Third-party management agreement on 72 units, the fee is 4% and the fee is not 4%

Your $1,000 per unit per year is the only number in that post that matters and almost nobody computes it. I'd go further and put it against NOI per unit, which is $6,900. So management is taking about 14.5 cents of every NOI dollar before you pay debt.

What's missing for me is what happens if turnover drops. At 47% you're paying $17k in leasing fees. Get to 32% and that's $11k. So the manager earns more when residents leave, which is backwards from what you want. Ask them to blend it: lower per-lease fee, small bonus tied to renewal percentage above a floor. If they refuse to be paid on retention, that tells you what they think their job is.

Get two more quotes. Not to switch, to price. I keep a list of every manager in my target markets and the spread on fee stacks for 50 to 100 unit properties is wide enough that your 4% plus everything could be either the best or the worst offer on the table and you have no way of knowing right now.

When you call the other two, ask for the same thing you posted here: fee schedule with every ancillary line, and last year's actual dollars from a comparable property in their book. The ones who won't give you the second thing are answering your question.

The exclusive listing right is the clause I'd fight hardest, and it's the one you glossed over. You're granting a sales commission on an asset you might hold for thirty years, in exchange for management services you can cancel in 90 days. Those are not the same duration of promise. Strike it or make it a right of first offer with no exclusivity.

Second, look at the indemnification language. Standard versions have the owner indemnifying the manager for everything short of gross negligence, and "gross negligence" is a high bar. Read what happens if an on-site employee does something actionable: whose employee is that, who carries the employment practices coverage, who pays the defense. Get an attorney on that paragraph specifically, it's worth the hour.

Also the insurance placement commission. That's the manager getting paid by the carrier for choosing the carrier while advising you on coverage. I'd want that disclosed in dollars annually or gone.

I manage properties for a living, and I'll defend two of the lines you want to kill.

The 10% maintenance markup is real cost recovery. Someone takes the call, codes the invoice, chases the vendor's insurance certificate, verifies the work happened, handles the resident follow-up. On $164k of spend at 72 units that's a lot of small transactions and none of it is in the 4%. Cap it if you like, $25k a year is a reasonable ceiling on a property your size, but if you strike it the good managers walk and the ones who stay make it back somewhere you can't see.

Construction management at 5% is also normal and honestly cheap for a project you'd otherwise be running yourself from wherever you live.

The insurance commission I'd hand you. That one's hard to defend and most of us have stopped taking it.

One thing nobody's said: 47% turnover on a garden property is the actual problem. That's costing you more in downtime and turn expense than the entire fee stack. Ask the manager what the last twelve months of turn costs and days-vacant were per unit. If they can't produce it in two days, the fee negotiation is moot.

@cobalt the markup is defensible on paper. What I've seen from the trade side is the markup plus the vendor relationship, where the manager's preferred plumber prices 20% over the market and there's no bid on anything under $2,500. Then you're paying 10% on an inflated base and the coordination story covers it.

@arbor ask for the vendor list and whether any of them are affiliated with the management company. Then pull three invoices over $1,500 from last year and price the same scope yourself with a local outfit. Takes an afternoon. If they come back within 10% you've got an honest shop and I'd stop worrying about the markup.