property manager?

At what ever point you think it makes sense to give your property manager an incentive to rent his other client's properties, before he rents yours.

@Wayne Brooks

That's a bit harsh!

@Adam Craig

I would say when losing you becomes an issue to the managers overall goal. So if you had 10 houses and the manager only had 30, you make up of 1/3 of his income. It depends on the size of the agency.

Any viable property manager should have over 100 doors to make it worthwhile. If you are > 10% of his business you have leverage. But heres the thing: the more properties you have, the harder for you to actually switch. And a bad property manager can totally kill your ROI. So if you like your PM, don't threaten to move for a few bucks extra. You may lose more than that with a bad one any day.

If you have a really good relationship with your property manager (and you are clearly making money on your investments since you continue to purchase more properties) then there's not really any reason to ask for a rate reduction.

I always tell my PM client's that their success is my success-and you have to recognize that if your PM is doing a (hopefully) fantastic job with your investment-then they have earned every percent that you pay them, and deserve to enjoy their success along with yours.

My guess is you wouldn't ask your real estate attorney for a discount on the fifth property you purchase, or the home inspector, or the realtor who sold you the property-so why the property manager, the one who protects your investment at every step?

Just some opinions from a property manager :)

I use the biggest property manager in the Cleveland area so I don't think my business or me leaving will affect them at all. They are doing a great job but I am always looking to find ways to save money. I think when you bring more volume to the table you should be rewarded. I give my volume customers good discounts in my business. I also get cheaper labor from my contractor/landscaper/gutter cleaner ect... because of my volume.

I defiantly wont threaten to leave them (shouldnt have used the work leverage) but I eventually want to have a conversation about dropping my 10% fee OR reducing the nickle and dime fees a little.

@Adam Craig ...everything is Negotiable including PM..Always ask for a discount.(heck, I drove 2 hours to save 4K on large purchase) I purchased landscaping stuff at a nursery and asked for a discount..My son was shocked at the 10% discount, but I will refer the nursery to others and do more business because the MGR made a decision...."Cash is King"

Not meant to be harsh, just realistic. I see it all the time on residential sales. While it sounds good to say that you negotiated a sales commission down to 4% from 6%, thinking hey "I just saved 2% off the top". The reality is I see buyer agents when they see a listing paying 2% instead of 3% to the buyer side, just pass right over that listing and don't even submit it to their buyers, or will find some way to talk it down. Right or wrong, human nature prevails.

@Adam Craig what are you currently paying them? Are they charging you market prices or are they higher?

They are market prices-

10% gross rents. First months rent for new lease. $400 lease renewal fee.

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