PM fees 3.3% in Western Sydney?

[RetireRich101]

I am currently using Laing Simmons to manage my properties in Western Sydney.
Previously I was with Starr Partner and the fees was 7%. When I switched to LS the fee was 5.5%.. I thought that was really good, but it seems when you ask around everyone seems to get this rate or slightly lower but nothing lower that 4%..

I came across Andrew Merton RE ..I know they're around and have promoted 1% Selling fees, but have never ever used their services..
Today I happen to spoke to the owner Andrew Merton, he said he is charging his clients with multiple properties a fee of 3.3%..

At the moment, I am happy with LS looking after my properties in the last year, but i did the maths on 3.3% I could potentially save $2000 a year

Cheap doesn't mean good, hence this thread.
Anyone used Andrew Merton? even if it's 1 property on higher rate, please share your experience.

 

[Bargain Hunter]

Once we are happy with a PM we will follow them from one agent to another, that being said our PM was promoted and their replacement is not of the same calibre. Perhaps it's time to consider Andrew Merton especially at the rate you're quoting.

 

[DaveM]

Enquired about prop for lease at AM a few years ago. Rang and left message after message, no call back.

Eventually leased something else then after 2 weeks got a call back asking if I still wanted to inspect.

AKA you get what you pay for

 

[Rolf Latham]

I dunno the service provider in question

What I do know is that something needs to be sustainably VERY different when one looks at the "same" product or service and one service is 66 % more costly than the other.

ta

rolf

 

[D.T.]

It'd be interesting to see if either
A. It's a short term promo and rates will go back to normal soon (and whether existing clients will keep theirs or not), or
B. He's just rapidly building the rent roll up for sale / retirement and can't keep up with servicing it properly.

 

[BV]

Cheap doesn't mean good.

Correct but expensive doesn't mean good either.
I've tried a few over the years and it all comes down to how motivated the property manager (PM) is to solve problems.
The other problem I found is that even if the PM is motivated he will often be overloaded with work.
They take on too many managements so when your property becomes vacant they don't move quickly enough.
Tenancy Applications can sit on their desk (or in their inbox) for days if not weeks and you won't get to have an open house often enough.
Those owners who don't complain or are not involved in the process of finding a tenant and don't ask for a daily update will get the worst service.

Will I go with Andrew Merton?
I'd ask to talk to their PM and see what he is like and to find out how many managements he is looking after.

 

[RetireRich101]

Come to think of yes this is correct. I have a property Sydney CBD and fees were 7.7% which is higher than other of my PM..
I get a discount of 10% on my strata if the PM pays on time. There was one time PM didn't pay on time, hence I got charged extra. The reason PM provided was there was a change of tenancy and there was no money in the bank. I had to get to the PM's boss to explain it is logical that PM's deliverable is to provide me a courtesy call to advise I dont have funds in the account to pay strata, else I would transfer from own fund..

Going back to the AM, they were using the strategy of '1% selling fee'. Some may argue how can they survive, but they have been doing this for at least 5 years+ that I am aware of. Just looking at their listing they have 85 for sale across sydney west, with 2 offices only..

Love to hear from anyone here who has used AM for their Sales or Management.

 

[DaveM]

Going back to the AM, they were using the strategy of '1% selling fee'. Some may argue how can they survive, but they have been doing this for at least 5 years+ that I am aware of. Just looking at their listing they have 85 for sale across sydney west, with 2 offices only..

Its 1% + GST (in tiny letters, which is in breach of price advertising laws) + advertising + printing + expenses.... adds up to 2% quick enough like other agencies.

 

[Xenia IM]

3.3 sounds attractive from a consumer view point. I want to offer a perspective from a business owner view point.

at say 8% (forget gst for now as that is not relevant for the point I'm trying to make) - the average income for a $400 per week property is $32/week. If you have 100 properties that is $166,400 per year.

