Property management, How much do they REALLY cost?

[Joel Senko]

I’ve been looking into property management firms and can’t seem to find anyone under a flat rate of 20-30% of rent income. Do any of you guys have property managers and if so who? And how much do they charge? Listening to podcasts and videos everyone claims to have a property manager of 10% or less lots of the time but that seems like fake news now that I look into it. I know being in Canada the rules are obviously different but if you have any advice or info let me know :)

[Michael Tempel]

Overall you need to look at your structure and goals.  I am not advertising our services and simply focusing on why owners use management vs. self management.  

Using an outside service allows you to grow quickly and not be stuck in the business.     There are a million things you can do wrong or poorly in the business.  

I get frustrated in posting since any comment related to the business gets me in trouble, but is such a paramount topic that owners need to understand.  

To simplify here are key factors paid fee management will address.   I have met The founders of BP etc. so I hope this is okay to post....users/members need to understand this.  

We look for owner managed portfolios for purchase....so look at this as a checklist of how to be a target and liquidated at a discount.

1.  Get the correct rental market rate for your area using real data and years of experience.   Owners either under or over price from my observations.   Creates vacancy issues or full, but under performing property.    It is not uncommon to buy a building with 750 rents thatvreally  should be 1250....30-180% returns are realistic in buying underperforming assets.   It is a headache to turn around, butva hige service PMs provide to make it happen.

2.  Process and handle all payments timely and paperwork, this sounds easy, but is complex.   Most self managed owners have past due rent and no systems in place to manage the issues or simply charge very low rents to avoid issues.   

3.  Maintenance - do you want calls at 3AM?   I had over 35 heat calls this evening in MN due to record breaking temps     We have staff and contractors ready to go, this is a huge benefit to outside management . I get calls constantly asking for outside maintenance assistance....NO...this is a huge investment for us and not a benifit to an owner that isn’t using us.

4. Marketing - self managed marketing is typically low budget crap, I literally look for and try to buy properties on Costar etc. based on what I find (focus is 40-200 units).   Your marketing will/should have great photos, 3D scans, floorplans and be featured on a website.  If not???  You might be a target :-)    

5. Long term planning/budgets/projections    

This applies mainly to larger assets, but are you doing this?    We have a team of 3 accounting firms and in house accountants.   Real estate is very intensive on the tax and 1031 opertinity side...

As an owner this planning is where you make real money and inpact on your assets. 

I could add 50 more points, I am sure I will get removed either way since it will be seen as advertising vs advise - my opinion is it is not helpful to subscribers since this is stuff owners need to know...not just buying techniques with zero planning/recourse on fee management side as self managers.

If I get bumped I will contact the owners of BP directly and ask for a new forum option that allows these discussions outside of marketplace since all members need to learn about this area as well.  

It is needed and very lacking currently.