Greetings to all! I just purchased 2 duplexes in the area of Albany, NY. I met a lawyer during the time of closing who’s also managing properties in the area. In fact he’s the seller’s lawyer and he owns some properties. He told me that the management fee is 10% which I understand is the standard. However, he mentioned that 50% of the rent will be charged for new tenants. Meaning each new tenants that he rents the apartment to, he will charge me 50% of the rent for the first month. Is this a standard? Or is it too much. I like him due to the fact that he’s a RE lawyer and he knows the area well. Any advice on this one? Thanks to all!
Operating rentals is all about cash flow. What will hiring a manager at 10% of gross rent + 50% of first month’s rent do to your cash flow??? What happens when maintenance is needed? If you won’t be making a profit…
Mike
I will still break even for the first month. And the succeding months, cash flow is still good.
I guess, I just wanted to know if this is the standard with management fees?
It’s not uncommon to charge 1/2 of the first month’s rent but you can do better and find a better deal.
sounds like very standard terms; could be better however
Actully, in moderate rental areas around CT a FULL month’s rent is standard compensation.
I would get creative and see if you can drop it 10% for each month the place is vacant. Also, see what he does for advertising. That may where some of his 50% is going.
This is the price you pay for letting someone else do your managment. Some can afford it others can’t. In my experience the folks that let others handle their rentals are either out of towners or old timers with little or no mortgages who can afford it.
New comers with full value mortgages can’t always afford the luxury.
Now, does he get 10% of collected rent? What if a place is vacant? Does he get paid that month?
I negotiated that if I find a tenant for the unit, I will not pay the 50%. However, while we’re preparing the property for tenants, there are 2 prospective tenants that are eager to rent the property because of the location. I already knew from the beginning that the area is in high demand. So, I guess I’m gonna have to pay him 50% for finding the 2 prospective tenants in case they rent.