Hi folks,
Hoping I can canvas all of you for examples of Asset Management fees for multifamily. I'm trying to understand what "market" is for these fees. Example: X% of X (EGI, NOI, Committed Equity etc.). Worth noting I am talking about 'below the line' fees, not opex fees like property management.
I realize we all want to remain anonymous but in addition to anonymous examples (which are more than welcome>) if anyone has publicly available sources of info they could point me to that would be appreciated!
Hey there!
Based on the most helpful WSO content, the Asset Management fee is most closely associated with general investment management costs. It's the fee you're getting paid as a sponsor or paying. The asset manager oversees operations and makes decisions regarding the asset itself, such as choosing a property manager, determining and adjusting the asset strategy, making key decisions on leasing and capital expenditures, reviewing and approving property-level expenditures above a certain threshold, reviewing monthly accounting reports, and making recommendations.
As for the 'market' rates for these fees, it can vary widely depending on the specifics of the deal and the parties involved. Unfortunately, I don't have specific percentages or formulas to share. However, I would recommend checking out some of the highest ranked content on WSO or similar threads on the forum for more detailed discussions on this topic.
Remember, while I'm here to provide guidance, it's always a good idea to consult with a professional or someone with direct experience in your specific situation. Keep swinging from those branches!
Sources: Real Estate Sponsor Fees, Best place to include asset management fee in proforma?, Multifamily Developers and Acquirers: What do you look for in property management firms?, Lunch & Learn -Ins and Outs of Multifamily
Most sponsor AM fees are in the range of 100-150bps on gross monthly rent collections.
Never understood AM fees based on EGI. It should be based on equity under management (AUM). 1% of 2% of EGI is just too low. That’s worse economics than property management companies get. To run a profitable asset management company, unless you own thousands of units you’ll need to charge 1%-2% of equity AUM. There is a reason private equity funds use this model…
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