Fair property management percentage?

[Ted Jackson]

I am closing on a 4 unit apartment and considering leaving the current propert manager in place since she has done very well there. She wants 10% of the monthly rent, which I think is fair, but also the first months rent from a new tenant. To me, that is a deal breaker but I just wanted to get some advice. Is that about the normal charge, or is that first months rent from new tenants a dealbreaker? Please only advice if you have actual experience. Thanks.

[Joel Owens]

Experience says that if you have a great PM manager they are hard to find.

Don't get sucked in to squeezing a nickel here to lose dollars by getting a sh&tty PM.

10% on a 4 unit is normal, Getting 8% is not common on a 4 unit. Now it also depends on the rents we are talking about. A quad in a low income area at 400 to 500 a month per door is not much money at all at 10%. Conversely a quad with rents a 1,500 a door 10% is a different ball game. The areas make a difference also. Higher end tenants tend to be more well educated, have college degrees, salaried jobs, and income and life is more stable. All that usually but not always means less of a headache for a PM. I can see a PM in a very high rent area per door with affluent tenants and a nice area taking 9 or 8%.

The ghetto I can see them taking 12%.

Have in your contract that you only pay out one turn a year per unit for first months rent. The turns after that the PM gets nothing except monthly ongoing. You want to align your interests with the PM so that the most money is made when you both are happy.