I know the most common AM fee in CRE is between 1% and 2% on Revenue.
However, If I’m looking at smaller properties for example that has $500k NOI at 6% with a value of $8.3M…
Is it ok to do a 1% of $8.3M instead of 1% of Rev $800K?
Like is that common practice on smaller properties? I’m trying to see how I can pay myself a small salary with the AM fee…
Any other options or examples would be helpful..
Are you paying a property management fee as well and this is a 1% override?
If it is an override, then it will be hard to find investors willing to pay both property management and asset management fees much higher than a total of 5%.
If you arent charging a management fee, then going up to 3 or 4% of Revenue isn't horrible.
Paying yourself 80k as an AM fee on one 8mm deal would be very unusual
It would be an override.
Management fees at about 5%.
I’m just trying to figure out how to do this full time and still live.
Appreciate the feedback
You might be able to charge an investment management fee, but it would usually be on invested capital. So in your example where you have an 8mm property, if you had 6mm in debt, you could charge the 1% on the 2mm of equity.
Can you property manage it yourself so you can pay yourself the 5%?
Thats a good idea. Thank you.
I normally hire property managers/management companies and haven’t really done property management before. I’ve managed renovations and some plumbing issues.
To do the property management I would hire a property manager that’s not with a firm and make sure they know how to report, lease, and keep up with plumbing issues etc?
… I feel like there’s a lot more that goes into it? I feel like I’m missing a lot?
(I would handle renovations myself. I know how to do that)
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