I'm looking into pm companies in StL and wanted to see what the general thoughts were on pricing i should look out for.
What's typical and what's overpriced? I see all the time people say budget 10% for PM, but that looks like just the flat fee. I'm also seeing $xx for service call, $xxx for after hours service call, $xx per hour of labor, which I all assume comes out of the repairs budget in my calculations. But what is normal for those amounts to be? How often should I expect them to get calls?
Finally what's the average charge for placing a new tenant/turnover? I've seen as much as the whole first months rent. But if I do that then my vacancy reserve needs to be how many months I expect it to be vacant plus 1 for placement.
It seems like all the nickel and dime really makes positive cash flow much more difficult.
You are right on track. Property management can be a nickel and dime business. So you first need to evaluate WHAT EXACTLY you need from your PM, and then you have to know the right questions to ask each one you consider.
Lease Up Fees - this can be a % or a flat fee of the gross rent. This usually includes marketing, showings, screenings and lease signing.
Management Fees - $45-$100 average monthly fee or can be 8-12%. This usually includes rent collection, fielding tenant calls, managing maintenance and repairs, paying utilities, issuing 3 or 5 day notices (depending on your state req), performing inspections, etc
Maintenance Surcharge Fees - This is where it gets ridiculous. This is a fee they can charge on top of whatever maintenance and repair expenses cost.
Also be sure to check the fine print for their cancellation fee and policy. Many PMs want to be paid in full for any lease ups that they have done that still have terms on their leases. This can equate to big bucks.
So, decide what you need them to do. If you can place your own tenants, but you want a PM to manage the property from that point, then you may ONLY want that service. Or if you are not good at placing tenants, but can handle the maintenance, then you may ONLY want the lease up service. So, it really just depends on what you need. Then compare, and read the fine print!
Your biggest expense will be turnover and that one month lease up fee.
Since that comes out of your pocket I would collect more than one month security deposit to compensate.
It all depends on the reliability and the resourcefulness of your manager, but I would shy away from the nickel and dime companies that mark up repairs and lease renewals.
Lease up fee and 10% management fee are about the standard here in Bridgeport Connecticut.
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