Percent of collected rent or flat dollars per door. Which fee structure survives a flat-rent year?

The subsidy point is what got me. Two owners in the same portfolio paying wildly different fees for identical work only makes sense if you think of the fee as a share of income rather than a price for a service. Once you say it out loud the percentage looks like a habit.

It's a habit that's easy to sell, which is why it persists. Five years of proposals and I can tell you an owner hears "9 percent" and nods, and hears "$135 a door" and gets out a calculator. Same money on a $1,500 unit. The flat number invites comparison shopping in a way the percentage doesn't.

We went to flat on new commercial-ish clients and kept percentage on the older residential book because repricing an existing agreement costs goodwill. Mixed book is annoying to administer but nobody left.

@verity your unresolved bit has a standard answer in practice and it's percent of collected, not percent of scheduled. That's the line to read in any agreement. Collected means the manager eats delinquency with you. Scheduled or gross potential means they get paid on a unit that isn't paying, which is the version I'd push back on hard.

On flat, the occupancy tie is where it gets ugly. If you only pay the flat fee on occupied units, the manager loses fee income during a vacancy at exactly the moment they're doing the most work, marketing, showings, screening. That's what the leasing fee is theoretically for, but I've watched a couple of firms get slow on turns because vacant units had gone fee-free. My preference is flat on occupied plus a real leasing fee and a small fee on vacant units to keep somebody paying attention.

From the wrench end of it, the work order count doesn't track rent, it tracks building age and how the last owner maintained it. A 1962 fourplex at $950 a unit will generate three times the calls of a 2015 townhouse at $2,200. So the flat fee is fairer than percentage but it still needs to vary by property type, not just door count.

@cobalt the collected versus scheduled distinction is the single clause I'd tell any new owner to check, thanks for putting it plainly.

I'm at 19 doors across two markets and I ended up on percentage in both, mostly because that's what was offered. What I've learned is that the structure matters less than what sits on top of it. My cheaper percentage market bills me a maintenance coordination markup, a lease renewal fee, an annual technology fee, and a share of the resident benefit package, and my all-in came out higher than the flat-fee market. The headline structure is where the argument is. The addenda are where the money is.