Profit Sharing Bonus for Property Mangement Staff

[David Oh]

Hi All, Not sure I'm posting in the right place but it says this is the Rental Property Management Forum, but it's about the business end.

I'm looking for some guidance from other PMs who have created a profit sharing bonus program with their staff. We only manage our own portfolio right now, so the bottom line is close to my heart. I want them thinking like owners. I'd like something that's based on stability (retention) and income. They obviously cannot control some costs, but they do have input on things like maintenance and repairs and some other things. I'd also like for them to be aware of costs like insurance and taxes, so that they have a better understanding, but I'm not sure that's really that important. I'm not looking to reinvent the wheel. I'd really prefer to just adopt something that another PM has already used and found success with, or use it at least as a framework that we adapt from.

Appreciate any feedback that you think might be helpful.

[Adam Bartomeo]

When offering incentive such as bonuses you must question the effects of this type of motivation. If you offer a bonus based on profitability will deferred maintenance increase because they want a bonus? If you offer incentives to fill units will they fill the units with subpar tenants? What checks and balances would you need to put in place to avoid this.

I am a firm believer that you should tie any bonus to a metric that the company is trying to achieve. Currently, we are in our growing, and we tie the bonus to that. We have goals for growth and based on those goals there are bonuses. We don't want to bring on every owner or every property unless they fit within our target market, so, I do the far majority of the sales - this is our check and balance.