Is this good property manager's fee?

[drewy]

Hi all. New to the forums and have read a lot and just asking for some help from people who have experience.

I am looking for an someone to rent out a property which I just bought and to be settled in 1 months time. Location is Nunawading VIC. I was thinking of getting the agent whom I bought the property off to help me rent out and below are their fees. As I do not have much experience with renting out, would someone kindly tell me whether these fees are fair? Or should the fees be lower/higher?

Thanks in advance.

Management Fee
Residential 7.7% of average monthly rental (inc. G.S.T)

Letting Fee
Residential 4.4% of annual rental (inc. G.S.T)

Marketing/Advertising Package $495.00 (inc. GST)
Inclusive of:

 Internet listing on 4 websites
 Noel Jones ‘For Lease’ board with a minimum of 2 pointer boards
 Preparation of copywriting for all advertising material
 In house photography of the premises for advertising purposes
 Inspections of rental property
 Negotiation and preparation of a lease renewal to existing tenants


Other incidentals charged as they occur:

Key cutting As incurred

Year end financial report No charge

Statement Fee $5.50 (inc. G.S.T)

Credit Checks (access to 2 databases) $15.00 (inc. G.S.T)

Photographs for condition report No charge

Tribunal Application Fee $35.20 (inc. G.S.T)

Professional Photography for advertising $105.00 (inc. G.S.T)

Colour Floorplan $97.50 (inc. G.S.T)

Project Management By negotiation

 

[luckyone]

Management Fee
Residential 7.7% of average monthly rental (inc. G.S.T)

Letting Fee
Residential 4.4% of annual rental (inc. G.S.T)

That's 12.1% just to manage the place. Ouch! Should be around the 7% mark for Melbourne I thought.

 

[Propertunity]

Management Fee
Residential 7.7% of average monthly rental (inc. G.S.T)

Average but you could easily get 6.6% and probably even 5.5% (especially if you have 2 or more IPs)

Letting Fee
Residential 4.4% of annual rental (inc. G.S.T)

1 week's rent is normal

Marketing/Advertising Package $495.00 (inc. GST)

Should be provided free to you

Statement Fee $5.50 (inc. G.S.T)

About normal

Credit Checks (access to 2 databases) $15.00 (inc. G.S.T)

Should be provided free to you

Tribunal Application Fee $35.20 (inc. G.S.T)

About normal

Professional Photography for advertising $105.00 (inc. G.S.T)

Take your own or get someone in their office to do it for free.

Colour Floorplan $97.50 (inc. G.S.T)

Forget it - not necessary

 

[twobobsworth]

What's the termination notice period?

 

[cadence]

You should easily be able to get a reduction on 7.7% to 5.5% - 6.6%. If you are taking both properties to the agent, 5.5% should not be a problem.

Where is your property located? If there's good demand for the area, personally I would ask them to advertise on Domain and realestate.com.au as a priority listing (ie: appears on the first page of any search). It should cost you no more than $100. This is a very effective form of advertising. Tell the agent to do at least 2 OPIs in the opening week, one on a weeday, the other one on the weekend, and continue until tenants sign up.

 

[drewy]

Hi all. Wow, thanks I'm overwhelmed with the quick responses. Thanks heaps - there is a lot of valuable info there. I am also considering managing the property myself, as I live on the same street but a few houses away and the property will be so close by.

Would anyone recommend managing their own property? Is it hard?

 

[tobe]

You will find people who recomend self managing, I'm not one of them, especiallly if it was just down the road from where I live!!

 

[jezza]

Drewy

As this is your first you can either you download all the rules about being a landord and what rights renters have and know them inside or get a PM. I would recommend getting a PM, just because you live around the corner does not make it anymore of a advantage. Thos fees are quite high, having the cheapest fees is not the best outcome but with nunawading your advantage is you have about 10 different real estate agents from Blackburn to Ringwood/Heathmont to choose from. Speak to a number of them, find a few that are available for rent this weekend and spend the day going around and seeing how they operate and then sit down with the ones you thought were reasonable and then negotiate the price. I would aim for 6.6% ( inc GST) and maximum 1 weeks letting fee. The rest of the charges might seem minimal but they all add up.
Jezza

 

[kissfan]

I am also considering managing the property myself, as I live on the same street but a few houses away and the property will be so close by.

