Property Manager Commission

[John Smith]

Hi guys,

I just have a real quick question. I know that the average cost of a property management company would be 10% of the annual rental income. I know that reason why property management companies charge 10% is because they have other costs such as attorney, accountants, book keepers, rent, insurance, ads and maintenance crew meaning that the property manager only gets part of that pie. So I was wondering what would the commission be if I was to directly hire a property manager. Would I be able to hire him for say 5 percent commission if they were only responsible for managing the property?

I am asking this because my father has around 20 SFH in Chattanooga Tennessee that each rents for between 1200-1550 dollars per month. I have two handyman friends down there who can help with the repairs and I can hire someone to do the taxes and book keeping for him. So I was just wondering if paying someone 5% to manage all 20 properties is a feasible idea or is it too little?

Any input would help!

Thanks in advance,

[Drew Sygit]

It's always trading your time for their fees.

20 units really isn't a lot of units. 

If you're really organized, you may be able to handle most of it on your own and hire out the rest.