Pricing a mixed-use management contract like a straight apartment deal is a common and costly mistake
Take a 14 unit building, 12 apartments and 2 ground floor commercial bays, with an owner wanting one manager for the whole property. A residential-focused shop, strong at turns, maintenance calls, and rent collection, might quote a flat 8 percent of collected rent across the board. On collections of about $18,500 a month, that is roughly $1,480 monthly, and it is a number that commonly fails to price several real costs. The two commercial leases typically carry expense recovery language with an annual reconciliation, which is a genuine accounting job: building an expense pool, splitting out what belongs to the apartments, and producing a statement each tenant's bookkeeper will accept. That work alone can run 30 hours in a first year and is easy to get wrong once. A commercial vacancy is also a different kind of problem than a residential one. Showings to business tenants, questions about permitted uses and zoning, a broker calling weekly, can easily run 40 hours on a single dark unit, and a percentage fee earns nothing on a bay with no rent to collect against. Commercial tenants also raise questions outside a residential manager's usual scope, sign ordinances, or who is responsible for a rooftop unit named in the lease, and answering those correctly can mean reading an unfamiliar lease several times over. Across a year, a contract priced this way can run roughly 200 hours over what a comparable 14 unit apartment building would take, for the same fee, and net of bookkeeping time it can lose money outright. The better structure is to quote the residential unit count as a percentage and the commercial bays as a flat monthly fee per bay, plus an hourly or fixed charge for the annual reconciliation, while either excluding commercial leasing from scope entirely or negotiating a leasing commission on it, and being explicit up front about what falls outside the manager's expertise, such as sign permits.
