Welcome to the RANCRE show, commercial real estate with no stone left unturned.

Hey, everyone. Welcome to the RANCRE show. I'm your host, Mike Tarvella, and today I wanted

to discuss, and I think it's super important, the differences between underwriting a smaller

multifamily deal and a larger multifamily deal. In the grand scheme of things, you might think it's

the same, but the number of units does play a factor in it because of several different things.

First things first is the management fee. So when we underwrite our deals,

we're looking at management fees in the low three to four percent. But on smaller deals,

your management fee could be much higher. So it's important to know, you know, if you're looking

at 20 units, a property manager might be looking at an

eight, nine, even 10 property management fee. But as you get bigger, there might be a, you know,

50 to 70 units that kind of blurs the line of a management fee plus payroll. But as you get

bigger, there's just a management fee for just dealing with the operation.

So it's super important when you're looking at deals that you, one, understand what that

management fee structure looks like.

Because the 20 unit might not have as many people on staff, so you might have a higher fee,

but lower payroll.

And then as you get bigger, the percentage

goes down, but payroll goes up. So it's super important to really understand that what that

management fee structure looks like and also how it implicates your payroll. So you know,

you might have more payroll. It might be so small in the operations. There's contract services

might go up. So it's just super important to spell it out. And everything's market to markets.

It can be entirely different in each of the market. So I think it's super important to understand

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