Property Management Business Development

[Marc Murano]

Hi all,

We currently do our own property management for all holdings in-house. We have gotten passed the discovery stage and now would like to expand on that side of the business.

How have you experienced companies (or yourself) structuring their salary/commission split for a new property manager that is solely seeking new clients/homeowners?

i.e. Salary only, salary base with commission, commission split, at what rate do you split, % of gross rent, % of brokerage management fee, ... etc?

Thanks,
Marc

[Bill Gulley]

Welcome to BP, Marc!

Hiring an additional employee is a cost benefit analysis. A salary is pretty much a return on investment, time, training, costs and awges as well as taxes to expected performance. You take the overhead and base it on performance, which will depend on your market.

Commissions simply reduce some expenses, part or all of the salary, but you still have other additional expenses and economic costs. Your return weighs more heavily on the quality of the employee/agent to perform. While the quality of employees varies and is influenced by motivation, you'll get more bang for your buck in RE, IMO, on commissions. Again, the market will determine the possibilities.

I have seen PMs using all three, salary, straight commission and both a base saalary plus commission, in fact, all three in the smae company, with more of the managerial types having a salary plus overrides on those supervised and commissions if they do any deal.

I'd say first you have to define a job description and from that, together with market influences you can get a better idea as to a fair compensation arrangement.

If your area has 2000+ rentals the performance expected of the bush beater will be greater than if there are only 500 rental units.

For anyone to stay with you, they need to make money and your market will ultimately define those opportunities. If you really require a more clarical postion, with an occasional sale, a salary plus would be more appopriate. Instead of saying commission, you might go with a flat bonus. This is probably the most equitable arrangement for office types that pick up an occassional client.

If your market supports a living based soley on commissions than that will most likely be your best approach. IMO :)