Owner wants me at 8% on a 14 room boarding house. My hours say loss.

26 month average tenure on rooms at 780 is the number I'd stare at longest. That's unusually sticky for this product and two residents already told you why. If the dinners go, does tenure go with them, and how many turnovers does that cost you at 350 each plus vacancy?

Reading this from the outside, my reaction is 20 hours a month for 749 is why I've never wanted to be the person doing the managing. But arbor's point cuts the other way for you, doesn't it? If the meals hold tenure, killing them makes your job worse, not just the owner's returns.

Seven of twelve paying weekly at the door is where I'd spend my energy before the fee argument. Two visits a week is roughly 8 to 10 of your 20 hours. If half of those residents move to a payment app or a money order mailed to a box, you've cut your hours meaningfully and the fee fight gets smaller. Some of them will be cash-only for real reasons and you can't push those, but I'd bet not all seven are.

Before the structure, a question. Whose license is it? If the boarding house license or permit is issued to the operator rather than the property in your state, then bringing in a new manager can be a filing event or even a re-inspection trigger, and that's a very different September than the one you're planning. I've seen this handled as a nothing-burger in one city and as a full new application in another. Worth an email to the issuing office naming both you and the owner before either of you signs.

The meal part threw me. Is a boarding house with meals a different licensed thing than one without, in most places?

juniper, sometimes yes. The classic definition of boarding house includes meals and rooming house doesn't, and some ordinances still carry that distinction with different requirements attached. Whether serving dinner three nights a week to residents triggers any food service permitting depends on your state and county health rules, and that's a question for the health department rather than for us.

trellis, on the cook. The exposure isn't only the records. It's who she is contractually. Nine years, set schedule, owner-supplied kitchen, owner-supplied food, cash pay. If anyone ever looks at that arrangement, the classification question is not going to be a close call in the owner's favor, and I would not want my management company in the middle of it. Whether she's an employee is a determination for a professional who knows your state's tests, but I'd make cleaning that up a condition of signing rather than a project for month four.

Simplest version: tell the owner you'll manage the housing and you won't manage the kitchen. Meals stay, contracted properly, billed to him, outside your scope and outside your fee.

Your 45 an hour loaded is doing all the work in this post and nobody's questioned it, so I will. Is that your fully burdened cost including the overhead you'd carry anyway, or is it your target billing rate? If it's the second, the 8% isn't under water, it's just thin, and that's a different negotiation.

Run it the other way. 749 against 20 hours is 37 an hour of contribution. If your marginal cost to service this account is a coordinator at 22 all-in plus mileage, you're making money at 8%, just not enough to be worth the risk profile. If you're the one doing all 20 hours personally and you're turning away other work, then 45 is real and the answer is walk or reprice.

Separately, 95 per occupied room is 1,140 now and 1,330 full, so you're 12% at capacity. The owner will do that arithmetic in about four seconds. Have the answer ready that it's 12% because the product is 14 leases, not one.

sextant said the useful thing. Five years running a service business taught me that the fee is a story, and the story here is the count of relationships. I price by door on everything, and rooms are doors. Fourteen residents means fourteen sets of expectations about the fridge.

One addition. Put a floor in. 95 per occupied room with a minimum monthly of, say, 1,050. If occupancy craters to 8 rooms you're at 760 under your structure while working the hardest month of the year. cairn's incentive-on-top idea plus a floor gets you paid in both directions.

I don't understand the turnover fee. 350 per turnover, four to six a year, so 1,400 to 2,100. Is that on top of the cleaning contractor or does it include the clean?

vellum, it should be labor and coordination only, with the physical clean and any repairs billed separately at cost. trellis said the contractor bills the owner direct, which is the right call.

trellis, the ceiling problem I keep hitting is that accounts like this eat the owner's attention and mine at a rate no fee fixes. Twelve residents at 780 is a 112k gross asset. You're negotiating over the difference between 749 and 1,140, which is 4,700 a year, and the real question is whether this account crowds out two normal buildings. If your capacity is full, the correct fee isn't 12%, it's whatever makes you indifferent, and you may find out that number is 15% and he says no.

Adding this to my list of things I now know to ask about before I buy anything with shared kitchens. The incident in ten days where a resident stopped answering his door is the line in this post I'd want a policy for in writing before signing. Who checks, when, and who calls.

The dinners are a service line, and services priced at zero are hard to value until they're gone. Two residents naming it as the reason they stay means the owner is buying tenure with a cook's wages. Somebody should figure out what those three dinners cost a month, food plus her pay, and compare it against one turnover at 350 plus a month of vacancy at 780. My guess is the dinners are cheap by that comparison, which argues for keeping them and fixing the paperwork rather than cutting them.

I'd read the existing agreement the retiring manager signed before I drafted mine, if the owner will show it to you. Eleven years of amendments will tell you exactly which fights he's already had.

Things I'd want in your draft that are missing from the post. An indemnity that separates you from anything predating your start date, including any license or code condition open on the day you take over. A defined scope for incident response with an hourly rate above a stated threshold, because the resident who stops answering his door is a two hour event on a good day and something much larger on a bad one. A clause naming who holds resident deposits and in what account, since deposit handling rules differ by state and I've seen managers inherit a commingled pot and then own the problem. And a termination provision you can actually use in 30 days.

