Property Management Fees

[Megan Barron]

When I am doing my calculations to see how a property may cash flow why do we only calculate the property management fee at 7-10% when in reality most property management companies charge a leasing fee of 75-100% of first months rent also?

Once I found out about the leasing fee the cash flow on the properties I have calculated out are absolutely terrible.

One property I calculated out after all general expenses I would cash flow $133/month. Then after finding out about the 100% first months rent leasing fee monthly profits plummet to $33/month. I’d make more putting my money in a CD.

So my question is why in general do we only use 7-10% for calculating monthly property management fees when in reality it is more like 16% per month?

[Kevin Wang]

Hi Megan

Besides Mgt Fees and Leasing Commission, there are -

- utilities (electric, water) and maybe the gas if your furnace is not working
- rekeying your house (done at last)
-house cleaning (done at last)
-landscape cost (mow grass)
-repairs
-vacancy

And much more.....

-Kevin