Realistic property management for 8 unit building

9 Replies

I'm currently analyzing a deal for a 8 unit building. Current owner doesn't have any property manager in place and also doesn't have records of vacancies.

I have no intention of managing the property myself. What rate would you guys put in for these two categories. Property is in New Jersey.

Im thinking 10% for both. But wanted second opinion

Kay, dependent on the income level the units are in can make a difference of percentage and also the number of units.  To property manage that number of units in a working class type of neighborhood I would charge 8%.  From my experience I don't think you can ever go wrong running your numbers at 10% just to be safe.  If it's a really rough area the percentage will continue to climb about 10% upwards of 15%.  

Hi Kay, those number depend on location and management companies as they charge different percentages, however, I can tell you that in Northern NJ the vacancies rates right now are about 3.1% and management fees are about 10%. As you are analyzing these deals normally the banks would use a 5% vacancy rate and a 10% management fee. So I would use those numbers and you will be just fine. Keep in mind, if those are less than you will realize more profit. Good luck!

James L

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Thank you for the info. That's perfect .
This is the summary of expense that the broker gave me.
What items do you think could be missing?
Again this is a 8unit building . Roof is about 10 years old, boilers are about 5 years old. Thx again in advance.

Expenses Annual Figures
R/E Taxes $9,756
Insurance Premium $3,000
Maintenance $4,000
Water & Sewer $3,000
Common Electric $700
Gas Heat/hot water $0 Tenant Paid
Management (5%) $3,937
Garbage $0 Ind. Trash Cans
Total Expenses $24,393

Are you including cleaning of common area, repairs, pest control, and landscaping under maintenance? Also either legal fees for leases or real estate agent commissions. I would make sure your insurance quote includes additional fire coverage.

Hi there. our company located lh the Bronx. we 0Wh And manage a laRphotfolio pRotfolio. 

mt Best Advise for you As you  Are purchase lh new jersey is to check the Vacancy Rate in your Area.

I know some areas which might Be hard to occupy all year long.

D.

@Kay Ferdous Also, check with the municipality to learn about their Rent Control Ordinance/ Vacancy Decontrol Ordinance (if applicable).  Some towns have brutal rent control ordinances that can prevent you from increasing your annual rents.  For example, Dumont, New Jersey just raised property taxes 2.35% (above the state-mandated 2% cap), however their Rent Control Ordinance only allows Residential Landlords to raise rents by the CPI percentage, which is currently 0.008%!  I tried to get the Mayor and Council to approve a slight increase, which was voted down 3:2 (being that the November election is coming up).  So they can expect me, and other Landlords, to file tax appeals and lawsuits regarding this unfair Rent Control Ordinance.  I will keep fighting until I get this unjust ordinance squashed!