Letting Fees POLL

How should we remunerate property managers

  • Standard method

    Votes: 25 78.1%
  • Flat rate

    Votes: 2 6.3%
  • Hourly rate

    Votes: 0 0.0%
  • Fee for service

    Votes: 5 15.6%
  • Other (please explain in a post)

    Votes: 0 0.0%

  • Total voters

Suggo's post about letting fees was very interesting, and I thought I'd post a poll.

Please have a look at my post Duties of property managers
To explain what I believe the duties of a property manager are (Joanna may be able to add to these)

These are the poll options:

1: Standard Method

% of rental per week (usually around 8%) PLUS a letting fee (Usually 1 to 1.5 weeks rent.)

2: Flat rate method

A flat rate for all properties managed by an agent. This would have to be based on roughly the yearly rate of the 80th percentile mark of the properties managed in the area.

For example, if the properties managed range from $180 - $280 per week, then the yearly rate would be based on $260, and would be $1340 per year, which is $25.76 per week. (note, only one letting fee allowed in this calculation).

3: Per hour of service

Every hour the property manager spends they log and charge you. Similar to remunerating an accountant or solicitor.

Based on current property management wages, and office overheads this would have to be around the $150 per hour.

4: Fee per each service

The property manager charges you for each and every service.

For example,
Writing a lease: $50
Signing lease with tenants: $75
Condition report: $200
Paying rates: $10
Checking if rent paid $10

5: Other

Please feel free to post other methods you feel might work and be fair.

I really hope we get a good response to this poll.

It is a very interesting question, I can't wait to see the responses!

Also, please note all prices above are based on that roughly $260 average rental. Obviously where the rents are much higher or lower the prices would vary accordingly.

Go forth and poll!!

asy :D
budgeting for management fees...

I was thinking...

(don't do it often, bear with me... ;) )

I wonder if the fact that the 'Standard method' is budgetable has anything to do with the poll results so far, and/or if anyone hasn't thought of that and has voted for an hourly rate, whether that would alter their view?

What I mean is, that say the rent on the property is $200/wk, you know that you will be paying around the $1030 allowing 1 letting fee and full occ.

Whereas with the Fee for service method, um, what do you budget?

interesting thought...

anyone care to comment?

asy :D

(By the way, if anyone DOES want to change their vote, PM me and I will change it for you)
Hi Asy

Interesting discussion.

I think it is vital that agents are given and incentive and rewarded for good work. A percentage of rent does mean that if the rent is increased that the agent gets more money (not much I grant but over multiple properties it would add up)

With one agent who has promised us rent increases over the first 12 months of management we have agreed that her rates can increase 12 months after we have signed with her. This effectively put her on 12 months probabtion and if she manages up the rents as indicated then we will both have more $$ in our pockets. We were happy to pay more for a better service because it is the nett rents that matter in the end.
True GA.

I agree! It is vital that regular rental reviews are performed, for both the landlord's and the property managers.

Every year the cost of running the agency goes up, the wages go up (Even if only CPI) and if the property management income doesn't go up to compensate then the department starts choking, and this is not good for the agency, nor the landlords.

Every property should have a rental review every year, or at LEAST whenever the tenants change. The PM should present their views on the re-assessed rental to the landlord then it is their perogative whether or not to implement this alteration.

This incremental alteration in the rent reflects in the same percentage increase in the PM department's income. For example, a rental increase from $200 to $205 per week makes a difference to the Agency (at 8%management fee + 1 letting fee) of $25.80 per year. Not to mention putting an additional $439.20 in the landlord's pocket!!!

If your PM is managing 150 properties, this is $3870. This enables your Property manager (and admin staff) to have their CPI wage rises, and also goes toward the increases in expenses over the year.

This means that the percentages don't keep creeping up. So that 8% (on average) stays at 8% and doesn't creep to 10 or 12...

Does this make sense?

asy :D