PM Fee's, WA

[Ralph]

Appreciate any views on reasonable PM fee's for within 3k's of Perth CBD.

Looking at a mob who are :

Setup
$300 mktg /advertisement for first time letting (inc. professional photography)
$180 initial condition report
2 weeks rent + GST

Ongoing
8.8% on gross collections (i.e. not just rent but any bond deductions, water payments etc.)
$5.50 pmth for statements
$66 per inspection
$50 annual account summary
$99 lease renewal
$130 final bond inspection

Works out at an annual cost of ca 9-10% of gross rental.

They come recommended.

Appreciate any views of others re rates.

Cheers,

Ralph

 

[russellpeter]

wow maybe I should move my business to WA

 

[Sez]

wow maybe I should move my business to WA

Exactly what I thought when I read that!!!

Ralph, if they are highly recommended and they do a good job, it doesn't matter what you pay because good management of your property will be worth every cent.

 

[Kent Cliffe]

Perth Property Management rates are higher then anywhere else in the country for various reasons. These fees I would say are pretty industry average.

Rather the focusing on fees, I would recommend checking the quality of management by asking a few of the following questions (be sure to get there answers in writing/email):

What is the cap of properties for each property manger?
A good agent will have it on paper that they stay under 100 properties per agent. This is important because if they are managing 150 properties, that is 150tenants, 150 owners, plus trades and other services (talking to 350 - 400 people every month successfully is almost impossible to keep up) .

What areas do they manage in?
If they say everywhere or are willing to take any property, this is not good. Another test is ask if they will manage a property in x suburb (far away from your current properties). A good managing agent will have a core area they specialise in and then reject properties outside of it. Therefore, they are able to operate under economies of scale. This means the cost to operate is lower and they can provide you with better service.

Ask them for a written customer service charter and a marketing plan. If this is not written up, good luck on holding them accountable to getting back to you when something goes wrong with the property or marketing it well.

Ask to see a copy of their end of month statements and get your accountant to check that they are adequate or if they could improve it in anyway. I've seen really bad ones that cost extra $$$ in bookkeeping fees.

Another good test is to ask if they take photos for the routine inspections. I have heard of some managing agents who mock these reports up when they get a little busy (it is not always the agency - but sometimes the overworked property manager). Photos guarantee that they have been inside every room. This is especially important if you are far away from the property.

I have a document with quite a few more questions your can ask, msg me you email and I can send them onto you.

 

[sanj]

Exactly what I thought when I read that!!!

Ralph, if they are highly recommended and they do a good job, it doesn't matter what you pay because good management of your property will be worth every cent.

so does this mean 10% would be justified? what about 12%? maybe 15%?

pls excuse the snide tone but it is a pet peeve of mine as it is often used to justify stupidly high fees in some professions

 

[Sez]

so does this mean 10% would be justified? what about 12%? maybe 15%?

pls excuse the snide tone but it is a pet peeve of mine as it is often used to justify stupidly high fees in some professions

I wouldn't charge anywhere near that but I am in VIC where the average fees are lower. What I am saying is that the slightly higher fees of the bunch won't always be the best agency but the slightly lower may not be either. If they are falling in the area's average then check their references, if they are doing an excellent job the fees won't be a sore point.

Snide tone excused , I am a PM and I come across it often, I must say I get annoyed at the other side of the scale as well, agencies offering management for 3.3%, providing the service which is being paid for (little to no service) and giving the rest of us a bad name!

Although PM is a profession I don't think that stupidly high or stupidly low fees can be justified at any time.

 

[sanj]

I wouldn't charge anywhere near that but I am in VIC where the average fees are lower. What I am saying is that the slightly higher fees of the bunch won't always be the best agency but the slightly lower may not be either. If they are falling in the area's average then check their references, if they are doing an excellent job the fees won't be a sore point.

Snide tone excused , I am a PM and I come across it often, I must say I get annoyed at the other side of the scale as well, agencies offering management for 3.3%, providing the service which is being paid for (little to no service) and giving the rest of us a bad name!

Although PM is a profession I don't think that stupidly high or stupidly low fees can be justified at any time.

fair enough, thanks for the measured response.

 

[jaycee]

so does this mean 10% would be justified? what about 12%? maybe 15%?

pls excuse the snide tone but it is a pet peeve of mine as it is often used to justify stupidly high fees in some professions

Add it up one by one..... I work out 15% or something at least...
My last PM charge 8.5% PLUS GST, bringing the managment fee to 9.35%

If this PM also charges 8.8% + GST, that bringns jsut the managment fee to 9.68% alone !

So thinking that the total = 10% pa coudll leqave you a bit disspaointed/surprised....

Kent might be right.. this is pretty average pricing, so the focus mi9ght be on how to identiyf a good PM / company...

 

[Sez]

fair enough, thanks for the measured response.

Any time! As I said, I am a PM, diplomacy is something I am quite skilled in .

 

[Chomp]

So if one manager can handle 100 properties,

Avg rent $350 x 52 = $18,200.00

10% = $1820

$1820.00 X 100 = $182,000.00

How much does a PM make? seems to be a bit of fat in there for a start up, if you could handle the complaints from tenants and landlords, no problem.

