Looking for anyone with experience in joint venturing with a property manager as a partner in the rental?
I have found a potentially good property manager for some low income rentals. Problem is that he only manages 10 doors, mainly his own, part-time. And as we know, there is not a lot of money in just managing until you get some economy of scale.
So one possibility I was considering was some deal whereby I supply initial capital and he can earn his share of the equity through the property management fees and I essentially become the hard money lender for his share. Once we are at 50/50 equity, we both pay 50% of the property management fee, and I've gotten say 9% return on the hard money.
it would have the added benefit of more closely aligning our interests.
so, anyone done a deal like that? Even better, anyone with an existing contract structure I could modify?
I've never heard of a deal like that but I've been managing properties both residential and commercial for the last 5 years and can say that you will get top quality service from the manager if you structure this the way you explained. The reason PM's likely don't have the best reputation is because they have minimal incentive on individual properties. When the fee is assigned and it only equates to $90-$100 per month then you'll get what you pay for. I understand that is the wrong mindset but that is how the PM's think. Driving to a property multiple times per month, taking phone calls multiple times per month and handling the property accounting is time consuming and expensive and will amount to the PM getting paid about >$10/hour. If you give the PM a little more incentive then you will get much better service.
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