4% + GST Management Fee
- Thread starter JIT
- Start date
Why have a percentage anyway?
This is my BIG question. Especially on sales.
Does a property at $700 pw take more time to manage than a $300 pw property? Does a $700k property take more work to sell than a $500k property?
Back to this thread, I have 5 being managed by the the same PM, I pay 6% and 1/2 week lett fee. Very very happy, she does a great job and I wouldn't consider negotiating. Also her office is 25 kms away from the the IPs. The distance hasn't been an issue at all.
Sunshine
Adding up all the charges that would apply to 1 x 12 month tenancy from a PM list of fees I have been given to consider, I found it equates to 16.8% of the annual rent - including finding tenant through to outgoing inspection report..... on top of tht is a charge for electronic banking, which they appear to have difficulty quantifying / explaining I didn't include $55 for annual statement (need to ask if copies of the mthly statements are available if required....)
Whilst you dont want to penny pinch over th wrong things, what I've found with my personal spending for exmples was that the prolbem is not that I'd buy 1 expensive itme, but another small one, another small one, another small one... and before I knew it..... spent too much....
You see little charge after charge & wonder, is this necessary or just cause they can ?
oh, they normally don't negotiate on fees either , but you can choose to do your own inspection and save some money that way...
not sure what to make of it
I didn't include $55 for annual statement (need to ask if copies of the mthly statements are available if required....)Whilst you dont want to penny pinch over th wrong things, what I've found with my personal spending for exmples was that the prolbem is not that I'd buy 1 expensive itme, but another small one, another small one, another small one... and before I knew it..... spent too much....
You see little charge after charge & wonder, is this necessary or just cause they can ?
oh, they normally don't negotiate on fees either , but you can choose to do your own inspection and save some money that way...
not sure what to make of it
Why have a percentage anyway?
Good point. It doesn't cost 4 times as much to manage an $800 rent property than a $200 rent property. I would expect that properties in rough neighborhood may be harder to manager than properties in fancy suburbs.
It would make more sense for rental managers to charge a flat fee per property ( say 1k per year ?), but then they wouldn't get the automatic income increase they get when the rent increases.
I have a rental manager charging 6% + GST who are doing a great job for one of my properties. I wouldn't consider negotiating them down. I already found out by painful experience that the cost of having a bad property manager is far above that.
I have another property not that far (about 5 km) that I could give to the same manager, but I am not that sure it is a good idea. When talking about the area to my rental manager, it became clear that she did not know the local rental market that well. So using the same manager, while maybe negotiating bulk discounts, may not be such a good idea. I think that it would be better for me to select a local rental manager that understand the local rental market very well. The value of a rental manager is not just tenant selection, but also the market knowledge. A knowledgeable rental manager can advise you on what type of renovation / fix-up / appliances would appeal to tenants in the area. That can be very valuable. They are also more likely to set the asking rent at realistic levels, minimising vacancies.
Recently I was looking for properties around the inner west, renting for about $600 per week. I had several rental managers offering to manage my property for 5% total, including the first 3 months free. They seem very keen to get the business at that rate. That is 1.5k per year per property. At 150 properties per manager, that is a gross income of 225k per rental manager. Not bad, especially when you consider the side benefits. The most profitable part of a real estate agency is sales. Rental management provides rental market knowledge to the sales team and referrals when the owner decides to sell. That can be very valuable to the agency. That is why it looks like many rental managers are not making much of a profit. The rental management side is there as a support arm for the sales team.
So I wouldn't try to negotiate down the fees of a good rental manager, and I wouldn't select rental manager only based on fees. Most likely, lower fees means they are managing 200 to 250 properties, unable to give proper attention to each one. That increases the risk of costly problems emerging.
I'm not so sure it is a great idea to give all your properties to same manager either. Even if they are good, they may not know the local rental market well enough to give proper advice.
Cheers,
On the bulk of our properties we pay 5% + $2.50 postage With the postage spread over multiple properties the postage becomes negligible.
