What should a property mgmt. company charge for managing small Apts. Complex?

what is going rates and fees?
In Property Management - Asked by jeff k. - Feb 26, 2010
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Answer(s)

Lou A.
Corporate Investor
Northlake, IL
Premium Subscriber

5 to 15% of gross rent

Feb 26, 2010
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ELIA S.
Owner/Investor
Indianapolis, IN

5% to 10% THAT HAS BEEN MY EXPERIENCE IN THE PAST
http://www.hoosierflippers.info

Feb 27, 2010
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Sharon W.
Owner/Investor
Portland, OR

Depends on the market... ask some other owner/investors in your area and then see if you can beat that rate. I find 10% to be about average in most markets.

Feb 27, 2010
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Kevin G. B.
Broker/Agent
Encino, CA
Premium Subscriber

The management fee is negotiable. Although, it can range from 5% to 10%. www.crnrealestate.com

Mar 6, 2010
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Chris R.
Broker/Agent
Denton, TX
Premium Subscriber

Will typically be in the 5 to 10% range. Varies from area to area / region to region - and will depend on factors as to what is expected of thet management company - what is the scope of work in regards to such as leasing, management, maintenance, accounting. There may be variables in the fees such as additional fees for maintenance, leasing, accounting and such. All should be reviewed - understood and agreed on before entering into an agreement for services. All should be discussed and negotiated. Chris Rosprim, CPM, Scott Brown Commercial, Denton, TX

Mar 6, 2010
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Dale O.
Owner/Investor
Spanaway, WA

For a small apartment complex, the income may not be high enough to pay a management company. You should look at managing the property yourself. This will automatically save you 5-15% of your gross income. Save this amount over time to invest in additional properties to build your own wealth not that of the management company. Who will care for the property better than the Owner?

Mar 30, 2010
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Mariano M.
Broker/Agent
Chicago, IL
Premium Subscriber

5% to 10% as many have already stated but its not unheard of to negotiate a flat fee which at times can be far less than the 5%. This would also depend on your management needs.

Jun 7, 2010
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Valentin G.
New York, NY

6 to 12 %.
This is the MGT Fee with Imperial Homes MGT & American Eagle NYC R.E Group.

Jun 10, 2010
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John C.
Charlotte, NC

An apartment plus 5% for 35-50 units should suffice.

Jun 10, 2010
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Rita C.
Owner/Investor
Annapolis, MD

10%

Jun 10, 2010
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P Donald W.
Owner/Investor
Alexandria, LA
Premium Subscriber

5%

Jun 10, 2010
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Steven B.
Owner/Investor
Greenwood Village, CO

Do it yourself; management companies NEVER manage a complex as efficiently as an owner who does it himself. 5-7% of gross rents is the gonig rate locally

Jun 10, 2010
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Bill P.
Lender/Mortgage Broker
Reno, NV

Most times we've seen fees in the 7-10% range, but if the property is smaller than 25 units it wouldn't pencil to hire a management company. If you owned multiple properties and could negotiate a lower fee for all of them it would probably make sense. For smaller properties, handling the property management duties yourself is usually the least costly alternative. You still have the flexibility to hire specialists for things you don't know how to do (plumbing or electrical repairs, for example).

Jun 10, 2010
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Robert R.
Owner/Investor
Louisville, CO

Any company charging 15% like one of responses suggested is ripping you off. It does depend on the size of the property though and you should be able to negotiate 5 to 8% for medium properties and around 10% for smaller properties.

Jun 10, 2010
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Jeff Y.
Owner/Investor
Lakewood, CO

Should they charge lease fees and or make money on maintenance on top of the 5-10%?

Jun 10, 2010
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Michael H.
Broker/Agent
Cordova, TN

4 to 6% of gross rent & factor in the property's condition-You do not want to manage yourself (on-call 24/7).

Jun 10, 2010
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Wesley K. F.
Broker/Agent
Devon, PA
Premium Subscriber

8-12%

Jun 10, 2010
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Mark & Paul B.
Broker/Agent
Pocatello, ID
Premium Subscriber

This depends on your area. In California, where 1 bedroom units can rent for $1500+/month, the fee may be different than in Idaho where the same apartment might only pull $400-$500/month. The work load is similar as there is still only 1 tenant and 1 unit to take care of, the fee should be similar right? It's not, but where in California you might see them be happy to manage for 7% (about $105/month to manage that unit) in Idaho, even at 10%, the most they make is $50/month. Half the wage for either the same or more work (as lower income tenants can be more work, due to inconsistency of payments). One of the respondents said it was dependent on the market you're looking at and that is the right answer. You should only compare management companies in the area for rates and fees. Another member said to just manage it yourself, I think this is unwise. If it's going to be an investment (especially if you plan to hold long term), then treat it as one and keep involved only to the point that you make sure it's performing to expectation. Otherwise, back off and let the manager do his job. If you really think all the time you spend on your property each month is worth the management fee you'll pay, then by all means, manage it yourself. For most though, management is a cheap price to pay for the stress relief and many times the savings as they tend to get better deals on maintenance via economies of scale. If you happen to be looking for management or brokerage services in SE Idaho- go to http://axiompd.com

Jun 10, 2010
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rebecca b.
Property/Asset Manager
Fort Washington, MD

10% is what we pay on all of our rentals.