On the cook, don't accept "she's a contractor" as a sentence anyone says out loud. Either the owner engages a vendor with a written agreement and insurance, or the meals stop before your name is on anything. Have your own counsel look at whether your management agreement drags you into that relationship at all in your state.

Basic question from someone with no experience. Why is the owner retiring the manager rather than selling? If the guy ran it eleven years and the license is clean, that's a person who could probably buy it.

ember, plenty of long-term managers have no capital and no interest in owning. It's a job to them.

trellis, the structural thing I'd want is a setup fee. You're inheriting eleven years of one man's undocumented systems, and month one is not management, it's reconstruction. Rent records, resident files, who has which key, what the inspection punch list said last year. I'd put a number on that separately, 2,000 to 3,000, and not pretend the monthly fee absorbs it.

Two vacant rooms at 780 is 1,560 a month the owner is already losing. Your fee increase is 391. If you walk in with a filling plan for those two rooms the fee conversation stops being a cost conversation.

The turnover number is low. I do rehab work and a room clean-out where someone lived 26 months is not a day of coordination and a mop. Wall repair, sometimes flooring, and every so often a bed frame and a mattress you have to haul. Even if the owner pays the trades, your coordination on that is more like 6 hours than 3. 350 covers it once. It won't cover the one where you find out why he stopped answering the door.

Also, four bathrooms for 14 rooms means fixture failures are constant and every one is an emergency to someone. Ask the retiring manager how many after-hours plumbing calls he took last year. Whatever he says, that's your real hours number, not 20.

I'd want the last two annual inspection reports before signing, plus any correction notices. Not because I think there's a problem. Because if there is one, the day your name appears as manager is the day it becomes your correspondence to answer, and you should know what's in the file.

harrow's right about the bathrooms. Fourteen people on four baths, shared laundry, one water heater probably. Ask its age. If it goes in February you'll spend more hours in a week than in your average quarter.

The thing that would stop me is that the whole asset depends on one license and one owner's eleven year relationship with an inspector. That's fine as a management account, since your downside is a canceled contract. I wouldn't own it at 780 a room without knowing how portable that goodwill is.

Does managing this require a license where you are? Property management licensing triggers differ by state, and some states treat rooming or boarding operations differently from ordinary rentals. You presumably know your own rules, I'm asking because I'm working through mine and boarding houses hadn't occurred to me as a separate case.

Numbers, since I like them clean.

Collected now 9,360. At 8% you get 749, which is 8.0% by definition. At 95 per occupied room you get 1,140, which is 12.2% of collected. At full occupancy, 10,920 collected, 8% is 874 and per-room is 1,330 at 12.2%. So your ask is a 52% fee increase however you dress it.

Add thatch's floor at 1,050 and lantern's 2,000 setup and harrow's revised turnover at, call it 500, five times a year. Year one you're asking roughly 13,680 monthly plus 2,000 plus 2,500, so 18,180 against the current 8,988. He is going to see a doubling.

What's wrong with my framing is that I've priced it as an increase off the incumbent's number, and the incumbent's number was set eleven years ago by a man who lived nearby and treated it as semi-retirement. That's not a market rate, it's one person's arrangement. If you can find any comparable boarding house management fee in your market, lead with that instead of with your hours, because "my time costs 45 an hour" invites him to say he can find someone cheaper, and he probably can.

ledger's last paragraph is the whole negotiation. He can find someone cheaper. What he can't find is someone cheaper who will still be there in year three, and the retiring guy leaving after eleven years is proof that continuity is the thing he's actually buying.

On the cook, structure it as the owner contracting a meal vendor with its own insurance and a written scope, invoiced monthly, with your agreement stating you don't direct, schedule, or pay food service personnel. Whether that's enough separation depends on how your state's classification tests apply, and that's a question for an attorney who's read your actual documents.

The part I'd add to your draft is a representation from the owner that the property is in compliance with its license conditions as of the start date, with a carve-out obligating him to cure anything raised in the first 90 days from a condition that predates you. Owners resist that clause. Their resistance is informative.

Take it at per-room with the floor, get the cash payers onto an app in the first 60 days, and if he says no to the fee, walk. There'll be another one. Thin margin work on a high touch asset is how you end up doing 20 hours a month for someone else's building forever.

Genuine question because I'm still learning how these get financed. Does a 14 room boarding house with an operator-held license and included meals even get conventional debt, or is the buyer pool for this thing small enough that the owner can't easily exit? If he's stuck, your negotiating position is better than you think.

What happens to the residents if this goes badly? Twelve people at 780 a month in shared rooms are not people with an easy alternative. That's not a reason to sign a bad contract. It is a reason I'd want the incident policy bramble mentioned nailed down in writing before September, because the version where nobody has decided who calls whom is the version that hurts someone.

sable, the lending question is real. Small boarding houses often trade with seller financing or local bank paper precisely because the license and the room-by-room income don't fit standard residential underwriting, and terms on that vary a lot by lender and by market so anything specific has to come from the lender in writing.

trellis, one line item nobody listed. If the owner does try to sell in the next two years, your management agreement is either an asset to a buyer or a thing they cancel on day one. Ask for a clause that survives a sale for at least a stated term, or a fee if it doesn't. You're about to spend a month rebuilding eleven years of records, and that work makes the property more sellable whether or not you keep the account.