A review of "The Landlord Entrepreneur: Double Your Profits with Real Estate Property Management" by Bryan Chavis
"The Landlord Entrepreneur" is a fairly detailed book about starting a property management company. It details out many of the processes involved from what entity type to choose for your company to how to deal with a non-paying tenant. It also contains a collection of forms, contracts, and an owner's operation manual for distributing to the owner's of rental properties you are renting.
Since I am more likely to use a management company than own one (at least in the near term), I was most interested in his outlining of the fee structures for management companies:
"A well-built property management company will generate monthly income from the following sources:
*Application fees: Through the Landlord Academy's partnership with TransUnion's Smartmove, you can charge prospects an addition fee over and above the hard cost to complete the tenant screening process. For example, if the average screen of a prospect tenant costs $35, you can charge the prospect $60, making a net profit of $25.
*Leasing Fees: Typically, a management company will chare a portion of the first month's rent as a lease-up. I recommend charging 100% of the first month's rent, unless you have a great relationship with the property owner and want to reduce the fee to 50 percent of monthly rent.
*Renewal Fees: Renewal fees are applied at the end of every lease term. I recommend charging the property owner between 30-50% of the monthly lease per renewed lease.
*Late Payment Fees: When a tenant pays rent late, a late fee is assessed, which ranged between $50-100, of which the proper management company received a percentage.
*Maintenance Fees: Because a good property management company handles the majority of maintenance issues on the property, I recommend that the management company receive a percentage of the fee charges to the property owner by the contract who actually complete the maintenance work.
*Management Fees: This is typically attached to the gross operating income of the rental unit. So if the rental property is listed for $1000 a month and the management company charges 10%, the management company would receive $100 a month as a management fee.
*Transaction commissions: There will be opportunity for your services to provide income from transactions. It is a good idea to be able to capture these as they can increase income as well as provide additional properties under management. "
-Summarized from "The Landlord Entrepreneur" By Brayn Chavis (landlordacademy.com)
Biggest Takeaway: The number one thing I learned from this book is that you can use property manager's services to help you find, purchase, renovate, and rent a cashflowing property.