PM Fees - is this OK?

[DreamzUnlimited]

Hi all :

Just got a quote from a PM for a property in Melbourne. It is as follows :

1. Management fee - 7% incl GST

2. Leasing fee ( new tenants ) - 1.5 weeks rent incl GST( including lease board )

3. Internet marketing - $99 incl GST

4. NTD history and credit check - $15 incl GST

5. Re-letting fee ( current tenant ) - NIL

6. EOFY statement - $33 incl GST

7. Monthly statement - $3.30 incl GST

8. Registered post, if any - $5.5 incl GST

Does this sound right? If not, what can be negotiated ?

Cheers!

 

[James Bond]

1. Management fee - 7% incl GST - I pay 6+GST

2. Leasing fee ( new tenants ) - 1.5 weeks rent incl GST( including lease board ) - I pay 1 week

3. Internet marketing - $99 incl GST - I pay 0

4. NTD history and credit check - $15 incl GST - same

5. Re-letting fee ( current tenant ) - NIL - same

6. EOFY statement - $33 incl GST - I pay 0

7. Monthly statement - $3.30 incl GST - I pay 0

8. Registered post, if any - $5.5 incl GST - same

JB

 

[Brett R]

If your happy with the property manager and you can get the same deal as James, I'd say grab it!

 

[Jolly123]

Are PM provisions the same for the same franchisee?

Hi All,

I'm just wondering if there is some kind of same provisions if the REA under the same franchisers in the same city, eg. Ray White around Sydney will have the same PM provisions.

Jolly

 

[Damien Cox]

Hi All,

I'm just wondering if there is some kind of same provisions if the REA under the same franchisers in the same city, eg. Ray White around Sydney will have the same PM provisions.

Jolly

You'll find that they will all be different. Most franchised REA's are free to set their own PM rates and policies.

 

[Sez]

Where in Melbourne is the property?? Location changes everything.
If you're in Melbourne City then that is a fairly low quote compared to a lot of the city agencies .

 

[DreamzUnlimited]

Hi sez

Its in outer east of Melbourne - Croydon.

Cheers!

 

[Sez]

I'd be asking them to wipe the EOFY statement fee and also ask them to email you your statements therefore you shouldn't get charged a 3.30 postage fee .

You can only ask!!!!

 

[skater]

Just got a quote from a PM for a property in Melbourne. It is as follows :

1. Management fee - 7% incl GST

Seems like a good deal. Many PM's will charge 7% excluding GST, making it 7.7%.

 

[cheechee]

PM in Adelaide

For those that are investing in Adelaide, would you know whether its common for a PM to charge a tenancy renewal fee ( 1 wk rent plus tenancy agreement preparation fee) when tanancy agreement expires and is renewed for existing tenant?

I recently received a letter from my PM asking me to authorise a renewal and was told I would be charged. I was wondering whether its compulsory to sign an agreement for renewal, as in NSW I think it's common not to sign another agreement when the lease expires.

Thanks for sharing.

 

[Damien Cox]

For those that are investing in Adelaide, would you know whether its common for a PM to charge a tenancy renewal fee ( 1 wk rent plus tenancy agreement preparation fee) when tanancy agreement expires and is renewed for existing tenant?

I recently received a letter from my PM asking me to authorise a renewal and was told I would be charged. I was wondering whether its compulsory to sign an agreement for renewal, as in NSW I think it's common not to sign another agreement when the lease expires.

Thanks for sharing.

The renewal fee is standard, the agreement preparation fee however, differs depending on your PM. We don't charge it as it is included in the renewal fee.

You do not have to renew the lease. You can just let the fixed term lease expire and then it will automatically become a periodic lease. Most landlords want the peace of mind that their tenants are locked in for another 12 months so they renew the fixed term lease.

Also note that some LL insurance does not cover tenants on periodic leases. Check your LL insurance policy if you have one.

 

[Damien Cox]

Hi cheechee,

I just want to clarify a couple of points in my comment above as I was a bit vague on a couple of things.

When I said you don't have to renew the lease I was referring to the fixed term lease. You still need to do one of two things. Renew the fixed term lease or start a new periodic lease.

When I said that the fixed term lease automatically becomes a periodic lease, I meant that your PM will draft a periodic lease if you do not renew the fixed term lease.

Either way, a lease renewal fee will apply. My comment above made it sound like you could just ignore the letter from your PM and roll on to a periodic lease at no charge which is not the case.

