Mobile Home Park - Property Management

[Michael Baradell]

Hey BP!

I am purchasing a park that has management already in place. This management team has been in place for 9 months under the previous owner and has done a good job cleaning up the park. Currently, the PM fee is a flat rate of $700/month. There are 13 active lots and 42 more to fill. 

My question is, how much should I anticipate paying them as we grow? The $700 flat fee tight now is excessive I feel. Should we pay per pad? Percentage of rent collected? 

[Chris Ebert]

@Michael Baradell, that makes sense. While on a percentage basis of rents the fee might seem high, it's more about the absolute dollar amount at this revenue level. The time and effort spent by a third party manager could easily exceed the $700/month. With that said, once you get occupancy up, the management fee should revert to a more normalized percentage of revenues. I would expect >10% but haven't explored third party management. We do all of it in house.