Hey guys! This goes out to all people that have a property manager!
I'm curious on what you pay your property manager. I've seen the average at different wage points, and was curious.
Do you go by a percentage?
What percentage do you go off of?
How many units did you obtain before passing the duties over to someone else?
What else should someone keep in mind about hiring a property manager as far as wages go?
Thanks in advance! :)
Let's clarify: Property Manager vs. Property Management.
There's lots of Property Management companies to assist in processing applications, performing move-in/out inspections and collecting rents - - that's a 10% commission on the rents kind of business.
The Property Manager, is required (in Calif) for 16+ units at one site, becomes a resident, gets paid by the owner and thus becomes an employee and that implies in your state. This gets complicated by minimum wage laws, rental fee accommodations and the tax consequences thereof.
All markets are different. I owned duplexes in Rochester and was charged 12% of gross revenue for management of the property. That included everything, collection, eviction, and was charged separately for maintenance requests.
In smaller properties, below 50 units, look to pay between 5-10% of collected revenue. Do not include security deposits in that figure. When you get larger, 100 and greater, that number will drop to 3-6 percent, but the management company will charge for leasing agents separately
we have five properties. Property management cost is 8% of rent collected. They get 50% of first months rent to place a tenant. Maintenance items require approval and are invoiced and paid separately.
Thanks guys. I think I have a better understanding of it all now.
My friend and I was talking about it, because I plan on having a few rental properties. Obviously this isn't anything right away, but we were discussing what a property manager would get paid. I've seen some of the averages, and I couldn't quite see how it was possible at 8-11% for a fair wage without owning upwards of 600 properties (based on the average rental price here.) I see now that this figure is probably for a property management company.
In our market 10% of rents is pretty common. Leasing fee 1 months rent.
I just closed on my first rental property--a 3 BR condo. As it's out of state, I've decided to hire a property manager to screen the tenant & cover maintenance issues.
This has been a helpful discussion in understanding the going rates for property managers. However, I know each area has a typical going rate. How can I determine what is currently fair in the area where my unit is located (it's in SW FL) since it may be different than what some of the answers here indicate. I'd like to negotiate but also want to go in with some base knowledge of what is common.
@Karin U. I would just call five different companies and see if you are experiencing a trend with the answers. Also, ask for recommendations from other investors in the area, and check online reviews.
Thanks, Dawn--such an obvious idea that I overlooked it altogether! Great place to start, though!
In San Diego, single family homes can run as high as 10%. Multi-family usually runs 5-8%. Keep in mind, rates and other associated fees are always negotiable, and what you can get depends on the desirability of your business to the property management company. A single family home is not as exciting, so maybe 10% and 1/2 a month's rent as a lease up fee. A 100-unit building is very exciting so, maybe 5% flat fee with no additional charges.
I am a PM in NJ. I charge 10% of gross monthly rents with no finders fee for placing tenants. Just a flat 10% for everything.
Great question Cheri, I manage some properties for 3rd party owners in PA and NJ. If its a single family home, we usually do 10% of gross collected rents and 1/2 month leasing fee, which always gets paid to the agent who placed the tenant. For multifamily, it depends on the amount of units and quality of the building and neighborhood, but we have done 6% for a 50 unit building in a nice town and also charge the 1/2 month so the agents can get paid.
Hope that helps,
The key is to KNOW YOUR MARKET! Everyone provided solid answers, but what works in San Diego may not work in Colorado Springs. A smart investor will do their research to determine what a standard rate is for your market. But DO NOT stop there! Just because someone charges a lower rate doesn't mean they are better. What services do they provide? What is their experience level? How do they handle bad tenants? How do they handle maintenance issues and care for your investment? Do they have any "add-on" fees? How solid is their lease agreement? Can they provide references from Landlords and Tenants?
There are a ton of people out there that will charge you a percentage just to collect the rent, but they do a terrible job of screening, dealing with problem tenants, or caring for your investment. Do some research to figure out what a good property management company looks like and then interview several before signing up with them. You should also look for a manager that is a member of the National Association of Residential Property Managers (NARPM) because they have more education and hold themselves to a higher standard. It may sound counter-intuitive, but paying a higher price for management can actually put more money in your pocket!
Sub 100 Units - 5-10%
Above 100 Units - 3-5%
Percentage of gross collected rents
Depending on your goals and your companies goals, management 1 day might be the best option.
Thank you guys for furthering this discussion. I know it's not just going to help me, but others that might be thinking the same thing.