Can I hire a team to run my PadSplits?
Last updated September 30, 2024
Below, please find three common models to consider as you structure your arrangements:
Description
Manager charges a either a flat fee or fixed percentage of revenue monthly (usually 8-15%)
Manager and owner split net operating income (either favoring the owner or 50/50 after an initial hurdle is cleared)
Manager pays owner a fixed monthly rent, and keeps all revenue generated by the property
Pros
Simple to explain, follows traditional fee model, most upside for owner
Best alignment of incentives between manager and owner
Simplest to set up, administer, and explain to owner. Most upside for manager.
Cons
Doesn’t align incentives between owner and manager on maintenance and utility consumption
Most complicated to explain and keep books.
Most risk for manager if things don’t go well. Leasehold improvements must usually come from manager
Great for...
Owners who are sold on the PadSplit concept
Owners who want managers to control costs
Experienced managers who really understand their profit drivers