How much rent discount for on-site manager

Question

Hey Guys,

Looking to buy a quadplex in Los Angeles, and was wondering what the average rate if discount is for an on-site manager.  They would be in charge of everything from figuring out maintenance issues to finding new tenants.

Thanks!

Marc M. · Answer

If you have so much maintenance in a 4 unit building that you need an on-site manager, you may want to re-think your strategy. :-)

Some of the more experienced apartment guys can chime in with how many units typically justifies an on-site but in association management, we only see them with less than 30 or so units in very high end buildings.

Account Closed · Answer

I was a resident manager in Santa Clara, CA, for a 26 unit apartment building.  I lived in one, so I managed 25 units.  My compensation was free rent.  I was worth much more of course :-)  But, I was on SSI and couldn't make much money or risked losing  my benefits, and SS was okay with my free rent.  It was a win-win for me and the owner.

Many resident managers in CA get a free apartment, plus a salary.

If I was you, I'd figure out how much time you think your relative will actually spend on tenant issues and maintenance.  Realistically with four units, unless they're doing some rehabbing, they shouldn't spend more than an hour a day averaged over a week.  So, let's say 10 hours a week to be fair x 4 weeks = 40 hours.  At maybe $20/hour?  So, $800, in my opinion.

Living with your tenants takes more time than people think.  They will stop you as you leave to go shopping, when you take out your garbage, and want to mention problems or just chat you up.  Then, there'd be sweeping, yard work, etc., bookkeeping, collecting rents, making deposits, fixing toilets.  But, I think on average, 10 hours a week would be fair.

So, I vote for a rent reduction of $800.  If that's close to what the rent would be, it might be easier to just say compensation is free rent.

Plus, in case it's an issue, if their compensation is free rent, when the job goes, so does the housing.  Resident managers don't have tenant rights.  They can be evicted immediately, when the job terminates.

Elizabeth Colegrove · Answer

@Robert Lee

Be careful about mixing relatives and business operations especially with a 4 plex. Practicalities aside, you are going to have to justify fair market rent when doing your taxes. So just be ready to justify your rate in numbers.

Most property managers make 10% a months plus one months placement fee. So that gets an idea of what you pay people.

We self manage from across the country and have absolutely no issue handling the things. I am flying out next month for the first time in 1.5 years so... Good luck

Robert Lee · Answer

Thank you everyone! I understand its a bit crazy what we are looking to do and we appreciate all the great feedback!

Curtis Bidwell · Answer

I agree with @Marc M. While working full time I managed 17 units myself and had 2 managers overseeing 66 additional units. Now I manage 36 units and 1 manager. The 1 manager lives in and oversees 42 units. It costs me about 4% of rents for her which includes her apartment and a couple hundred extra.

Another option is to get a professional manager.  They generally run about 5-10% depending on how many units you have.  "If" I were to put a manager in a small 4plx 10% of rents would be max.

Screen your purchases well and screen your tenants well and you will minimize management hassles.  A 4plx is good to start with and learn on.  Good luck!

Robert Lee · Answer

To be honest, it would be a family member living/managing as we are not local to the area! :)

Thanks

How much rent discount for on-site manager

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