what's your property management fee?

[Michinori Kaneko]

Hi All, I'm curious what kind of property management fees everyone is getting. can you let me know 1) where you invest, 2) how many properties you have (and approximate combined gross rent if possible), 3) what your management fee is vs what the "quoted" management fee is (aka are you getting a batch discount), and 4) how many units did you have when you got to your current fee structure.  Thank you.

[Nathan Gesner]

Nobody can manage 1,000 units with three people unless their only service is to process rent payments. It would take three people just to handle showings. They would need 2-3 people to process applications. 2-3 people to coordinate maintenance. Plus property managers, accountants, office administrators, etc. One of the most successful PM companies I know has 900 units under management and he has 16 employees. I have six people managing 350 units and we are looking to expand.

No property management company can survive by charging 3% or even 5%. If their fees are that low, they are either making it up for it somewhere else or they are preparing to go out of business. I would argue it's the latter.

Let me explain.

The average single-family rents for $1,000 a month and I charge a 10% fee ($100) per home. 100 homes would earn me $10,000 a month income.

An investor like David Greene walks in the door and asks me to manage 100 homes at a discounted rate of 7%. 100 homes would earn me $7,000 a month income.

In both cases, my workload is the same. My expenses are the same. Yet I'm earning 30% less with David Greene! Every time he brings me a property at 7%, it's actually costing me money instead of making me money!

Can any of you name a successful business model that discounts rates by 30% for a repeat client? It's untenable.