Jun 10, 2010
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John P. Simon W.
Property/Asset Manager
West Covina, CA

Anywhere from 5% - 8%. Depends on the property income as well as the scope of work.

Jun 10, 2010
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Shirley L.
Broker/Agent
Odessa, TX

In Odessa, Texas we manage small apartment complexes (under 50 units) for 8% of gross collected rents and $25.00 per new lease. In my 25 years of management in Texas I have found that fees are negotiable and depend on how many total units a single owner brings for management, what type of property, and the total scope of services.
Shirley Lee, Broker, Regional Manager
TLC Property Management LLc

Jun 10, 2010
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Doyle D.
Owner/Investor
Thornton, CO

Several individuals are correct in stating that "as the owner no one will do it as well as you" [my paraphrase]. However, keep in mind that this takes a great deal of time. I managed my own properties in Alaska and will NEVER do it again. Time is the only commodity that we can NEVER get more of. Thus consider what your goals are. If you want to grow in investing then definitely get a manager and then consider a Virtual Assistant to handle many of the other daily items. Make the best use of your time by focusing on looking for more deals.

Jun 10, 2010
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Michael K.
Property/Asset Manager
Hampton, VA

10% seems to be the average for most companies. You will have to consider the rent amount and expense for the property.

Jun 10, 2010
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John G.
Broker/Agent
golden valley, MN

define small. plus there some apartment buildings that are not worth managing no matter how many units they have.

Jun 10, 2010
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Dale O.
Owner/Investor
Spanaway, WA

For a small apartment complex, it is not cost effective to pay a management company to manage it. Manage the property yourself to avoid additional "repair charges" for repairs that never occur. You will care for the property better. If you do not think so drive by the cleanest looking small apartment complex and see who the manager is - usually a mom and pop operation. You can always tell the professionally mismanaged properties by their run down condition, potholes in the parking lot, trash and weeds everywhere, and usually drugs and prostitution going on. Use your money to invest in more properties instead of flushing it down the property mismanagement toilets!

Jun 10, 2010
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Michael B. M.
Broker/Agent
Tarzana, CA
Premium Subscriber

Jeff:
We have several small apartment buildings in the Los Angeles area and do something a little different with each Bldg. First we do the management in-house, that is paying the bills, bookkeeping, etc. 2nd we have family members doing the off-site management duties and 3rd for the buildings that legally require an on-site manager we try to hire one of the existing tenants and workout their pay with rent and a monthly paycheck. The on-site managers income will also depend on how much work you want them to do. I like that manager to be the one who answers all the calls so the owner doesn't get involved and is insulated from the tenants. On two of our 9 unit buildings we use our on-site manager from another nearby 20-unit building we have and pay them $300/month extra per building to oversee any and all issues that come up while some of the other family members do the repair work, etc.
So you can see much of the management expense depends on how you want to run your complex. For some landlords it may workout great to hire a family member to provide them some income. Other landlords may not want to deal with any of the management issues so they will hire a full service management company and pay the 5%+ rate.
Finally, whichever way you decide to operate the asset it will cost you money and it always seems to be more costly than you expected! If you operate the building at 32-35% you're in the ballpark, while 40% is high.
I hope this was helpful.
Michael B. Marechal, CCIM
Nextage United Realty
Owner/Broker

Jun 10, 2010
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William W.
Broker/Agent
Campbell, CA
Premium Subscriber

We charge the 5% -10% range, with no markup for leases or repair expenses. We are operating in the Silicon Valley area were rents are pretty high. We base our fees on the work load and how many expenses (taxes, loans, utitlities, etc) we have to pay. Also what area is it in, some gang related or college areas are tougher, where affluent professional have higher rents and are more reasonable to deal with.
It kind of follows cap rates. Tougher to manage areas have higher cap rates, and we will charge higher mgmt fees. Where professioinal area are easier to manage put pay higher rents in nicer areas have lower cap rates, and we can get by with less mgtmt fees.

Jun 10, 2010
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Virgil Z.
Researcher
Oviedo, FL

Here in Florida the management companies are very greedy. For an owner of a a few units the manager gets on half of the first months rent and ten percent of monthl rental thereafter and an additional one hundred and Fifty dollars (150.00) for each lease renewal. This even though the lease has a recurrent lease covenant in it. If no notice within 30 days of the end of lease it will automaticall renew for another period. In addition the owner may increase the monthly rent rate. This is from V Zoller Orlando FL

Jun 11, 2010
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Virgil Z.
Researcher
Oviedo, FL

Here in Florida the management companies are very greedy. For an owner of a a few units the manager gets on half of the first months rent and ten percent of monthl rental thereafter and an additional one hundred and Fifty dollars (150.00) for each lease renewal. This even though the lease has a recurrent lease covenant in it. If no notice within 30 days of the end of lease it will automaticall renew for another period. In addition the owner may increase the monthly rent rate. This is from V Zoller Orlando FL

Jun 11, 2010
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Endre B.
Broker/Agent
Beverly Hills, CA

There seems to be a common theme around 10%. Here in the greater Los Angeles area it is around 10% as well.

Jun 11, 2010
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