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Updated over 5 years ago on . Most recent reply
Property Management Cashflow question
I have a property and i hired a property manager to deal with it but i dont see how this scales well. Lets say i have a property that i am paying $1100 a month in mortgage. I am asking $1400 a month for rent. I hire a property manager and they charge 1 months rent to find a tenant and then 8% of each months rent in fees. My mortgage expense per year would be $13200. My rent cashflow would be 16800 per year minus 1400 for tenant placement fee and then minus 8% service fee that leaves me with $14168 in pocket from rent. So ultimately i would have around $968 of profit for the year. However this does not take into account repairs, HOA fees, insurance, vacancies, etc.... what am i missing here? I dont want to manage the properties but hiring a property manager is expensive. this doesn't seem to scale well if you have a number of properties and repairs. I couldnt see my self not working and living off of this rental income considering an unexpected expense could put me in a bad situation.
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@Jef A.
You need to determine from be start whether you’re going to hire a PM or manage yourself. If hiring a PM, then you plan this into the operating expenses from the start, when you’re looking and running the numbers on potential properties to buy. And as such, you only buy properties where you can still get the cash flow you want/need while including PM.