What do commercial real estate property managers usually charge and what services do they perform?
Looking to buy an industrial/flex space in California and curious about the PM costs.
[{"id": "e90fhkp", "text": "Typically 1-10%. It\u2019s such a large range, but it all depends on the property and what they do and their quality. I have a property right now for sale and I thought it was crazy they were paying 9% for management fees.", "replies": [], "depth": 1}, {"id": "e90lnhc", "text": "We're paying 4% on a large warehouse. I think it's good value for getting us started, when there is more work to do, but once fully leased I'm not sure we would be willing/needing to pay as much. ", "replies": [], "depth": 1}, {"id": "e90qcl4", "text": "I work for a small management co (as well as manage my own) and we get 10% of gross income. That includes deposits, reimbursement for repairs due to tenants negligence, or insurance claims. We do 100% of management starting with interviewing perspective tenants, collecting rents, meeting and directing contractors, dispersing funds for repairs, with a set pre approval amount usually under $500, anything over gets owners approval, and monthly reports.  Sometimes these reports are as simple as all leases are current with no expenses to which leases are ending and how tenant negotiations are fairing, and laundry list of updates or repairs that need to be done to empty units. We rarely call the owner except to get approval for the larger immediate repairs or if police get called to a unit. \n\nCouple of reasons to go with a management co. One, they should get you good long term tenants that will initially pay close to top of the market, if not above. Two, you don\u2019t have time to sit in your car for an hour while waiting on the guy that is stuck in cross town traffic and when he shows decides he doesn\u2019t like the bay doors configuration.  \n\nI like to think I provide a valuable service.  I also think that if some of these owners had just a couple more hours a week they could do much of the work themselves. ", "replies": [{"id": "e917xhj", "text": "Yes, we could do most of the work ourselves, but a good property manager like you is worth their weight in gold.\n\n", "replies": [], "depth": 2}], "depth": 1}, {"id": "e90sd9z", "text": "Depending on your cap rates, the property management company makes as much as the property owner without any cash outlays. If you have a full set of contractors on speed dial or are not too far away from it, it is always cheaper to self manage, giving good tenants a 5% discount on rents to keep them and paying the handyman his full rate whenever he's called out to a spot.", "replies": [{"id": "e94rxcb", "text": "What do cap rates have to do with the property management expense?", "replies": [], "depth": 2}], "depth": 1}, {"id": "e90z0kr", "text": "I appraise all types of property from all over the country, and I typically see 3-5% depending on how big the deal is. If I see someone charging more than that, it's typically a management company owned by the same entity as the real estate.", "replies": [], "depth": 1}, {"id": "e9e3zhd", "text": "Depends where in California.  If it's remote and the manager/mgt company has to travel hours to get there, 8-10% is about right.  If it's infill in LA, 4-6%.  Competition drives the prices down - so does how much participation you play.  Be careful though, I am a broker in LA and all my clients complain about the same things, it's not the annual percentage of income, it's the fact that most Mgt company's are lazy and they gouge.  They charge you $200 to fix a leaky faucet, while they are paying their plumber on staff ($20/hour).  Most management contracts include a floor amount of money to spend per occurrence which they don't have to contact you to spend the money ($500 usually).  Plus since all Property Managers must be brokers, it's a direct call you will take to listen to why you should sell.  ", "replies": [], "depth": 1}]