I am about to close on my 5th unit in Jacksonville, FL and I am looking to put property management in place. I just have too much going on with work and church to deal with tenants and toilets directly. One company gave me these terms:
10% of rents
Maintenance at cost as needed. No mark ups. There is a team of maintenance professionals that work with the company (but not exclusively) and all fees are passed to me at cost.
1st Months Rent when a unit is filled.
Main manager has 20+ years of experience. He was recommended by and works with my Realtor. My realtor and I have done multiple deals together and I am looking to do more. She is a Rockstar.
I am pretty comfortable with this arrangement, but I have always managed my own properties, so I want to get your thoughts on the arrangement and fees associated with it.
Thanks in advance for the insight BP Fam.
If these are single family properties than this sounds like a regular deal. As a property manager my self, this is typically what we shoot for with single family properties
Pricing in Jacksonville for percentage based property management companies is 7.5%-10% monthly and half to a full month's rent for tenant placement. There are also a couple brokerages like ours that offer flat rates. I would recommend finding out a couple things:
Do you need to pay the tenant placement fee again if the current tenant renews their lease?
What is their cancellation policy?
Am I able to sell my home myself or with another agent?
The biggest complaints we hear from people are that they are being nickel and dimed on repairs and other fees, it looks like they are charging cost which is great, and a lack of communication. If they are responsive and you feel you would have a good relationship with them then they may be a great option for you as they are not outside the norms for cost.
AgentChase Real Estate
Thanks for the great advice and insight. Just wanted to get some thoughts from people that have more experience than myself with property management companies. One point of clarity is that one of my units is an SFR. The other two are duplexes. Not sure if that changes the thinking much, but it sounds like I am moving towards a solid arrangement with the company.
That doesn't change much, you could try to negotiate a bit on the monthly percentage as you are adding multiple properties though.
AgentChase Real Estate
For duplexes, my company typically does 8.5 % management fee for duplexes, 75% leasing fee,
If you already have a good relationship with them then it might not be worth it to negotiate. It all depends on your goal
Full disclosure - I own a property management company in Jacksonville, FL.
Hi @Titus Hill , those terms seem very fair to me. However, the most important thing to focus on when hiring a property manager is how long their average duration of tenant stay is. Most investors never ask this question. But the greatest correlation to your success as a rental property investor is how long your tenants stay in your home. Turnovers are costly in terms of maintenance and vacancy costs as well as additional tenant placement fees. Most investors need residents to stay 3+ years on average in order to hit their original return on investment goals.
So, 3 additional questions I would ask:
1. What is your avg duration of tenant stay?
2. How long are the leases you sign with your tenants? (don't accept 1 year leases...should be 2-3 years)
3. What are your tenant placement fees?
Hope this helps!
Go look at Navy to Navy homes they should give you a better rate than 10%. The head guy is very knowledgeable and has all of the property management certifications and licenses. Prior navy guy. I am probably going to use them when I get to your level.