Any property managers here?
 

Got a question on commercial property management. What's the upcharge for capital improvements? I was helping my brother out on some two story office buildings with new roofs, cornice, paint, parking lot restriping, drainage issues, etc. ($75k worth of work) and he said the usual markup was 5 - 7 1/2%. Having been in new home construction for 20 years, I thought that was way too low.

What are your thoughts?

Crickets chirping....

What exactly do you mean by "markup"?

Are you talking about increased rent from the tenants due to the improvements to the building? Well, it occurs to me that it depends. Was the roof leaking before? Were the stripes in the parking lot faded to invisibility? Did the lot flood? If this is the case, then you have a decent expectation to raise the rent. If the improvements were simple upgrades, and the building was fine before....I suspect that in this economic climate that you won't be able to raise the rent at all. The improvements in this later case will appear transparent to your tenants and they won't be willing to pay anything additional.

N

We pay from 10% to 20% markup on material and sub-contractors our vendors use depending on the contract, for labor and equipment we pay their hourly or daily rate.

Thanks guys.

My brother's co. manages the offices by leasing, repairing, calling in maintenance, etc. The owners wanted some capital improvements done. These costs are not passed onto the tenants to acheive higher rents.

The "markup" is simply a fee charged to the owners of the office bldgs for work we contracted to have done to the three (3) two story office bldgs. I bid the work out, made proposals to the owners, picked the subs, scheduled them, etc. On $75k worth if work, $5625 (7.5%) in profit is not worth it IMHO, with all the time and effort it took to get the work done. My thought is the going rate would be higher, but I'm used to new home construction, not propert mgt.

some property mgt firms in the city specify that the owner use the mgt co's construction co in the contract