When can management fee be less than 10%?

2 Replies

Hey BP,

A friend and I are under contract on a quadplex and in our proforma have assumed a 10% management fee. However, we are projecting rents of $1,125/unit or $4500/month. With a property that brings in so much income, do we have the potential to have a fee less than 10%? At what point will a manager consider taking less than 10%? 

Additionally, we will also plan to have a $150/month utility fee as units 1/2 are submetered as one and 3/4 are submetered as one. Would the property management company take 10% of this as well?

Finally, what are the main things YOU look for when interviewing property managers?

@Charles Kennedy I would say the PM company shouldn’t take some of the utility money. As for 10 percent at those rents I’d say it reallt just depends on the company and the market. I’ve got one PM that’s at 8 percent and another slightly above 10, it all just varies. I prefer good service over saving 20 bucks a month. Anything below 8 percent on something that isn’t 50 plus units and I would get concerned about the service quality.

@Caleb Heimsoth thanks Caleb. I agree I will not take a worse PM company that is doing 8% vs. 10%, but if I can get the best of both worlds, 2% is another $90/month. I agree on the utility, as someone that does have a submetered property wouldn't have to pay this fee. I guess when I interview PMs I will just have to see what the market is like! 

Thanks.