How much should I pay myself to manage my rental properties?

[Joe Shaffer]

Okay, so I am one of the newbies to this particular forum.

I have had rental properties for going on four years and in that time I have always reinvested 100% of net profit back into the rental business. A mentor friend of mine (who owns several successful businesses) suggested that I begin to pay myself a monthly stipend to compensate for time invested. In the first few years I was focused on growth but now I am beginning to think it may be time to take his advice and pay myself back for some of the startup capital and my time. From what I have researched it seems that property management companies seem to charge between 8%-12% of gross monthly income.

My question is for those of you currently compensating yourself.

How do you pay yourself? Is it just a flat rate or a percentage of gross sales? Or of net profit? Any guidance in this area would be helpful. Keep in mind that I would like to continue to invest back into the business and grow. Thank you in advance for your suggestions and advice!! 

[Roy N.]

@Joe Shaffer

You should budget the 8 - 10% you would have to pay a hired PM and set it aside each month.  

Whether you choose to draw it out or reinvest it at the end of the year is your decision, however by building it into your management budget, if you ever find yourself in need of hiring a PM, you know you can do it and remain afloat.