Professional management refers to third-party property management provided by licensed management firms. Contrasts with self-management by the owner.
Professional management firms handle operations, compliance, tenant relations, and reporting in exchange for a management fee (typically 4-8% of collected rent). Larger firms offer institutional-grade systems; smaller firms offer more personalized service.
LA multifamily buyers typically underwrite with professional management fees included, regardless of whether the seller is self-managed. This adds 4-6% of EGI to the expense line and reduces underwritten NOI. Sellers preparing for market should either include professional management costs in their operating statement or expect buyers to adjust.
From the Sterman LA Multifamily Glossary — defined the way a broker with $1.41 billion across 254 closed transactions actually uses these terms.
Michael Sterman, Senior Managing Director Investments, Marcus & Millichap.
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