@Jenna Lee
This first months rent at release plus 10% makes management total 18.3% if you lose a tenant after a year on a 1k$/month unit... I don’t see how you can make this pencil with these fees. Unless your tenants last 5 years. But regardless there are plenty of residential managers working for 10% on single fam and 8% on mf so why would you settle for that. Seems more common on commercial props.
@Scott Rubzin
We’ve been in business more than 20 years here in Austin, TX and charge only 5%. We don’t mark up invoices either. We work for the investors — making sure they have a solid return on their investments.
@Scott Rubzin My property management company charges 1/2 of the first month rent then 10% monthly. I get invoices for maintenance but the charges are usually low or fair.
@Bill O Brady
I can top that, my properties are also in Vegas...7% PM fees all-day. Been that way since I started with them.
My PM team is extremely selective though both of landlords and of renters.
They hardly take on new owner clients and treat every property as if its theirs. They also seem to snag exceptional tenants.
I have had terrible experiences with PMs in the past. I now interview my potential PMs with questions such as:
How often do you conduct inspections?
If we experience a large storm will you inspect the properties?
Are you willing to lower your fees as we add properties?
I now work with two PMs in two states and they have been great. The one offers a discount for assigning leases due to multiple properties. I also buy through my leasing agents which helps build our relationship. They know what I am looking for and they are able to provide the best assistance. The whole idea, at least for me, behind having a PM is to remove myself from the management process as much as possible. In past experiences, I found myself managing my PMs rather than them managing my properties. This is not ideal. So, working with a PM you trust and allowing them to make the call on repairs under a certain amount (ex. $300) works well for me. I am an active duty Soldier and recently I was out of the country when a water leak coming from the hot water tank was discovered in one of my properties. My PM handled everything to include the insurance company. They earned every bit of their 10% of repair cost fee.
Find a reputable, like-minded PM who provides value to your company. If the fees work for you then do business. If not, then negotiate. Once you find a PM that is willing to provide the necessary assistance at a price that works for you then try them out and do not be afraid to fire them.
Great post, as I’m trying to figure what The rate is going to be in the Florida Keys. I started my research and have been quoted 20 to 25%. Few are quoting me 15%. Any of you guys out there with “exotic” locations heard of these inflated prices?
As a landlord, I spent six figures on the management company this year.
The cost included managers, techs, office space, equipment, fleet services, vehicles, legal cost, insurance, software, and advertising.
I own the management company and maintenance company. We pay extremely well at 20% above market, 100% health paid by us, and fully funded retirement accounts by us. Everyone is salary, and we have a little over 30 paid days off per year.
Management cost ran 4.7% of gross rents this year.
Maintenance cost 4.1%
For those not running their own operation, you need to hire a owner operated PM company vs a PM shop, this can help keep the fees low.
There are plenty of real estate agents that will happly side hustle for 1 months rent to get a unit rented, and include management with that fee. Did that for years before rolling up my own firms. Quality is all the same.
I have a SFH in Chesapeake, VA and my initial tenant placement/lease negotiation fee was $300 and 10% monthly management fee. They typically call/email me for repair approvals first; They keep a $300 repair fund in my account. I have had a roof replaced and other repairs, but no mark ups. She even got the quotes for me on the roof. I decided after reviewing the quotes from each contractor.
I have some of my own contractors she uses so I know it's no mark ups. When she uses her resources, I always see the invoicing (not that it can't be a relative like someone else said).
I just transfer the funds to my account and they pay it when the contractor invoices. It's been good so far.
@Scott Rubzin
I am a leasing agent for a property management company and we charge $79/month for on-going management and one months rent for tenant placement! It saves on average 20-40% over other property management companies. We have a 2 year guarantee for the tenant placement as well if they break their lease or move out early.
In Ohio we pay 8% (our PM since upped it to 10% for new clients). We pay 1st month for tenant placement, nothing for a renewal. If the tenant leaves before 1 year is up, we do not have to pay to get another tenant in. Rents are btw. $650-$800 a month.
We keep $200 a property (10 SFHs) in reserves for repairs. We don't pay any overage for repairs, though he has no handyman, all work goes through his contractor friend from high school/growing up/neighborhood, something like that. They also share office space. Who knows if they have some sort of deal..... Some of the repairs could be handled by a handyman, I think we pay too much for some simple things because we are paying contractor prices and not necessarily getting a better result.
For a new purchase reno, or a turnover reno we use that same contractor, who for the most part does good work, but things definitely slip through the cracks and we have to check our invoices and confirm that the work has been done.
They do have a great software program, Rentec Direct, and are efficient at disbursing our funds.
We definitely have to manage the property manager and now the contractor as our PM has gotten busier with his own deals.
I'm getting a bit frustrated and have been thinking of starting a thread on what my expectations should be.
@Scott Rubzin. 8 percent monthly rent. One month rent at lease up. 150 renewal fee. Mark up maintenance 15 percent. Other PM I plan on using (different market). Is 10 percent of rent if it’s below 500 rent and 7 percent If it’s above 500
In Raleigh, NC, 8% of rents collected, no renewal fee, $150 annual fee inclusive of first 10 properties, no fee for tenant placement, and they prefer longer-term leases and actively look for less turnover, which I love. They do not upcharge for outside work, actually better prices on new HVAC, water heater, etc., than I could find when I did my own research, but their handyman for the smaller jobs is expensive and the contractors they use are definitely higher on things like pressure-washing, landscaping, etc., so I try to schedule those on my own.