Cost of Management options - looking for creativity & options

[Brian Black]

As we are growing I am considering asking my property manager to cut his fees. He is awesome. However, we also need to cash flow and are bringing value by the number of units under management.

How is everyone else handling good property management costs?
Is there a way to cut costs at scale?
What deals are you making? 
What options to consider?
15% plus a first month's rent fair indefinitely? @ 10 units, 20, 50, 100 does it change?
Is labor separate from this amount in all cases?

What deals are you working for good management?

The lower I can get the fees the higher number of units I could get.

Thanks!

[Joe Martella]

Brian,

I have no idea where @Drew Sygit is going with his post.  You aren't bringing in a consultant, nor merging a company.  You are trying to get an idea on how to be more economical and figuring out how to get the best bang for your buck.

You should always be thinking about growing your business and what that would look like or adjustments would be needed.  Any business in its infancy stage needs to be the most efficient for survival and reinvestment purposes.  For example, I own and manage 4 properties.  The gross rents I collect are over $7,000.   If I had a PM at 10% (which is the general standard for long term rentals), it would cost me $700 a month or $8,400 a year.  That doesn't include the one month rental fee and the lease renewal fees.  It would cost me $10,000 a year in expenses.  That is a huge amount of money.  Saving that for 3 or 4 years that is a down payment.  $10,000 is a roof or a furnace/AC install and you would still have money left over.  

Take a look at this post where I laid out my self-management strategy.  Self management property tools (biggerpockets.com)

Of course, as I scale, this won't be sustainable, but I will do this as long as I can to keep reinvesting the capital.  If I ever go to a PM, my goal would be to scale to where I can hire my own person.