What are the typical percentage rates that you pay to real estate agents to manage your commercial property? I've read that some people pay around 4-5%+GST and that it is usually below the percentage paid for residential property. Is this correct?
Agents commission - leasing out commercial property
- Thread starter thesuperman
- Start date
I guess we are paying too much then as we're paying 6%+GST, property worth about $500k 
The property was already tenanted prior to purchase & was managed by the previous owner themselves (no agent). Then we got an agent to manage it after purchase. We didn't get charged 1 week's rent or a leasing fee though as the tenant was already there so nothing for them to do in this regards.
Maybe should touch base with agent to negotiate the percentage down.
The property was already tenanted prior to purchase & was managed by the previous owner themselves (no agent). Then we got an agent to manage it after purchase. We didn't get charged 1 week's rent or a leasing fee though as the tenant was already there so nothing for them to do in this regards.
Maybe should touch base with agent to negotiate the percentage down.
Rates do vary a bit Superman - it will vary depending upon how high the rent is eg if you are only getting $20k+gst, then you might be paying the same as residential, likewise if the property is retail there are more compliance issues to worry about than with industrial or commercial premises.
One other factor is the length of the lease prior to renewal - if there are 3-4 years left and the current agent didn't do the lease deal, then it is likely that they will charge a little more to make it worthwhile.
SNM
One other factor is the length of the lease prior to renewal - if there are 3-4 years left and the current agent didn't do the lease deal, then it is likely that they will charge a little more to make it worthwhile.
SNM
As said previously management fee will scale depending upon the rent collected.
A small property generating under $20,000 pa might be 7%, a $300,000pa property might be 3%.
Are they below residential fee's? maybe slightly if comparing the same annual rent. There aren't too many residential properties renting for $300,000pa
Negotiate with your agent, if they want your property they'll come to the party.
A small property generating under $20,000 pa might be 7%, a $300,000pa property might be 3%.
Are they below residential fee's? maybe slightly if comparing the same annual rent. There aren't too many residential properties renting for $300,000pa
Negotiate with your agent, if they want your property they'll come to the party.
I cant compare it to resi and I've never done it.
But you get your easy properties and the time consuming ones, the easy Lessee's and the time consuming ones, easy Lessors and the time consuming ones.
Horses for courses I guess.
But you get your easy properties and the time consuming ones, the easy Lessee's and the time consuming ones, easy Lessors and the time consuming ones.
Horses for courses I guess.
No different to residential. Some properties are harder than others just like some tenants are more difficult than others.
Where a good commercial PM comes into play is the long term approach to the investment.
It all starts with the securing of a good tenant under a strong watertight lease.
It follows through to ensuring the building is effectively managed and in my case, my job is often to ensure that all possible grants are collected, costs are maintained/reduced wherever possible and the clients needs for the property are realised.
Essentially you are paying for the agents knowledge and ability and like residential, quite often those who charge you the least will cost you the cost.
There are always grants being offered for lighting, water etc from public and private entities.
For your 8% I would be expecting a full service from the PM. I would have them paying the bills and collecting the outgoings (if it is a nett lease). Then the agent can prepare the annual budgets, do the reconciliations, invoice the tenant and chase up the arrears (as well as paying all of the bills)
Johnno, it may seem high but the rent is only $27k. If the rent was double that, then I would be expecting a much lower rate.
That said, I have charged less for similar priced properties.
Geoff, shop around with the other commercial agents (avoid the residential agencies).
That said, I have charged less for similar priced properties.
Geoff, shop around with the other commercial agents (avoid the residential agencies).
We charge 5% for properties whether they bring in $10k or $500k + pa. In saying this, it's hardly worth our time for the smaller properties so I understand why people want 8% but I don't think it's fair on the owners.
We're there to do what is in the owner's best interests, so charging them exorbitant fees because they own smaller property doesn't exactly make sense. We'd rather do it for 5% and break even, so that we maintain credibility and when they buy something larger, we're the obvious choice.
Anyhow, I'm getting off topic. Shop around with the local agents because it may be the going rate in the area, but surely they have room to move from 8%.
We're there to do what is in the owner's best interests, so charging them exorbitant fees because they own smaller property doesn't exactly make sense. We'd rather do it for 5% and break even, so that we maintain credibility and when they buy something larger, we're the obvious choice.
Anyhow, I'm getting off topic. Shop around with the local agents because it may be the going rate in the area, but surely they have room to move from 8%.