For very effective service you need one property manager and at least 2 admin staff to manage 100 properties. Plus subscriptions to default databases, realestate.com.au - the best subscriptions cost thousands per year, plus travel plus plus plus.

at 3% - the income is $12 per week per property - that is $62,400 per year.
that means that more properties are required to support what we call an "effective business unit" -

if a PM team needs to manage 200 - 250 properties, that is one PM with the 2 back up staff, just to cover the salaries then balls would have to be dropped on service because staff are overloaded with too many properties.

Real estate companies are expensive to run, there are audits every single year, legislation compliance, trust accounting, licensing compliance - the list goes on and on.

staff burnout is very high, sales people burn out due to non performance, property management staff burn out due to emotional exhaustion. The more properties they manage, the higher the burnout rate. One year max is the average burnout rate for a PM.

the above is based on an assumption of $400 per week for the average property. The problem becomes worse with lower end properties that are bringing in a lower income.

3.3% can certainly work with higher end properties as the gross amount paid to the real estate company is higher.

With any product or service industry you get to choose only 2 factors out of PRICE, QUALITY AND TIME. Usually not all 3. If you are winning on price then time or quality are compromised. Ie fast food - very cheap, very fast, very low quality. Silver service restaurants, high quality but not cheap.

In the property management industry, neither quality nor time can be comprimised as every mistake or neglect costs the property owners big $$$

 

[TMNT]

3.3 sounds attractive from a consumer view point. I want to offer a perspective from a business owner view point.

at say 8% (forget gst for now as that is not relevant for the point I'm trying to make) - the average income for a $400 per week property is $32/week. If you have 100 properties that is $166,400 per year.

For very effective service you need one property manager and at least 2 admin staff to manage 100 properties. Plus subscriptions to default databases, realestate.com.au - the best subscriptions cost thousands per year, plus travel plus plus plus.

at 3% - the income is $12 per week per property - that is $62,400 per year.
that means that more properties are required to support what we call an "effective business unit" -

if a PM team needs to manage 200 - 250 properties, that is one PM with the 2 back up staff, just to cover the salaries then balls would have to be dropped on service because staff are overloaded with too many properties.

Real estate companies are expensive to run, there are audits every single year, legislation compliance, trust accounting, licensing compliance - the list goes on and on.

staff burnout is very high, sales people burn out due to non performance, property management staff burn out due to emotional exhaustion. The more properties they manage, the higher the burnout rate. One year max is the average burnout rate for a PM.

the above is based on an assumption of $400 per week for the average property. The problem becomes worse with lower end properties that are bringing in a lower income.

3.3% can certainly work with higher end properties as the gross amount paid to the real estate company is higher.

With any product or service industry you get to choose only 2 factors out of PRICE, QUALITY AND TIME. Usually not all 3. If you are winning on price then time or quality are compromised. Ie fast food - very cheap, very fast, very low quality. Silver service restaurants, high quality but not cheap.

In the property management industry, neither quality nor time can be comprimised as every mistake or neglect costs the property owners big $$$

you can justify it whatever way you want and throw whatever figures you want however, if everybody else is offering 3.3% then that is the market figure, on the assumption that everyones performance is relateively similar.

I hate it when agents try and justify their fees of 9.9% when everyone in the area is 7.7 or 8.8% for example.

their first point of excuse is always , "oh we have rent/wages to pay" unless other agencies dont pay rent or staff work for free, thats a dumb argument.

followed by "we screen our tenants very well" or "we do all background checks"

sorry mr/mrs captain obvious, all other agents do the same

 

[DaveM]

you can justify it whatever way you want and throw whatever figures you want however, if everybody else is offering 3.3% then that is the market figure, on the assumption that everyones performance is relateively similar.

But not everyone else is offering 3.3%. Its incredibly low, where the comparable 5+ property rate is circa 5.5% and 2-4 is 6.6%.

The lowest off the rack price I had seen of late was 4.4% from a relatively low key agency, mainly aimed at investors who bought through them.

 

[westminster]

you can justify it whatever way you want and throw whatever figures you want however, if everybody else is offering 3.3% then that is the market figure, on the assumption that everyones performance is relateively similar.

