@John M. Can you clarify what you mean when you say 15% surcharge on maintenance fee/invoice amount? When I think of surcharge, I think of a charge on top of a charge, for example if there was a maintenance call to an apartment that amounted to $100 for a furnace service call that a PM uses, then bills the owner of the property $115 (15% surcharge)...is this what you are asking about? If this is what you mean, the reason they have the surcharge is because it falls under the maintenance category and not the tenant category, which adds more to the work load of managing an asset. The PM maintains a list of vendors who they vet and must ensure the vendors are compliant with their operating standards such as having a Certificate of Insurance naming the PM as an additional insured, receive invoices from said vendors, pay vendors, checks vendor work (in some cases) and ensure the invoice is appropriately accounted for in the asset/owners account.
There are generally three facets of property management: tenant management, maintenance management and financial management. The standard 10% usually covers tenant management only - advertising, screening tenants, preparing leases and renewals, fielding phone calls from tenants, collecting rent and conducting evictions.
In your calculation you stated that 10% equals $1200, did you mean $120 or was the $1200 an annual number? And are you assuming the rent is $1200 monthly in your calculations? Just want to make sure I am on the same page...
Keep in mind when thinking about property managers, they have overhead of conducting business, including employee wages and benefits, hardware and software costs, utilities and rent for their office location, insurance costs, licensing costs for their employees plus the time and effort put into maintaining compliance with applicable laws regarding third party management of real estate assets.
There are many assumptions within this calculation, assuming only 1-2 years of tenancy, and assuming 2500-3000 for turn over costs. In my head when I think of a 100k asset I think of a decent single family home in a decent neighborhood that has had mostly everything renovated already. Tenants tend to stay in SFH's longer than apartment rentals, so I would assume 3-4 years, and turn over could be as simple as a wipe down and carpet cleaning if the PM is doing their job and screening tenants appropriately (although even great screening doesn't always guarantee great, clean tenants).
There is also a certain type of investor who prefers turn key with management in place. It isn't bad or good, it all depends on a persons goals and level of involvement, or lack of involvement, that they want. And when you want lack of involvement but want to be in real estate, turn key providers fill a need.
