Do I have to give a Resident Manager free rent?

Star Rent

Actually, it is not that simple!  Minimum wage laws have snagged unsuspecting landlords.  Many landlords reluctantly realize they must give up a unit to a Resident Manager because they have 16 or more units.

The next thought landlords often have is…  How much do I have to reduce the rent or how much work can I get from the Resident Manager?

Minimum wage laws change often but, currently the rate is $8/ hour.  Of course, overtime generally applies.  Therefore, the rental credit must be divided by $8/ hour.  So, an $800 unit would theoretically allow the landlord to demand 80 hours of work per month.  Life is not that simple for landlords!

The California Code limits the rental credit to the lessor of 2/3 of the rental value of the manager’s unit or $451.89 (Single Manager) or $668.46 (Co-Manager Team).  In reality, the limits are always the lesser amounts.  Therefore, landlords are limited to a rent credit of $451.89 for a single manager or $668.47 for a co-manager team.

Applying minimum wage law to those credit limits…  A landlord can demand 56 .49 hours of work from a single manager or 83.56 hours from a co-manager team.  Managers must be compensated for any work above and beyond these hours.

It is wise to have a Resident Manager on an employment agreement limiting their scope of work and the number of hours they are to work in a month.

Posted in Income Property, Property Management, Resident Manager

Leave a Reply

Your email address will not be published. Required fields are marked *