How much for management?


#1

When I looked after a stable of Single Family Homes, which when renovated and leased required a little of my time, I charged myself a $ 100 per home per month for my efforts of management. In the process of assessing the purchase price of a small park, say 20 to 40 spaces, what would be a reasonable allocation for my management?

Thank you ,

Bernd Hanak

P.S. Have a merry Christmas and a prosperous New Year.


#2

Bernd

I always use the standard bank analysis management fee of 5%. I will send you a bank anaysis break down.

Rick


#3

I would use a slightly higher figure than Rick - about 8%, to account for payroll tax and leave open the possibility of outsourcing some duties to an employee or another company.

On the properties I own, I pay my “property services” LLC (holds no real estate) a modest but reasonable sum for management and then take that as W2 income for myself and employees. Additional cash flow from the properties is taken as distributions, and is taxed at my regular rate, with no self employment or payroll tax owed.

I know you didn’t ask about tax issues, but it makes sense to me to try to come as close to real-world numbers as I can when I’m doing my analysis.

Lin


#4

Here is my breakdown

Management Fee 5% for me and a per site per year fee of

Maintenance $120.00

Salaries $75.00

Reserves $50.00

This may not be enough in small parks


#5

Thank you, Rick and Lin, for your positive response. To you, Rick, an especial thank you for your trust. Hope you both have a Merry Christmas and a prosperous New Year.

Thank you,

Bernd.