Can I hire a team to run my PadSplits?
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 |