Chomp

 

[yadreamin]

I think you will find that most PMs will provide an annual statement fee free of charge. Just ask.
I have just signed up to 13% pm FEE. iT includes everything . A PM mate worked it out for me that it was the cheaper option by far. With all inclusive l should be paying near 18% if you add it all up one by one
cheers

 

[vbplease]

Add it up one by one..... I work out 15% or something at least...

Actually, over 15% for the first year.. Even if you average out over 5yrs it seems over the top.
I've noticed a few threads on the about PM fees in WA for some time.. I wonder if anyone will start up a business to undercut?

 

[Jody in Darwin]

I would recommend checking the quality of management by asking a few of the following questions (be sure to get there answers in writing/email):.......

Really good suggestions Kent. I believe many issues would be avoided if property investors asked these questions of every agent they consider using.

KR,
Jody

 

[russellpeter]

So if one manager can handle 100 properties,

Avg rent $350 x 52 = $18,200.00

10% = $1820

$1820.00 X 100 = $182,000.00

How much does a PM make? seems to be a bit of fat in there for a start up, if you could handle the complaints from tenants and landlords, no problem.

Chomp

Hi Chomp

after looking at the numbers like you have just shown us

was one of the reasons i decided to charge a flat fee rather than a %

 

[Bigtone]

Perth Property Management rates are higher then anywhere else in the country for various reasons. These fees I would say are pretty industry average.

what r those reasons Kent?

always hearing about the WA pm fees but never hear the real reason why.

 

[jaycee]

Perth Property Management rates are higher then anywhere else in the country for various reasons. These fees I would say are pretty industry average.

what r those reasons Kent?

always hearing about the WA pm fees but never hear the real reason why.

Iremember someone suggesting collusions & "cause we can" as the resons...

Perhaps Kent can enlighten us ?

 

[sanj]

like most things WA related i think a lot of it boils down to a couple of things.

1)a big part of it is simply cos they can. unfortunately in a lot of ways we in WA are like the beverly hillbillies, a bunch of hicks with more dollars than sense who are willing and able to be bent over by businesses everywhere. we have this terrible approach of just going "oh well, this is what it must cost" and then paying what is asked.

2) people say lack of competition but i dont think this is entirely true as there are a number of private property management companies too and not just the big companies like professionals etc

this is of course the opinion of a non real estate professional but i do believe they at the very least contribute to the problem

 

[Kent Cliffe]

Before I worked in the industry I would have agreed with Sanj.

But here is my un-researched, untested and unproven opinion:

Property management is a service and it also has a geographic restriction. For example, if there was a shortage of loan assessors in WA and there were heaps in VIC. The wage and thus the price of loan assessors went up, the simple solution would be to email the loan through to VIC and then back. Quick fix and it would resolve the increasing cost. However, you can’t exactly get a Property Condition Report done in VIC.

Now the main costs to property management companies are wages. I can guarantee, anyone who is a property manager in Perth back in 09 could easily get a job as a cleaner up at the mine sites earning $70k pa. This puts wage pressure on PM employers and thus increases there bottom line, so they pass this onto consumers.

If you want to see an explanation of why wages and thus prices haven’t come down, see also: http://en.wikipedia.org/wiki/Sticky_(economics)

The other costs of a PM agency are leasing, essential services and advertising. These also are intrinsically high in WA to the rest of the state.

Here is an article giving a backing to the high costs of doing business in WA:
http://www.google.com.au/url?sa=t&s...49HyDQ&usg=AFQjCNGLVyixkIkQF6UsW2wrBN2Kveahrw

I would like to say, it’s all a big bad rip off in WA and some property managers should come in and undercut everyone and offer amazing service (kind of like what Sanj is alluding to) but guess what? If that was the cases it would have happened already and they would have 90%+ market share.

 

[sanj]

kent im well aware of the costs of running a business, our own has been running for 14 years in australia and 20 in singapore.

your reasons might explain some of the higher fees but i do not believe that they justify all of them. incidentally to use the age old "they could go to the mines instead" argument is not correct here as the usual demographic of PMs are not the same people who want to go work on the mines (talking generally here, obviously there are exceptions to every rule)

in terms of rent, again, are you saying our rent is higher here than sydney and melbourne and significantly so? you will find shitty property managers is say maddington where the rent is cheap will be more expensive than some in inner sydney, this makes no sense whatsoever if rent is a big factor.

 

[jaycee]

kent im well aware of the costs of running a business, our own has been running for 14 years in australia and 20 in singapore.

your reasons might explain some of the higher fees but i do not believe that they justify all of them. incidentally to use the age old "they could go to the mines instead" argument is not correct here as the usual demographic of PMs are not the same people who want to go work on the mines (talking generally here, obviously there are exceptions to every rule)

in terms of rent, again, are you saying our rent is higher here than sydney and melbourne and significantly so? you will find shitty property managers is say maddington where the rent is cheap will be more expensive than some in inner sydney, this makes no sense whatsoever if rent is a big factor.

How can the mines have any relevance to PM wages and none to nearly everyone else's in WA - based on that theory, I could have quit myjob & gone up North to the mines and earned a truckload...fair enough however, when they last replaced someone in my local team, the person who stepped into the job got paid leess not more (this has been consistent since prior to 2009 and has not changed since)

Rent - again, it only affects PM's ? Not every other business in WA, making them that much more expensive than their counterparts nationwide ?

I'm not trying to suggest anything other than a doubt on the reasons given based on logic, I have no agenda/opinion about why prices are like they are