Agent Comission Fees (Rental)
- Thread starter ducsta
- Start date
y would u buy an investment property in tarniet?
Tarneit
Hello Ducsta
I totally agree with you regarding this area.
We have a number of managements and some of my own personal properties in this area and we have no problems with demand from excellent applications for this area.
When you interview for your new property manager make sure you have good communication with them and they know what you expect from them.
Ask them a few simple questions for example how do they handle communication do they guarantee same day call back when you wish to talk with them. What is there procedure to minimise vacany between tenancies to avoid unnecessary holding costs for you. Do they actively pursue rental increases inline with market trends to offset your holding costs. What is there office procedure with arrears? Do they have the latest software to alert your property manager quickly and efficiently
Do they hand out keys to prospective tenants. Our office
ensures all tenants are accompanied when viewing properties.
Aside from maximising the security and protection of your
property, this procedure enables us to more accurately gauge
the appropriateness of a tenant for the property investor with
constructive feedback.
Do they provide entry and exit condition reports with photo's to protect your asset. Do they conduct six month inspections?
And most importantly are they active property investors themselves rather than it is just a job for them.
I hope this might help when it comes to interviewing your property manager.
__
Hello Ducsta
I totally agree with you regarding this area.
We have a number of managements and some of my own personal properties in this area and we have no problems with demand from excellent applications for this area.
When you interview for your new property manager make sure you have good communication with them and they know what you expect from them.
Ask them a few simple questions for example how do they handle communication do they guarantee same day call back when you wish to talk with them. What is there procedure to minimise vacany between tenancies to avoid unnecessary holding costs for you. Do they actively pursue rental increases inline with market trends to offset your holding costs. What is there office procedure with arrears? Do they have the latest software to alert your property manager quickly and efficiently
Do they hand out keys to prospective tenants. Our office
ensures all tenants are accompanied when viewing properties.
Aside from maximising the security and protection of your
property, this procedure enables us to more accurately gauge
the appropriateness of a tenant for the property investor with
constructive feedback.
Do they provide entry and exit condition reports with photo's to protect your asset. Do they conduct six month inspections?
And most importantly are they active property investors themselves rather than it is just a job for them.
I hope this might help when it comes to interviewing your property manager.
__
Hi All,
I have recently made an offer for a property in Tarneit (Rose Grange Estate) and its currently tenanted.
Managing agent: PRD Jens Gaunt
In terms of (%) whats the fair number? (5%, 7%, etc)
Also what sort of questions do i need to ask to the property manager?
Any ideas of growth plans of Tarneit:
-apart from train station coming up
-new shopping centre in Rose Grange estate
I have recently made an offer for a property in Tarneit (Rose Grange Estate) and its currently tenanted.
Managing agent: PRD Jens Gaunt
In terms of (%) whats the fair number? (5%, 7%, etc)
Also what sort of questions do i need to ask to the property manager?
Any ideas of growth plans of Tarneit:
-apart from train station coming up
-new shopping centre in Rose Grange estate
All questions are here. IMO, the fee is the last question you would ask. The difference between 5% or 7% is lets say on an average rental of $400pw is $416 per annum.
How much would you lose if a PM's process is poor when a tenant vacates. Only takes 8 days additional vacancy and you have lost that great 5% fee you thought you had.
How do you know the maintenance issues are addressed early (yes at times, you will be frustrated because there is another potentially unplanned cost), but avoid higher cost to address the issue in 6, 12 or 18months?
How well will they follow-up rent arrears? If a property is worth $450k at 80% LVR, 7.5% interest rate, and had then rent mentioned above, it would only take a cumulative of 6 days late (for the entire year) in extra interest to soak up the difference between 5% and 7% management fee.
Good luck with your choice.
How much would you lose if a PM's process is poor when a tenant vacates. Only takes 8 days additional vacancy and you have lost that great 5% fee you thought you had.
How do you know the maintenance issues are addressed early (yes at times, you will be frustrated because there is another potentially unplanned cost), but avoid higher cost to address the issue in 6, 12 or 18months?
How well will they follow-up rent arrears? If a property is worth $450k at 80% LVR, 7.5% interest rate, and had then rent mentioned above, it would only take a cumulative of 6 days late (for the entire year) in extra interest to soak up the difference between 5% and 7% management fee.
Good luck with your choice.
Buzzlightyear
Does this mean the property manager that charges the higher % is the better agent
If you look at the numbers at $400pw at 7% the office is bringing in $1456pa now let’s say the PM manages 100 properties = 145,600+GST
Now the agent that does it at 5% same property is bringing in $1040pa X 100 properties = $104,000+GST
I don’t know any agencies who pays this kind of money both options should be able to afford the best PM and still have the structures in place to manage your property
I think it comes down to the agency owners how greedy they are and if Property management is there number 1 priority
You can still run an office on cheaper % and have a high customer service
it’s the agencies who’s owners load up the Pm with high portfolios that gives us a bad name
We just hired a Pm who worked for one of the bigger Property management companies and she managed 260 properties
The level of service you pay will in my experience as a LL, have no correlation with the fees you pay. Hence the examples in my pevious post to say, that there is much more to selecting a PM than just their commission fee structure and rates
Given PM't is traditionally an entry level job for those in RE and a pathways to
residential sales or into commercial property, it has traditionally been a low wage job whch doesn't attract quality people. At the same time, there has no emphasis on the owers of the business to train and develop their people. I realise over the past ten or so years there are pockets where this has changed. But I look at Run for example, came into existence with a supposed point of difference and value propositon, and now are simply just another REA.
What do you think is an optimal number? And when you mean manage, are referring to everything including processing paperwork, following up maintenance request the lot?
I agree I think that agencies need to start paying real money to get Pm who want it as a career
Watch this space i am going down a diffrent path with my own agency in the next couple of months. it will have a couple of POD that is new to PM in Australia and will hopefully change things for the better
Doing the whole job i think a Pm can handle 80 to 100 properties but it also depends on the portfolio.
the Pm i was talking about didnt do any inspections never visited the properties. not what i would say good service
it is intresting to see how run has developed into what they are today like you said just another RE
As a long time reader but first time poster I feel the need to respond on behalf of all RE business owners.
In your first example of $145,000 + GST, that would not even be break even point for running a rent roll of 100 properties. Firstly in Sydney to get a decent experienced PM you are paying a minimum $70,000, secondly what about all the other overheads a business has to run such as rent, receptionist, phones, computers, software programs, stationery, electricity etc etc. To think you could run at anything but a massive loss in your 2nd example of $104,000 is totally wrong, and I take great offence at your reference to greedy agency owners.
Many of you have said in this and other posts you want an experienced PM, who is going to offer you good service etc etc. They do not come cheap and whilst I luckily have many long term staff in my business (10 years +) there is no way an office can offer what you want at a 5% management fee.
As has been said before pay peanuts get monkeys... To have a rent roll where each PM manages 100-120 properties (which is all you can realistically do if you want the service you are all talking about), it cannot be done with a high calibre of staff and low ratio of properties at 5% management fee.
