PM Fees & Percentages

[RedCat]

I've often wondered why PM fees are based on a percentage when some properties are tenanted for 2-3 times as much rent as others. Have you found that you can get a bigger discount on the standard fee if your property is of a higher value?

1BR flat and a 3BR house have very different needs/rental costs etc... shouldn't that be reflected in their fee structures?

 

[ACTInvestor]

Some agents might discount their management fee if the property is of a higher value, but more likely they will discount if you bring more than one property to the agency. I guess that letting fees are a percentage because the properties all balance themselves out. A large, expensive property should probably have a higher letting fee because they might take longer to rent, more showings or more applications to process if they are suitable for group housing. They would also probably require more maintenance and follow up, therefore more man-hours spent than say an apartment, which would warrant the higher fees. I really don't know, just speculating.

 

[Jas]

1BR flat and a 3BR house have very different needs/rental costs etc... shouldn't that be reflected in their fee structures?

I'm curious about your statement here. From a property managment POV, what's the difference between them?

Have to admit, from where I stand, I don't see a lot.

Jas

 

[Paul Do]

Property management costs are closer to a fixed amount per property than variable with rent (within a service area). This is an opportunity for a property manager to differentiate themselves from the pack by charging a flat fee, like RE/MAX did with agents' sales commissions.

Don't be afraid to negotiate the property management fee for what ever reason - higher than average rent, volume discount or rising rents.

In the last few years rents have risen much more than average weekly earnings and CPI, so the property management industry is much more profitable than in the past.

 

[RedCat]

I'm curious about your statement here. From a property managment POV, what's the difference between them?

Have to admit, from where I stand, I don't see a lot.

Jas

Not from a PM POV, but from an investor's POV. Maybe I'll put it a different way. Let's say you have one 3BR house that brings in rental of $300/week and another 3BR house that brings in rental of $500 a week. The work involved with both is pretty much the same yet on a percentage basis the PM earns so much more from one than the other.