Christian OsgoodCEO, Multifamily Strategy · CEO at Multifamily Strategy

How to NEGOTIATE Contracts in Real Estate

4 Jan 2026 · 1 min

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A real estate investor explains his property management fee structure: 3% of revenue plus a salary budget for onsite staff. On a 144-unit property, that's a $120,000 cap for up to three employees. After fixed costs and overhead, his management profit is minimal, just a point on the overall deal.

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But when I do my deals, I negotiate the management contract because I have property management into the investment opportunity. So I'll say, hey, I'm going to manage, for example, the 144 I'm doing. It is 3% plus salaries. My salaries for the 144 is $120,000 a year for up to 3 employees. When we acquire the 81-unit, that is going to add $50,000 to the salary cap for my on-site person. And is built into the actual investment. So my profit in that is nominal because we have fixed cost, overhead, software. The 3% less all of my variable cost for running the PM in that market is my profit. So I'm making like a point on management on a lot of my deals, but the onsite employees are direct pass-through from the LLC.