On change of tenant we pay 1/2 weeks rent plus the $15 lease fee.
There are no other charges for any other services provided.
This agent will physically check all problems personally before phoning us to decide whether we attend or we get tradesmen in. This is on local properties not the ones further afield.
Cheers
On change of tenant we pay 1/2 weeks rent plus the $15 lease fee.
There are no other charges for any other services provided.
This agent will physically check all problems personally before phoning us to decide whether we attend or we get tradesmen in. This is on local properties not the ones further afield.
Cheers
Is this standard? Our local one charges 2.2 weeks to get a new tenant and 1.1 weeks to resign an existing one.
I think that's ridiculous. Especially the 1.1 weeks to resign. All they have to do is ask the tenant to sing forms.
My new one is 1/2 week for new lease + GST. $18 for renewal.
Others are 1 weeks rent and $30 renewal
They're the only PM so they can charge what they want, I'd say. They manage a lot of properties 150km north of their agency - they add an extra 11% for that town.
I pay 7% for one manager to take care of all 5 of my properties and its worth every cent.
Leaves me totally free to focus on the 'bigger' issues.
But he is also an exceptional manager (when we coverted one of the apartments into a fully furnished corporate apartment, we created a budget, he sourced everything, he was there receiving and putting together everything (alot of furniture these days are self assembled).
I never hear boo and in the last 10 years that he has been managing my properties (when ive held them, i didnt own property consistently for 10 years), i have never had a problem.
Sometimes you pay for what you get.
Just remember the difference between 5% & 7% is nearly 40% more properties needed to create the same income stream.
Leaves me totally free to focus on the 'bigger' issues.
But he is also an exceptional manager (when we coverted one of the apartments into a fully furnished corporate apartment, we created a budget, he sourced everything, he was there receiving and putting together everything (alot of furniture these days are self assembled).
I never hear boo and in the last 10 years that he has been managing my properties (when ive held them, i didnt own property consistently for 10 years), i have never had a problem.
Sometimes you pay for what you get.
Just remember the difference between 5% & 7% is nearly 40% more properties needed to create the same income stream.
I totally agree with you there.
The first weeks rent business really drives me nuts.
One deal I have with a PM with 8 units is 7.5% +gst flat free. No extras for letting no first weeks rent no free xmas present for the family. I couldnt be happier with price and service. I had four with him for many many years and recently moved another 4.
I pay 4.4% incuding GST, 1 weeks letting fee, no advertising fee and no statement fee (as they are emailed to me). My PM is fantastic and always goes the extra yard with communication and ensures rents are always at market level. I live o'seas so this is important to me. I have 7 IP's under management with them, all are inner Melbourne in Elwood, Middle Park, St Kilda, Sth Yarra and Brunswick. The PM is located in Sth Melbourne.
JIT, i would definitely ask them about 1 weeks letting fee. I think 5 IP's is a reasonable amount and grounds for requesting 4.4% inc GST. They can always say no or you could meet them in the middle at 5% inc GST. A lot of agencies also benefit from the potential to list your property should you ever decide to sell.
JIT, i would definitely ask them about 1 weeks letting fee. I think 5 IP's is a reasonable amount and grounds for requesting 4.4% inc GST. They can always say no or you could meet them in the middle at 5% inc GST. A lot of agencies also benefit from the potential to list your property should you ever decide to sell.
Hi there,
Thanks for all the interesting replies.
I'll have a think about it all, and then proceed with the negotiations.
shuggy...... I think you're winning so far!
My only other comment with respect to property management, as some here have already alluded to, is that the amount of fees you pay (low or high) has very little relationship to the quality of service provided by the manager.
Thanks for all the interesting replies.
I'll have a think about it all, and then proceed with the negotiations.
shuggy...... I think you're winning so far!
My only other comment with respect to property management, as some here have already alluded to, is that the amount of fees you pay (low or high) has very little relationship to the quality of service provided by the manager.
