Reasonable Property Management Fee Structure?
I have a question for any members that have a good amount of experience with property managers. I apologize for the length of the post.
I currently own a property in another state and have a property manager who manages that property. For managing the property, I pay a flat 10% of gross rent per month. The PM doesn't charge me any additional fees to locate and screen tenants or when they arrange for repair services. So far, I am fairly happy with their service and this fee structure seems to be reasonable and somewhat what I expected from the little bit of reading I had done online prior to enlisting their services.
I am considering purchasing a property in another location that is about 5 hours from me. It is a small town so property management services are very limited. My dad lives in this town and is serving as my "on the ground" person to do research on the properties and PM services. He is not comfortable serving as an actual PM for me and I don't want to put him in that position if it isn't something he feels comfortable doing or is interested in learning.
The one property manager that he has located that has been responsive to our inquiries sent us the following email to describe his fee structure:
"*I would help as requested to find the properties. If the property is listed, as a realtor, I would be compensated for this by the seller. If the property is unlisted, only the following hourly rate would apply.
*I would help secure pre-leasing repairs as needed. I would too handle all in-lease complaints and coordinate repairs. For this, $30 per hour.
*I would take pictures, present a write-up on/outline of the property on craigslist after having it approved by you. I would then meet/interview potential tenants and collect the deposit and present and deliver a lease agreement. For this, I would keep 1/2 of the security deposit - the total deposit being the equivalent of one month's lease. (This is consistent with what I do for the properties I currently manage.)
*Thereafter, for being the first point of contact, I would retain 10% of the lease money per month. Should a tenant fall behind, I would work with both parties to secure remedy. "
As you can see, this PM's fee structure is significantly different from that of what I am used to with my only other PM relationship and different from what I was expecting based on what little reading I have done on the internet concerning this topic. Our attempts to get a fee quote from other PM companies for comparison purposes has turned up nothing.
So...I am turning to the vast knowledge here for thoughts on this fee structure from those of you who have a bit more experience in this than me. I look forward to hearing your thoughts.
Thanks!
Burke