He was sued for negligence.I followed the case as my employees were called down for depositions.

My understanding is that expense ratio = operating expense/gross operating income, which mine is at 10%.

I was wondering how property managers take their cut, do they use the net income for the property, or they used the gross income.If A property makes $100,000 a year without deductions, do they take 10% of that, or do they take 10% of the cash flow?

They sent me a contract with the fees outlined and they are as follows:1) One time start up fee of $2992) Leasing fee of 50% of first month rent for the first tenant placed3) Leasing fee/renewal fee of $175 per lease signed or renewed 4) Management fee of 10% of gross rent collected or minimum of $75 each month.

It grossed ~$73K in 2019 with only 40% occupancy (cash flowed about $20K). 

Most rentals I see are at the 0.5% rule (mthly gross rents = 0.5% of purchase price). 

I new leases are executed they are generally estoppels signed so there are no disagreements with the tenants.If the tenants signed a lease changing from a gross lease to cam then they should have read and agree before signing.

Most of them all say the same thing on how to get gross income minus expenses including vacancy, CapEx, repairs, taxes, insurance, mortgage payments, etc.

Once you have your EIN number you can take it and your articles of incorporation and open a bank account, hire employees...etc.   

I then mention that I would be willing to pay 6.5% and tell them how much that would gross over time and compare that to the .3% a bank pays and what that would be over the same period.