In the process of buying a 12 unit apartment building and will be my first time hiring a property manager. They say their standard rates are 10% of income, 1/2 of first month’s rent for all new tenants, and they charge and keep a $45 application fee. They do have 24 hour maintenance. Does this seem high to anyone?
@Ben Traxel This will definitely bring about a great conversation! I would say this is not high – only if the team you are hiring has the appropriate systems in place to protect your investment. Now, is this the cheapest? Of course not! But run away from the cheapest. I can not stress the importance of doing your research. Now, if you find someone cheaper, feel comfortable, and think you will rest well at night with them protecting your investment – then go for it! I recently shared with someone in the BiggerPockets community: I can not stress the importance of quality. You can not sacrifice quality for a company that’s “cheaper.” Price is often the deciding factor in a consumer’s choice to buy, but if asked many will not agree this is the case. Customers don’t want to seem ‘cheap’ nor do they always want to buy ‘cheap’ items. They generally want value for money or a less expensive item. It’s funny when some claim they are cheaper and when you get into the “nitty-gritty” of things.... they are actually more expensive. Always remember everyone can do it cheaper but not everyone comes through on their promises! Some companies can’t be real and they make fake promises – “to keep up with the Joneses”. I often tell clients, respectfully, we do not proclaim to be the cheapest. If you want cheaper.... yes you can probably find cheaper online! But unfortunately it’s not us and that’s okay. Perhaps we are not a great fit. Our goal is to make life easier for our customers. All to say, when you are interviewing theses companies . . . Do not compare based on prices. Compare companies based on the service they provide, what’s all included, how many years they have been in the game, and most importantly the KPI’s (Key Performance Indicators). Remember the salesman can sound good on the phone, his cheaper prices has you thinking, but what proof in the pudding does he/she have?
Best of Luck!
Thanks for responding Davartay. I've had some rentals in the past but definitely going PM from now on. I've read (only from quick searches) the average cost was 4-9% depending on services provided. These guys do seem to know their stuff and cover everything I don't plan on doing. I have one more I'm checking with but these guys are are close by. Just making sure I wasn't getting gouged. I appreciate the feedback and certainly understand on not going with cheap just because they are cheap. In the architecture world it is the same way. You get what you pay for.
That’s awesome you understand! My early career was in Landscape Architecture – Design Build . . . So I know where you are coming from there. I did want to mention If you are not looking for X,Y, and Z from company A who’s charging 10% . . . . perhaps you all are not a great fit for one another. If you are looking for only X and Y . . . . And you can get it less than 10% then go for it. Only if you know you will be able to sleep well at night with that company protecting your investment. Just make sure you know what you are signing up for.
Best of Luck, sir!
We just had a potential client insist we should only charge 5% to manage their 12 unit building.
We tried our best to point out to them that 5% either:
1) Applies to 100+ unit complexes
2) Has a contract that will charge for every little thing the PMC does, so will actually cost more!
They didn't believe us and will get screwed.
Seems reasonable - but you can negotiate to 8% most likely
I agree with @Alexander Szikla . Just know that you live and die by your PM. I would do you research on the PM and get references. Your PM will be your eyes and ears and your investments is only as secure as your PM is. Last thing you need is a bad PM and a bad tenant.
I think the charges are pretty fair since they have 24hr maintenance. I'd definitely make sure there are not any hidden fees involved.