Do Property Management Fees Lower Your Appraised Value?

[Jared Ebert]

 I'm setting this up as a purely hypothetical question for my own education.  In this situation I am purchasing a turn key (no significant room for forced appreciation)8 unit apartment building.  The seller has been successfully self-managing the property without a property manager for several years. I purchase the turn key property and because I know I don't have the time and don't want to self manage, I immediately get a quality property manager on board.  Because it's a turn key property and the sellers have taken great care of the property, even though I have a great property manager, there isn't really any rent increases.  Now 6-12 months after purchase I decide to have this property appraised.  The rental income is the same.  The maintenance fees, taxes, and insurance haven't changed.  However, I'm now paying 10% PM fee. Have I just lost equity in this property??

I'm not sure if in appraisals, property management fees count towards your expenses and thus lower your appraised value.