Property Management in Large Multifamily (40-100 units)

[Seo Hui Han]

I've been going through "The Multifamily Millionaire:  Volume 2" and in Chapter 13, they talk about property management ranging from 4-6%, on top of on site management that is on the owner's payroll, separate from property management, and that you should budget about 1 staff member for every 40 units.

If you (the owner) are already paying a property management firm, why do you have to have on-site management separate from the PM?  What does the PM do, and what does your on site management do?  Unfortunately, this was not clear in the book, which is unfortunate, since otherwise it is a very good and detailed read.

[Kim Meredith Hampton]

Yes, those number ratio numbers are correct for how many units per manager. 

The management company handles a lot on your behalf, besides overseeing the manager. If you aren’t an experienced investor, most bank will require you to hire a professional pm company to oversee and manage the daily operations of such.

Do you actually think that the PM company could afford to pay a manager out of the 4-6% they receive??? think about how much money that would be, almost nothing. Let’s say that your 50 units rent for $1500 for each unit on average. That would be approximately $3750 per month based on 5% mngt fee. I don’t know about you, but I can’t hire anyone for that amount??? That is very little money for the amount of work performed, but not only the onsite manager, but all the people behind the scenes that no one sees. The manager and mngt company work in tandem daily to manage tenants, buildings, maintenance, contractors, accounting, escrow, HR, taxes, fair housing, municipalities, legal etc… It does take a village for sure.