This article was posted on Tuesday, Sep 01, 2015

Q: “Do I have to hire a professional management company?”
A:  Not usually.  However, in some instances, it may be required by the lender or by a local or government housing authority such as HUD. 

Q: “Do I have to have an on-site manager?”
AIn California, any residential property (under one assessor’s parcel number) that has 16 units or more is required to have “a responsible person” reside at the property.  For buildings with 15 units or less, an on-site manager is not required.            

Q: “If I have an on-site manager, why would I need to hire a property management company?”
A: If you hire an on-site manager or any other employees to help with your property, you become an employer!  You will be subject to not only all of the Fair Housing laws and regulations, but all of the laws regarding employers and employees for both State and Federal.  Hiring a third party management company puts the management company in the employer roll, and not you. `

Q: “Can’t I simply give my manager a rent credit for their services?”
NO! Gone are the days when you could simply reduce a manager’s rent by a few hundred dollars a month in exchange for them collecting checks and cleaning up the property once or twice a week. The state of California is actively going after multifamily property owners in an effort to collect what they consider to be taxable and unclaimed income.

Q: “How much does professional property management cost?”
A:  IT DOESN’T.  Good property management does not cost, it pays!  Often times the management fee is covered in an owners increase to NOI alone.  The net result to the owners pocket is usually greater with a professional management agreement than without.  Additionally, other benefits of working with a professional company can be incalculable. Take into consideration the time dedicated to managing your units, turning vacancies, making repairs, finding tenants and fielding emergencies… and not to mention the legal issues that are bound to arise every now and again.  If you do the math, you might be shocked to learn that you quit your corporate job earning six figures annually, only to work for yourself as an investor for a few bucks an hour.

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Management companies usually charge a monthly percentage of the gross collected income (GCI).  This means that fees should only be collected for those units that are rented, and the tenants are paying their rent.  The fee ordinarily ranges between 3% and 10% of GCI.  The smaller the property the higher this percentage will be. 

For instance, a single family home would be charged closer to 10% of the monthly rent, where as a mid-sized apartment complex of 8 to 10 units would be charged about 6% to 8%.  Large complexes can be managed for 3% -5%.   Other fees, such as leasing commissions, may also be charged. Read the fine print and know how you will be charged.  Most fees are negotiable. 

Shawnee Ament has more than 22 years of experience in multifamily investing.  She has had the pleasure of working with some of the industry’s most influential investors, lenders and property owners across the U.S.  Shawnee now dedicates her time to RTI Properties, Inc. where she oversees the company’s marketing efforts and develops long term relationships with industry professionals.  Shawnee lends her expertise to apartment owners in Southern California to improve the performance of their investments.  To see how Shawnee and RTI Properties can help grow your investment, call her at 844-RTI-MGMT (toll free 844-784-6468) or email her at [email protected]