Sometimes the questions that I get from tenants are useful in helping us rental property owners to think through some of the management issues that we face.

For example, I just received an email from a reader of ManageRentalProperty.com that asked this question:

“I’m so glad you have this helpful website. Thank you. I actually have never really managed anyone’s property before, but have an opportunity to do so now. I was wondering what an even trade-off would be. For example, is living rent free in one of the apartments in a 4-plex, while managing both this 4-plex and a duplex, and even trade-off? The 2 bedroom apt. that I would be renting is in a low income area and the owner is getting $600.00 per month for her units. My management responsibilities would include maintenance on all 6 apartments, as well as, collecting rent. Can you help? Thanks.”

This was my response:

“The answer, of course, is ‘it depends.’ I guess you could say, it’s whatever you both agree on. A property manager, for example, normally makes between 4% and 12% of the rental income of the property. So, for example, if there are 6 units, each getting $600 in rent, that’s 3600 per month. A property manager would generally make between $144 and $432 per month, depending on the number of units managed and the services being provided (eg. rent collection, evictions, maintenance and repairs, bookkeeping, bill paying, etc.)

Before you enter into any type of agreement to manage a property, however, please make sure that you are not violating any licensing requirements for property managers in your state, meet income reporting requirements (yes, free rent for managing a property is considered “income”), and you have proper liability insurance (in case you do a repair and the tenant gets hurt, or the tenant sues you for discrimination, etc.). You may want to consult an attorney and accountant before you agree to do any property management services.

Although the arrangement seems simple, in actuality, it is potentially much more complicated and could be considered a business. That business may either by “yours” or you could even be considered an “employee” of the landlord.

Best of luck, but for your sake and your landlords, please be careful and make sure you both know the issues that you may face.”

What do you think? Any landlords or tenants out there that currently have this arrangement? Am I making this too complicated or is it much more commonplace than I would think? Comments welcome!