Property Management Compensation

[John Smith]

The Ohio market severely lacks good property managers which I think has a lot to do with the traditional terms of property management. 10% of an 800 rental is only 80 bucks a month. Do you guys think that's enough to incentivize someone to do a good job?

I have several homes I would like to do this to but here is the situation for the first subject property.

Value: 70 k no work needed and no loans

Rent: Vacant now rents for $850

Tax: 50 per month

Insurance: 55 per month

Maintenance/Repairs: 150 per month

Utilities: All paid by tenant

Net Cash flow: 595

I am moving to a new area and am interested in training a new investor to be my property manager in the area I'm moving from. However, I think 85 bucks per month isn't a reasonable fee to make sure they do a good job and also isn't performance driven.

What about an arrangement like this:

Property Manager will lease, oversee repairs, collect rent, file evictions in exchange for 25% of the net cash flow. I.E. they get paid the same way I do and only when the property makes money. 

Has anyone ever experimented with other property management payment arrangements? Our area also has properties that rent for 500 bucks a month so 50 bucks to manage tenants in the most problem areas? Not worth it to me. I understand the rent up fee but still a lot of hassle for the money. Agree?

[Amanda Roderick]

In Ohio you have to have a broker's license in order to run a property management company that manages other people's properties. And allegedly the Division of Real Estate is cracking down on unlicensed companies. Just FYI ...