New Investor - Estimating Property Mgmt Costs?

Question

I'm a new investor in the Tampa Bay Area hoping to get some input on "rule of thumb" figures to use for property management costs when I'm analyzing a potential investment property. Thanks in advance.

James G. · Answer

@Brad Stein as @Damian Bialonczyk said, 10% is a good rule of thumb to operate by. However, some property managers will go down much lower. My PM's operate at 8%, I know some who go down lower. Multifamily you can see 5% or lower as well. Hope this helps

Damian Bialonczyk · Answer

General rule of thumb would be to assume 10% of income will go towards property management, but this value may fluctuate depending on location, property-type, etc...

Tom Parris · Answer

Hi @Brad Stein,

8-10% is what we charge based off of how far away the property is, and it's condition. We also charge a percentage of the 1st month's rent to procure a tenant. That can be anywhere in between 50-100% again depending on the difficulty.

Jonathan Pflueger · Answer

@Brad Stein

Everything is negotiable (percentage amounts, up-front costs, lease-up fees, etc.) - do not forget that. With that said, the lowest price is not always the best deal - a good property manager is worth their weight in gold.

In my area, the going rate is between 6-10% based on the type (multi or single), condition (older or newer), area, and so on. I just recently finished a multi-unit renovation; due to the like-new condition I was able to negotiate zero lease-up costs with a 1 year PM contract. After year one, I will reevaluate.

New Investor - Estimating Property Mgmt Costs?

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