i should probably know this but what exactly are the property management firms responsibilities vs the property's employees? lets say that i have a property that is paying a property mgmt firm their 3% but on the op statement i the owner am also paying the payroll and benefits for the property level employees. do the property mgmt firms really perform asset mgmt duties?
i guess what im asking is why would an owner pay both the property level employees who do most if not all of the work and also a property manager? what are you paying the property management firm if you already are paying the property level employees?
Not sure what you mean by property level employee? Like janitorial, maintenance/engineering staff? Property management bids, hires and contracts for the property staff. Dependent on size, the building staff and property management staff are allocated to the property as well. The management fee on top of that (3%) covers the PM firm's overhead and profit. If there was no property manager the owner would have to deal directly with the property level employees.
You pay the management firm to deal with the headache of collecting rents, dealing with tenant complaints, receiving/fixing/closing out work tickets, etc. Also, management firms can buy well when it comes to supplies, contractor pricing, etc. It's no different than paying for brooms or mops or replacement cabinetry or whatever; the property manager might front that but they are billing you on the back to cover that cost.
If you have a small property it's feasible and probably smart to do this yourself. If you have hundreds of units then you'll spend all your time just responding to tenant requests. Property management is a shitty business and if you are smart and well capitalized then it's a waste of time that could be spent hunting down, entitling, and financing other deals to spend most of your day dealing with the day-to-day management side.
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