Cash Flow After PM fees

[Taylor D. Jenkins]

Hey y'all, I'm looking to buy my first rental property and have been analyzing deals for a few months now. I've mostly been finding deals through the MLS. Initially, i'd found properties that seemed to cash flow after accounting for vacancies, repairs/maintenance, cap ex, and 10% PM fees (I want to utilize a property management company). However, now that i've actually spoken with and researched PM companies, I find that PM fees are closer to 15-17% when accounting for annual/biannual inspections, lease renewal fees, and placement fees and this really eats into the cash flow on the majority of deals. I know that inspections are optional and also that some PM companies don't charge renewal fees, but outside of finding other companies who don't and/or just finding better deals, have y'all run into issue as well? Do y'all account for these other fees when analyzing deals? Seems like a lot of investors just budget 10% for PM.

[Calvin Ozanick]

I would like to point out that not all PM companies charge those extra fees. My company does not charge anything outside of our base management fee. I would highly recommend shopping around for the right company. Also, you should be looking at PM as a partnership and not an expense. Many investors need to begin searching for the right partner who is going to help them grow. A good PM should never feel like an expense.