PM fees of 12.5% plus GST
We bought a 2nd IP and the property is tenanted and tenat is happy to stay. The PM company is selling the property so they do not have to anything except new agreement. They send me a quote. They provide 2 options. (1) 12.5 % plus GST ALL inclusive package and (2) Management fee 8.5% plus 2 weeks letting fee, $90 per hour for property condition report, reletting fee $110, Final bond inspection $88, Routine inspection fee $55, Marketing $33 per week (They do not have to do this), Admin fee $8 per month, national tenant database check $9.90 and Title search $25.
Isn't it too much for a property that is currently rented and tenant is happy to stay for another 12 months. They are the PM for the property.
I can not understand.
(Property is locatedin Parkwood, perth)
We bought a 2nd IP and the property is tenanted and tenat is happy to stay. The PM company is selling the property so they do not have to anything except new agreement. They send me a quote. They provide 2 options. (1) 12.5 % plus GST ALL inclusive package and (2) Management fee 8.5% plus 2 weeks letting fee, $90 per hour for property condition report, reletting fee $110, Final bond inspection $88, Routine inspection fee $55, Marketing $33 per week (They do not have to do this), Admin fee $8 per month, national tenant database check $9.90 and Title search $25.
Isn't it too much for a property that is currently rented and tenant is happy to stay for another 12 months. They are the PM for the property.
I can not understand.
(Property is locatedin Parkwood, perth)
Ripppppppped. Go to another agency and get a quote. They sound like cowboys in Perth.
Agree.
If you've inhereited the tenants and the PM find out your rights about how much notice you need to give the PM and provide said notice to remove them.
Search for PM's in Perth in your location or start another thread where local SS'ers can provide some recommendations.
bradje, is it 16% all inclusive - no extra costs ?
If it is, compard to Perth PM prices at least, you ight find you're not out from what the rest of us ae paying
I addedup the fees for the current pm I chose for my new ip to find a tenant and at the end of 12 mths lease, give them their bond back etc...
17% of total rent.
If it is, compard to Perth PM prices at least, you ight find you're not out from what the rest of us ae paying
I addedup the fees for the current pm I chose for my new ip to find a tenant and at the end of 12 mths lease, give them their bond back etc...
17% of total rent.
Wow! 17%, I should keep quiet about the great deal i'm getting at 16%
Yes it includes everything.
Still, we are self-managing another IP and really enjoying it and learning so much. I guess if we paid ourselves for the time spent it would cost a bit though
One of the "problems" with DHA is that you can't make any improvements and charge higher rent. What u get is what u get. It's usually a well built house/unit, but from then it's all crystal ball gazing as to how much it will go up by for the term of the lease. After nearly 9 years with our one DHA house it's only just squeezing out to be CF+ now.
Cheers,
JB
the fees i mention include the usual
- advertising, searhcing database, signing up lease, initial inspection, one more inspection, final inspection, mthly admin and anythign else I forgot, plus 8.5% of rent + GST.
so if a tenant leves after a yer, youd pay that... You'd pay a bit less if the same tenant stayed - less to re sign them compared to signing a new tennt, no advetising,searching database or initial inspection...
I'm happy wiht my first ip, tenant have been there 18 mths and Ive self managed for about 16 of them. Theyre on a new 12 mth lease now, hardly hear from them, it's great.
But when it comes time to get a new tenant , like my 2nd IP I think Ill use a pm again.
- advertising, searhcing database, signing up lease, initial inspection, one more inspection, final inspection, mthly admin and anythign else I forgot, plus 8.5% of rent + GST.
so if a tenant leves after a yer, youd pay that... You'd pay a bit less if the same tenant stayed - less to re sign them compared to signing a new tennt, no advetising,searching database or initial inspection...
I'm happy wiht my first ip, tenant have been there 18 mths and Ive self managed for about 16 of them. Theyre on a new 12 mth lease now, hardly hear from them, it's great.
But when it comes time to get a new tenant , like my 2nd IP I think Ill use a pm again.
