Property Mangt Fees

[tdfloans 0]

Hi, can someone tell me what's a normal fee a prop mangt company should charge? Im thinking of a property to invest in, and the PM fees are 1months rent & 10% a month...I was told that's kinda high? They find the LO tenant (almost always before 1st months mortgage is due), negotiate the deal (based on the terms I've told them), and collect rents. Is that standard?

 

TDF

[Frank (OH) 0]

I would have to say that 10% of the monthly rent is about right on depending on your locale. I don't think one months rent should be included though. But if they are going to find a tenant for the L/O and negotiate the deal, I would say OK to that. That just leaves you to find some sellers.

This sounds to good to be true. Are you sure there aren't some other fees involved somewhere? Make sure you go through their contract with a fine tooth comb!!!

[JerseyJeff 0]

TDF, I'm a little confused.

 

In a L/O, the hard part is finding the sellers. The easy part of the process is what you are going to pay them to do.

 

They find the LO tenant

Finding a tenant yourself shouldn't be too difficult. Just market the property. Read through the Marketing forum for a gazillion ideas.

 

(almost always before 1st months mortgage is due)

Almost always huh???? And what happens if they don't?

 

negotiate the deal (based on the terms I've told them),

What is to negotiate? This is the purchase price, this is the rent, and this is the option money needed...Interested?

 

and collect rents.

Doing your due diligence should lessen the chance of this becoming an issue.

 

Using a mgmt. co. can only be used for you when setting up a SLO; not with a CA, so I'm assuming that's the route you're going.

 

Finding the tenant and negotiating the deal with them is a one-time occurrence. Assuming the one-month's rent fee covers this, you are basically paying them 10% to have a rent check mailed to them; hardly necessary. Also, what happens if the tenant stops paying, are they guaranteeing payments to you or do they just call you up and say the tenant stopped paying and then you have to deal with the problem? If this is the case, I am about to start my own prop. mgmt. co. because that is one SWEET deal...

 

Me thinks they're trying to get over on you. Provide us more information on the agreement with them and what your intentions/investing strategies are in the deal.

 

Jeff

[MichaelC 160]

TDF, that is high. And completely unnecessary, in my opinion. How many properties do you have that you need a third party to manage them for you?

As Jeff said, finding a t/b is certainly the easier part of the equation. Usually, there is no need to pay someone to do that for you.

[tdfloans 0]

Ok, let me clear up a few things. Im involved with a company that finds me the deals (property) and they have a prop mang group that gets you an LO tenant (usually before your 1st pmt), screens them (credit, police records, ect), negotiates the deal for you (based on the terms u told them). After that, they just collect the rent & forward it to the me (you could cancel that if u wanted).

 

These properties are out of states, already vacant homes ready to be bought with equity. I dont have time to manage (nor do I want to) out of state properties. Again they charge 1months rent plus 10% a month (optional). Is this still too high, based on this info? Im not dealing with a seller. I dont have to use this company, but it's convenient. What are your thoughts? Please advice.

 

TDF

[Frank (OH) 0]

TDF,

I would definitely do my due diligence on the properties first before buying. Like I said, 10% per month is the norm in this area(Toledo) for property management.

 

As for the one month payment, I wouldn't know how much it would cost to do all they say they are going to do for you. It's out of state and partially out of your control I think.

 

What terms are you giving? Option money? Cash flow? Back end profit? Length of Lease? Sounds like a 1 year lease would be too short for them to make any money.

 

I'd like to know how they are making a profit. Be careful here.

 

Just my advice.

[Craig 0]

Hi, can someone tell me what's a normal fee a prop mangt company should charge?  Im thinking of a property to invest in, and the PM fees are 1months rent & 10% a month...I was told that's kinda high?  They find the LO tenant (almost always before 1st months mortgage is due), negotiate the deal (based on the terms I've told them), and collect rents.  Is that standard? 

 

TDF

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Why not call all listed PM numbers in the phone book? Talk to the owner interview him like you would a lawyer or a Title Company. Get referrals and call them too. Ask them if they are interested and on what terms.

 

I work for a large corp and they are changing vendors and manufactures from one day to the next. Its all driven by price and servicing there contract. IF they don't deliver they don't pay.

[jtlab 0]

  Ok, let me clear up a few things.  Im involved with a company that finds me the deals (property) and they have a prop mang group that gets you an LO tenant (usually before your 1st pmt), screens them (credit, police records, ect), negotiates the deal for you (based on the terms u told them).  After that, they just collect the rent & forward it to the me (you could cancel that if u wanted). 

 

These properties are out of states, already vacant homes ready to be bought with equity.  I dont have time to manage (nor do I want to) out of state properties.  Again they charge 1months rent plus 10% a month (optional).  Is this still too high, based on this info?  Im not dealing with a seller.  I dont have to use this company, but it's convenient.  What are your thoughts?  Please advice. 

 

TDF

<{POST_SNAPBACK}>

 

Im confused.. they get the property, l/o for you and send you the money? Why dont they keep the whole deal themselves? I think I am missing something.

[tdfloans 0]

YES, they do. They put deals together for Investors like myself. They r exclusive to investors of this real estate education company. But Im not obligated to use their lender, prop mangt, ect.

 

TDF

[jtlab 0]

  YES, they do.  They put deals together for Investors like myself.  They r exclusive to investors of this real estate education company.  But Im not obligated to use their lender, prop mangt, ect. 

 

TDF

<{POST_SNAPBACK}>

 

 

So what exactly is your role in the whole deal? Upfront cash? What risk do you inherit in this transaction?

[Guest Guest]

My role is to DECIDE IF I WANT TO BUY IT, thats it!! Or wait for another one.

[tdfloans 0]

Sorry, that's my reply above, forgot to log in.

[jtlab 0]

  My role is to DECIDE IF I WANT TO BUY IT, thats it!!  Or wait for another one. 

<{POST_SNAPBACK}>

 

Oh I see, you purchase the property then they l/o it for you. I get it. Sometimes you need to see the letters is big caps before you can get the picture. At any rate looks to be a very interesting concept. Who collects on the option consideration? If they do then drop the 1 month rent definately and/or negotiate for 100% of the option consideration.