Property Management Fee - % of Net Income

[Tommy Loretz]

Hello - Wondering if any investors have experience working with a property management company that charges their fee based on a percentage of net income (after operating expenses) instead of a percentage of gross rents. If so, was it beneficial? I assume it would incentivize the PM to keep expenses down in addition to increasing the rental income as much as possible. Appreciate your input.

[Tracy Streich]

So As a Property Manager this is a no go for me.   I get the feeling you think the property manager some how has control on things such as late payments or your AC or hot water heater breaking down.   There are ways for the PM to assist the owner in keeping the cost down.   Have a reliable low cost vendor is one.   We send all AC service orders to the same company.  Because we have 600 doors we get great service and lower cost than you as a regular owner would get just calling this vendor because you found them on Google.  Why, because he knows with me there is a lot of repeat business.   In your scenario if the AC goes out and cost you $5,000 to replace and the rent is $1,000 per month I would get no management fees for 5 months until you start making money again?   Does not really make sense for the PM.