Would anyone recommend managing their own property? Is it hard?

Hi drewy.

For me personally, it is not so much a matter of "is it hard", but is it worth the hassle.

Just think, you're going to be living very close, so if you get a p.i.t.a. tenant, you may be getting requests/visits etc on a regular basis. I wouldn't want that, but that's just me. I'd be using a PM (sought by all the tips in above posts) and would emphasise to the PM that I don't want tenant to know my address. Perhaps get the PM to mention that the landlord lives local and drives past on a regular basis (tenant probably won't care but it may keep them on their toes.

Not only that, but with self managing, there are certain regulations etc that you must be aware of. This may or may not be of concern, but once again, not for me.

Regards
Marty

 

[rugrat]

I have been playing around with the idea of being my own pm. I already have a reasonable understanding of the regs. Having said that, it really boils down to whether or not I want to have to be the one who deals with the tenant.
At this point I have decided to use a pm initially and see how it goes, and revisit the idea of self management later. The pm company I plan on using, also have a list of services they can provide for those who selfmanage (ie, sourcing tenants, tribunnal representation etc). Maybe that is an avenue you could look into.

 

[ltk333]

My advice is do due diligence and get multiple PM's to come to your area.
I found that just by having 3 agents come through the property, my complete fees were offered at 4.4% inc GST + a $5 monthly statement fee + 4 months free commissions.

Remember that its a substantial source of revenue for the agencies, and consider that you hold an asset for 5-10 years, even at only 4% cut, you can see why they compete for the business!

 

[ACTInvestor]

What sort of PM Agency would work for 4.4% less 4 months free commission? Are they really going to look after your property? I am all for reducing your costs where possible (why pay a condition report fee, statement fee or a postage fee ?) but 4.4% sounds extremely low to listen to whinging tenants, do periodic inspections etc. This person is looking after my investment and I expect to pay them fairly to do that. It sounds to me that PM company is in financial trouble if they have to resort to that. Either that or they are doing it for the love.

 

[ltk333]

ACT Investor - I've never had experience dealing with PM's outside of Sydney's North Shore so I'm not sure however would imagine the market would be different elsewhere.
I would guess maybe a blue chip suburb with typically easy tenants, + solid returns makes it a steady income stream without to much work for the agency.

 

[skater]

Hi all. Wow, thanks I'm overwhelmed with the quick responses. Thanks heaps - there is a lot of valuable info there. I am also considering managing the property myself, as I live on the same street but a few houses away and the property will be so close by.

Would anyone recommend managing their own property? Is it hard?

To self manage, you need to ask yourself if you are really self disciplined enough to send out all the notices on tim?. Are you going to learn about the tenancy laws? Are you a good judge of character, so that you get the right tenant? Are you happy for the tenant to call you whenever they need something? What would you do if you got a PITA tenant?

I used to have an IP that was at the back of my own home. I still used a PM. I don't want the hassle of doing the PM job myself. Sure, you might save a little money, but at the end of the day, I would still always use a pM.

BTW, those fees you were quoted are highway robbery. I'd shop around a little, if I were you, but be warned that fees aren't the only consideration. You want a PM who is going to do a good job.

 

[Gools]

Drewy, what is the market rent for your place? All these % figures don't tell the whole story without including a dollar figure.

 

[Ben1978]

those costs seem exorbitant to me. for our VIC property we're paying 6% inclusive of GST for management + 1 weeks rent.

Didn't pay for anything else - no marketing fee, photos, copywriting, REA listing.

We get $430 gross pw so PA income of around 22k ... fees sit somewhere around 1,500-1,600 PA which feels fair to me.

 

[Xenia]

Cool

always good to see how others spread out their fee structures and how they upload and upsell their services, sounds professional. I've printed it out

can you say who the company was?

never mind the "shoulds" if you are happy with them go for it. If you screw professionals down too much you could be branded as a "C-Class landlord" and be the first to go if they sell the rent roll.

 

[lura]

http://www.noeljones.com.au/