On-site property management costs

[Max B.]

We're in the process of purchasing a larger apartment building with 120 units set on a single property with about 11 separate buildings. The current owner has a few on-site people running the operation who he gives free rent and a small salary. We're unhappy with their current level of service to the tenants since work-orders don't get filled and the common areas aren't in great shape. We don't want to replace the only people who are familiar with the property, and assume the low performance is due to being understaffed.

With this being said, we obviously want to increase the quality of service, but are unsure of how to price this out. We have a property management company who manages our other properties and will be involved with this deal as well.

Any input on what we should pay our property management company to oversee the operation, costs to bring on another onsite person, or other ideas would be greatly appreciated.

Thanks in advance!

[Daniel Turkin]

Max,

Typically in a property this size management fees will be around 3%-4% depending on how much work needs to put in by the management company. Sounds like you need some level of overhaul on the staffing.

Don't be afraid of fresh perspectives on the property to improve the asset. Complacency is a killer.

Daniel