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. 

[Drew Sygit]

@Seo Hui Han you're not going to get very far in this business if you don't start thinking through the nuts & bolts of how this all works! 

@Kim Meredith Hampton makes excellent points, but she shouldn't have to.

YOU should already be thinking these things through, so you invest wisely and don't get taken advantage of.

BTW - yes, BP is where you can post questions for answers, but ask BETTER questions!

Example: "what does a PMC do for their 4-6% that the onsite staff doesn't cover?"

[Seo Hui Han]

Quote from @Drew Sygit:

@Seo Hui Han you're not going to get very far in this business if you don't start thinking through the nuts & bolts of how this all works! 

@Kim Meredith Hampton makes excellent points, but she shouldn't have to.

YOU should already be thinking these things through, so you invest wisely and don't get taken advantage of.

BTW - yes, BP is where you can post questions for answers, but ask BETTER questions!

Example: "what does a PMC do for their 4-6% that the onsite staff doesn't cover?"

 What does a PMC do for their 4-6% that the on-site staff doesn't cover?

And to people who run PMC's, I'm sorry if my original post sounded like I was complaining about having to pay for both, or being snide about the cost.  That really wasn't my intention.  I genuinely want to know if there are certain tasks and responsibilities that are delineated for the PMC, and others delineated for the on-site manager, and what those were?  

For example, who collects rent?  Who turns units?  Who screens new tenants?  Who handles maintenance requests?  I just want to know if there is an industry standard or convention in this situation for how these things are divided up between the PMC and on-site management.

[Michael Smythe]

@Seo Hui Han onsite staff is there to mostly show the property and keep tabs on tenants and the grounds. Sometimes maintenance.

The PMC collects rents, although some may drop off at office, tracks EVERYTHING the onsite staff does and arranges maintenance of grounds and units. They will also handle nonpayment & evictions, marketing of units, applicant screening and much more. 

Almost forgot, the PMC also manages the onsite staff.

[Seo Hui Han]

Quote from @Michael Smythe:

@Seo Hui Han onsite staff is there to mostly show the property and keep tabs on tenants and the grounds. Sometimes maintenance.

The PMC collects rents, although some may drop off at office, tracks EVERYTHING the onsite staff does and arranges maintenance of grounds and units. They will also handle nonpayment & evictions, marketing of units, applicant screening and much more. 

Almost forgot, the PMC also manages the onsite staff.

Thanks, that really clears things up.

I am under the impression that the owner is typically responsible for paying on-site staff.  Is that a hard and fast rule, or do some PMC's take care of that for the owner, billing the owner on top of their 4-6%?  And if the PMC manages the on-site staff, does that include hiring and firing as well?

[Michael Smythe]

@Seo Hui Han who pays & manages the onsite staff, is up to the owner.

Some want to do it themselves, for check & balance, some want PMC to do, so they can be more hands off.

[Kim Meredith Hampton]

Typically the PMC handles the payroll, taxes, etc… for the employee and property on behalf of the owner. We also manage, fire and oversee onsite staff. This makes it really hands off for the ownership. You should not have to do anything

The onsite manager shows and rents apartments, oversees third party vendors like, maintenance, landscaper, pest control, pool. Works day to day with resident complaints etc…. 
Most of the administrative tasks such as posting rents, verifying applications, paying contractors, payroll. human resources, paying taxes, paying owners etc…. are dealt with at a higher level with the corporate office PMC