Property management fees

[zx7king]

Hello everyone,

After enjoying all the info on this site for a while, I am posting my first question.  I am searching for my first multi-family property.  All my ducks are in a row and now I am collecting info on property management companies.  Since this is a side business for me, a PM is a must.  I have read a lot of threads on this site regarding PMs and I wanted to run these numbers by you all.  A friend of mine has two properties and he speaks extremely highly of his PM.  Here are his fees:

- 1st months rent for placing renter (includes background check, advertising, etc..)
- $75 / month / unit regardless of rent amount (around here, that is less than 10%)

I know this might be higher than some, but my friend's endorsement means a lot to me.  What do you think?

Thanks in advance,
Charles

[reiauctions]

Those fees are in line with what I'm finding.  Anything less than 10%/month to manage is pretty good and if you have a recommendation from a friend you trust, that's worth a lot.

[zx7king]

Thanks for the reply Tom.. I appreciate it.

[d_sbrown]

Hey,
I would add, quality means more than price.  If you have poor management, then you will lose money no matter how cheap the manager is.  If you have pay a lot for good management, then you simply have to find a deal that allows you to make the return you want above the expense of management.  In multis, I don't think there is anything as important as management, IMHO.

Good luck,

DB

[islander]

I like the "keep it in the family" approche if you have a spouce let him/her manage the properties, and pay them the same thing. just an extra 2 cents.

[aak5454]

a full month on the front end is a bit steep.  My question would be immediately "how good is your pipeline" (i.e. flow of potential teants calling your office looking for a place) and 2nd how long have you been in business and how many tenants do you screen in a average month.

you will be payig top dollar for placement so you need a PM that can get people signed up to move-in BEFORE the previosu tenants moves out plus has excellent screening epxerience to minimize the possibility of getting deadbeat teants.

Its a cost benefit analysis-----vacancy and deadbeat will absolutely kill you rental biz.  If you can minimize thtose with a good prop. mgmt, then do it.

Its all about the numbers.....

[Rayh78]

Chargeing 1 st months rent for a tenant. Have not heard this one before.

good incentive for PM not to chose very long term tenants.
If a tenant moves out bad news for you but good news for the PM

[propertymanager]

AAK is right - IT IS ALL ABOUT THE NUMBERS!!!  So, the question is not how much a property manager costs, the question is whether or not you can make a profit considering ALL the expenses.  If you look at realistic numbers, I don't think that you can turn a significant profit using paid property management, paid maintenance, etc.  It just doesn't work.  Why not post the numbers and let's take a look at them.

Mike