Property Manager + Maintenance Work: What should I pay them?

Rehabbing, Fix and Flip, Rental Properties
1

My property manager has been doing most of my handy-man service as well. He does everything from rent collections, showing the houses, fixing the toilet, doing the landscape, etc. The only thing he does not do is the Heavy plumbing, electrical, and certain A/C work. So, these are like big installs that requires a license, then he doesn’t do, everything else, he fixes.

My question is: What should I be paying him for this service??

A. 10% of total collected rent
B. 15% of total collected rent
C. 20% of total collected rent

I have 19 SFHs, and 8 unit complex. He does not live in any of them.
The houses and complex are in a mix of low, working, and middle class neighborhoods. So, the houses are reflects the neighborhoods.

BTW, I pay for all the materials, so this is LABOR only.

Thanks!

Exo

2

I think you have to look at your cashflow and decide from there. Is the cost of a PM eating your positive cashflow? How much profit do you want to make on each unit? It sounds like he takes away the day to day headaches. I don’t think you want him to be doing the type of work on your properties that require a licence/permit. It could void your insurance policy if something happens. Did you sign a contract with him? It should spell out the additional fees in addition to the the typical 10% of gross rents. Also, if you signed a contract with him, you have to honor it. If you posted more info on your cashflow situation and your PM agrement, you’ll get more detailed responses.

3

I wonder why you would be paying him a percentage of rent?!

Why not just ask him what sort of hourly wage he is expecting? Your local newspaper ads should show what hourly wages are in your area. If he is a great worker, pay him better than those ads.

Also, is he contract labor or an employee? What is your accountant’s advice on how to treat this worker?

4

Thanks for the responses. He is a contractor (corp-to-corp), this is the advice of my accountant. The reason for % is that he does the property management also, which is about 8-10% on average. I figure a % would be easier than breaking down hourly each month. Currently, there is no contract yet. But I’m trying to get one in place soon.

Thanks!