Typical property management expenses for large multi-tenant properties that are managed professionally include:
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Management Fee This is the fee charged by the property management company handling the day-to-day operations of the property. Note that this fee does not include actual costs, such as staff salaries and legal fees. The management fee is typically quoted as a percentage of gross potential rent (GPR).
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Management Administrative Payroll Costs These are the costs for the payroll of management staff, which includes usually include front desk staff, accountants, etc.
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Legal Fees This is the annual expense of legal assistance with contracts, lease agreements, and other legal matters that may arise in relation to the property's operations.
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Accounting/Audit Fees These are the annual expenses associated with ongoing accounting assistance and any audit requirements.
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Advertising/Marketing An adequate marketing budget is required in order to ensure maximum possible occupancy of the property and avoid a high percentage of vacant units. In assessing the advertising/marketing budget, the lease expiration schedule and potential renewals need to be examined in order to determine whether a smaller or greater amount of units will be needed to be marketed. Furthermore the prevailing market conditions (soft or tihgt market) should be appropriately factored in such calculations.
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Other Administrative Expenses These are routine costs that include telephone charges, cost of office supplies and other administrative costs that need to be also taken into account in calculating property management expenses.
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Any Other Management Expenses These include costs that are not covered by the previous categories.
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Return from Property Management Expenses to Property Investment Analysis
