Property management fee "too good to be true?"
Hi All,
New to this forum... And a new "potential" investor to boot...
I'm in the process of purchasing a 6 unit property (target closing date is in Jan2008). So I don't actually own the building yet... Right now, I'm in the process of selecting a property management company. But I've got some questions...
I've read that PM fees should be around 5% of the monthly rental revenue - but is that the high end? or the average? Here's why I'm wondering...
The current PM for the building is charging $240 a month base fee (rents total $4275/month) so they're at 5.6% of rent - and I've met with them in person and it seems that they've kept the property in good condition (the sellers say that this PM has been managing the property since they bought it about 7 years ago). In addition to this base fee, they charge a full month's rent to find a tenant and $40 per hour for non-licensed maintenance.
Now, I've spoken with another PM in the town... and (over the phone) they said they charge $175 per month base fee, and half a months rent to find a tenant and $20 per hour for non-licensed maintenance.
So, I'm wondering if that sounds too good to be true... My dilemma is obviously the difference in fees (i.e. cheaper) vs. the "proven track record" of the PM... Granted, "past performance is no guarantee of future behavior" but, it's there for what it's worth.
I have no idea if it's a "you get what you pay for" situation or not... But I'd be more inclined to believe the "it's too good to be true" saying if the price is really too good to be true...
What's your experiences out there for management fees? Is 5% the high end? or is that the average?
Also, if anyone could recommend or point me to property management companies that handles 6 unit buildings in the Leominster, MA area, I'd appreciate it... I've only been able to find these 2... the others seem to only want to handle the large complexes...
Thanks!
Marcelino