I hate it when agents try and justify their fees of 9.9% when everyone in the area is 7.7 or 8.8% for example.

their first point of excuse is always , "oh we have rent/wages to pay" unless other agencies dont pay rent or staff work for free, thats a dumb argument.

followed by "we screen our tenants very well" or "we do all background checks"

sorry mr/mrs captain obvious, all other agents do the same

I'm not so sure. A company that pays a good PM more than a bad PM. all PMs are not paid the same wages. You might have a lacky admin person being a PM or an experienced PM who you've stolen from the competition because they are brilliant.

A good PM agency will also have more staff per 100 dwellings than a bad one.

 

[BV]

I hate it when agents try and justify their fees of 9.9% when everyone in the area is 7.7 or 8.8% for example

I have previously tried to negotiate a rate with Starr and they went on telling me how they do a better job than others in the area etc etc.
In the end I took my properties away from them.

The reason? poor performance when the tenant was paying late, poor performance with inspections, poor performance when they trying to lease a property.

Many agencies suffer from the above so when you find a good one keep him.

 

[TMNT]

But not everyone else is offering 3.3%. Its incredibly low, where the comparable 5+ property rate is circa 5.5% and 2-4 is 6.6%.

The lowest off the rack price I had seen of late was 4.4% from a relatively low key agency, mainly aimed at investors who bought through them.

of course in this siuation, 3.3% is stupidly low, whereas the market is 5.5%-6.6%

I have an area where I gave them 5 properties at the same time and it was a struggle getting down from 9.9% to 8.8% when the market was 7.7%-8/8%, and their excuse was "oh we have rent to pay"

I chose them because I heard good things about them, and was giving them a shot first

 

[Rolf Latham]

you can justify it whatever way you want and throw whatever figures you want however, if everybody else is offering 3.3% then that is the market figure, on the assumption that everyones performance is relateively similar.

I hate it when agents try and justify their fees of 9.9% when everyone in the area is 7.7 or 8.8% for example.

their first point of excuse is always , "oh we have rent/wages to pay" unless other agencies dont pay rent or staff work for free, thats a dumb argument.

followed by "we screen our tenants very well" or "we do all background checks"

sorry mr/mrs captain obvious, all other agents do the same

The great thing is we all have choice

Here, specially the example is based on a 60 % spread of pricing ......something very Different needs to happen for that to be sustainable.


Ta

Rollf

 

[TMNT]

I have previously tried to negotiate a rate with Starr and they went on telling me how they do a better job than others in the area etc etc.
In the end I took my properties away from them.

The reason? poor performance when the tenant was paying late, poor performance with inspections, poor performance when they trying to lease a property.

Many agencies suffer from the above so when you find a good one keep him.

I have no experience with Starr, but in my experience, every agent reckons they are better then their competitors, in a whole I find property managers generally similar,v (maybe im lucky) ive yet to have one that was totally incompetent eg forget inspections, forget reports, withholding bond, missing major things in exit/entry report.

I had one who had a reputation that I found out after was a dodgy character and didnt do any inspection reports, and bad mouthed everyone in the area and was called "gutter trash" by other agents who had worked with him in the past

 

[DaveM]

in a whole I find property managers generally similar,v (maybe im lucky) ive yet to have one that was totally incompetent eg forget inspections, forget reports, withholding bond, missing major things in exit/entry report.

http://somersoft.com/forums/showthread.php?t=104996

 

[BV]

http://somersoft.com/forums/showthread.php?t=104996

I remember when Blink were starting up they had a high management fee
but I don't know if their service was any better than the others in the area.
I've never tried them.

 

[Jamie M]

I can't see how the business can be sustainable with such low margins. I guess you could always give it a go and if things don't work out appoint another one. Personally - I'd focus more on sourcing the best pm in the area rather than the cheapest.

 

[datto]

If you got good tenants even a trained monkey could run an agency. Just collect the money, take your cut and disburse the balance. I have come across PMs who had great difficulty in just disburing the funds!