I feel much better now

 

[skater]

When I said you don't have to renew the lease I was referring to the fixed term lease. You still need to do one of two things. Renew the fixed term lease or start a new periodic lease.

When I said that the fixed term lease automatically becomes a periodic lease, I meant that your PM will draft a periodic lease if you do not renew the fixed term lease.

Either way, a lease renewal fee will apply.

Really? Please excuse my ignorance, as I am in NSW. I have an IP in Vic & I used to have a couple in Tassy, so is this a SA thing?

In the States that I have owned IPs, the leases automatically roll over to a periodic lease. The Agent doesn't need to do anything for this to happen. Either way, resigning a lease, or rolling over to periodic, I have NEVER paid a renewal fee. Although in saying this I am aware that some VIC agencies charge a renewal fee.

 

[Damien Cox]

Hi Skater,

Yes, this is an SA thing. In SA, a fixed term lease is exactly that, a lease covering a fixed term. Some form of action needs to be taken at the end of the lease. Either a renewal of the fixed term lease (technically an extension but commonly referred to as a renewal) or a periodic lease is put in place if both parties agree.

 

[fisherman]

Really? Please excuse my ignorance, as I am in NSW. I have an IP in Vic & I used to have a couple in Tassy, so is this a SA thing?

In the States that I have owned IPs, the leases automatically roll over to a periodic lease. The Agent doesn't need to do anything for this to happen. Either way, resigning a lease, or rolling over to periodic, I have NEVER paid a renewal fee. Although in saying this I am aware that some VIC agencies charge a renewal fee.

REAs are being encouraged by trainers who promise better returns for them from their property management to diversify their charges. There is an increasing range of such 'taxes' to be paid by owners and each can be jacked up by further double dipping on 'administration, 'postage' and so on.

One wonders what the 7% 'management fee' covers, apart from all care and no responsibility.

Property owners are being nickle-and-dimed to death.

However we are fortunate that there are some effective PMs out there who are organised and good at detail, and some post to this forum. They may be few and far between though.

It is also relevant that tenancy regulations and Tribunal decisions have made what was once a simple contract between individuals into a complex, counter-intuitive mess of legalistic red tape that is a huge overhead for all parties, owners, PMs and responsible tenants.

 

[cheechee]

Hi cheechee,

I just want to clarify a couple of points in my comment above as I was a bit vague on a couple of things.

When I said you don't have to renew the lease I was referring to the fixed term lease. You still need to do one of two things. Renew the fixed term lease or start a new periodic lease.

When I said that the fixed term lease automatically becomes a periodic lease, I meant that your PM will draft a periodic lease if you do not renew the fixed term lease.

Either way, a lease renewal fee will apply. My comment above made it sound like you could just ignore the letter from your PM and roll on to a periodic lease at no charge which is not the case.

I feel much better now

Thanks Damien.

So either way I will have to pay.

I must say my thinking is the same as Skater's. I was really suprised to hear that I have to pay renewal Fee when the agent needs much less effort to renew a lease for an existing tenant.

And out of all the properties I own across 3 states, NSW, QLD, & SA, the management fee in SA is the highest (with the lowest growth ). It will make me think twice next time before choosing SA for another IP.

 

[Chris B]

With competition most PM's in an area will tend to charge roughly similar fees unless they have another way to distinguish themselves. A lot of people end up choosing their PM based mainly on fees, as it is often assumed that each company provides basically the same service, but it is worth doing your research. It's easy for landlords to be fairly happy with their PM until something goes wrong and only then will you find out whether your PM knows what they're doing.

Some things I would suggest you find out before choosing your PM.
- How many properties do they manage?
- How many staff are in the property management dept?
- How much experience do the staff have and how long have they worked there?
- How long are you committed to using them? I would want to be able to cancel at anytime, to ensure they are accountable.
- What systems are in place when staff are absent or if staff leave the company?
- Do they take photos to be used as evidence of the condition of the property?

It can be good to look at the external condition of some of the properties they manage or attend inspections of other properties they are trying to lease. Get testimonials from landlords and even previous tenants if possible. Many PMs treat their tenants like rubbish, which doesn't help you to keep them for longer term.

Some PM's are ridiculously over-worked as the agency see them as a cash cow and keep adding to their list of properties without adding resources. This can result in high turnover of staff which reduces the level of service.

If you want to quickly get a range of quotes, you can post your property on sellmycastle where local agents will submit proposals. There is no obligation for you to use any of the agents but if you do, SMC will charge the agent 1 week's rent as a referral commission, so agents may increase their fees to allow for this.