Hiring and Managing a Multifamily On-site Property Manager

An on-site property manager is responsible for the day-to-day operations of your multifamily property.

But it doesn’t stop there.

Because your manager lives on the premises he/she becomes the “face” of your property. Your manager interacts with current residents; prospective residents; service providers; the fire department and city building inspectors; your lender’s inspectors; and all other visitors to your property. Your manager is your ambassador to the outside world.

An engaging and competent on-site property manager can:

• Act as your diplomat and public relations person.
• Have a dramatic and positive influence on community relations.
• Attract the type of resident you want to see in your property.
• Be your 24/7 eyes and ears.
• Increase leasing activity and,
• Give you peace of mind.

Here are some of the things you’ll want to consider when hiring an on-site manager:

On-site Property Manager Compensation

You, as the owner of your property, determine the salary, credits, fees and bonuses paid. These amounts should be negotiated at the beginning of your relationship with your on-site manager.

Many on-site property managers receive free rent. And nothing more. Others receive a base salary in addition to a rent credit.

On-site Property Manager Monthly Salary or Rent Credit

Base salary rates will vary based on: condition of property; building style, age, and class; location; competition; supply and demand; and overall economy. Note that compensation packages will vary from market to market.

• Monthly salary: The monthly salary is a base pay commensurate with the duties required, the size of the property and the local market.
• Rent Credit: Rather than pay your on-site manager a salary, their compensation comes in the form of free rent, or a credit for a portion of the normal monthly rent.

Note: Depending on the local demand for good on-site managers and the duties required of your manager it may be necessary to offer a salary in addition to a rent credit.

Multifamily Leasing Bonuses

In addition to base salaries and rent credits, multifamily on-site property managers frequently receive leasing bonuses. It’s a great idea to give your resident manager the incentive to keep your property at full occupancy.

• New leases: Your on-site property manager receives a percentage of the monthly unit rent for all new leases signed as a result of their direct marketing efforts. For example if the unit rents for a monthly amount of $1,000 your manager will receive 30% of the monthly rental amount, or $300. This is a one-time fee.
• Lease renewals: Your on-site manager receives a set dollar amount per lease renewal. For example you might pay $125 for each lease renewal if the lease term is 12-months or greater. This is a one-time fee.
• Performance bonuses: Performance bonuses are especially useful if you own or have acquired a property with high vacancies. Your manager will receive an additional bonus if they meet a certain volume of new leases. For example, if your manager leases four or more units in a single month, you will pay the normal 30% of the monthly rental amount plus an additional 20% leasing bonus. Using the example above if a unit is rented for $1,000 you will pay a one-time bonus of 30% ($300) plus a bonus of 20% ($200) for each unit leased.

Tip: You can also stipulate that your manger rent to new or renewing tenants in “accordance with the owner’s tenant screening guidelines.” If a tenant fails to meet those guidelines your manager will forfeit all leasing bonus.

Other On-site Property Management Fees (If Qualified)

In addition to the general duties described in your management agreement your on-site property manager may qualify for additional compensation.

Some of those duties might include:

• Market research: Often an actively engaged on-site manager knows local leasing trends better than anybody else. Duties could include market rent research (what are other similar units commanding in rental amounts and can your rents be raised?); market amenities (what does the competition offer and can you do the same at your property?); or rental unit upgrades (what is your competition offering in order to attract your target renter?).
• Community relations: The duties could include hosting an annual resident barbeque or semi-annual resident get together (such as an ice cream social); publishing a bi-monthly apartment community newsletter; or designing a community flyer.
• Creative marketing: Your on-site manager can find new, previously overlooked avenues for reaching your target rental market.
• Property maintenance: If your on-site manager has handyman or construction skills why not pay him/her to handle the small maintenance items at a much lower rate than your traditional third-party property management company charges?

All of the duties above can be paid at an hourly salary. Again the amount you pay your on-site manager is up to you as the owner. You may be able to have your on-site manager handle the duties that a third-party property management company would otherwise provide—at a significantly lower hourly amount.

Note: Always remember that it will be someone’s responsibility to manage the on-site manager. A system for reporting and frequent performance reviews must be established in advance. As your on-site manager’s duties and responsibilities increase, so does the need for the oversight of your manager’s performance.

Sample Multifamily On-Site Property Manager Duties

Here are some of the duties you can assign to your on-site property manager. Be sure to include your list of responsibilities in your On-site Property Manager Agreement (a sample can be downloaded below).

• Answer calls, meet and greet residents, prospective residents and property inspectors.
• General office administration.
• Keep accurate up-to-date records of income and expenses from property operations.
• Submit timely expense reports.
• Inspect vacant units for make ready status.
• Synchronize the time clocks, turning backwards and forward as necessary. (This includes outdoor and indoor security lighting and sprinkler systems.)
• Check and maintain boiler water levels and oil pump monthly.
• Clean the laundry room, mail room and entryway a minimum of twice per week.
• Clean the property exterior and common grounds which includes: snow shoveling, plant watering and courtyard care.
• Pick up trash from the grounds regularly.
• Water, maintain and mow the lawns regularly during the season.
• Clean the common areas every three days or more often as needed or conditions warrant.
• Clean the common area windows and hall carpets as needed.
• Coordinate tenant service and maintenance requests.
• Communicate with residents in a responsive, positive and direct manner.
• Arrange for carpet layers, plumbers, electricians, appliance deliveries, etc. to get into the apartment units or building to repair items as well as meet with pest control people to spray the building.
• Show apartment units to prospective residents. Accept rental applications and non-refundable application fees and forward to owner or third-party management company.
• Travel to and be a liaison between property management office and community residents.
• Handle all unit make readies: This includes wall prep, paint and paint touch up, all cleaning and hauling including stoves and refrigerators, carpet shampooing if necessary, wall plate replacement, light carpentry, window repair, window coverings, small repairs, etc.
• The on-site manager with the exception of the application fee collects no money, checks, cash, money orders or any other form of payment. (It’s up to you whether you allow your manager to accept payments from your residents. As a rule of thumb, I, or my third-party managers collect all funds at my properties.)

You’ll find this list of duties in the linked management agreement below.

Sample Multifamily On-Site Property Manager Agreement

Final note: Not all properties will be able to financially support an on-site property manager. However there are some alternatives you can consider. Hiring a qualified and competent on-site manager might be a viable substitute to engaging the services of a full-blown third-party management company.

For example it might not be necessary to hire a third-party manager if you have a competent on-site manager and you self-manage by personally taking on the duties a third-party manager might otherwise handle such as: property bookkeeping; financial reporting; and major capital repairs and improvements. Independent contractors can also handle these services.

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Theresa Bradley-Banta

Theresa Bradley-Banta writes about investing in real estate while avoiding the pitfalls that plague many new investors. She is a 2017 PropTech Top 100 Influencer and winner of 14 American and International real estate awards for her website and real estate investing programs. As featured on: The Equifax Finance Blog, AOL’s Daily Finance, Scotsman Guide, The Best Real Estate Investing Advice Ever Show, Stevie Awards Blog, Rental Housing Journal, and Investors Beat among others.

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