Property management fees

M

menty

Ill be leasing out my properties (front house and granny flat) in the coming months with an agent. (Chester Hill). Having never done this before, what are the expected “norms” for fees?
I visited 2 agencies and they have all said they are open to negotiation.
Here is a comparison between the two. (company 1 vs company 2)
* Management Fee: 5%+GST vs 6%+GST. I have managed to bring down the fee for company 1 to 4% +GST as I bought the property from them.
* Admin + sundries: $5+GST per month vs $6+GST per month
* Letting fee: First week rent +GST (initial) for both
* Subsequent letting fee: Half a weeks rent vs 1st weeks rent
* Income and expenditure report fee: $20 + GST vs $0
* Advertising: NIL vs $?
* Tribunal application fee: $36 vs 0
* Representation at hearing: $NIL for 1st appearance, then $50/h thereafter vs FREE.

What else should I negotiate and which one seems better? Is there any difference in choosing between different agencies really?
 
menty said:
* Management Fee: 5%+GST vs 6%+GST. I have managed to bring down the fee for company 1 to 4% +GST as I bought the property from them.
* Admin + sundries: $5+GST per month vs $6+GST per month
* Letting fee: First week rent +GST (initial) for both
* Subsequent letting fee: Half a weeks rent vs 1st weeks rent
* Income and expenditure report fee: $20 + GST vs $0
Click to expand...

Spreadsheet the costs - based on $500 per week

Company 1
Mgmnt $22X52=$1144
Admin $5.50x12=$66
Letting $550
Statement $22
Total = $1772

Company 2
Mgmnt $33x52=$1716
Admin $6.60x12=$79.20
Letting $550
Statement $0
Total = $2,345.20

So without scratching, company 1 is far cheaper

The other things to check out is how often do they disburse funds to owners & how many properties does each PM look after
 
I think you got the management fee for Company 1 slightly wrong, correction below.

Scott No Mates said:
Spreadsheet the costs - based on $500 per week

Company 1
Mgmnt $27.5X52=$1430
Admin $5.50x12=$66
Letting $550
Statement $22
Total = $2068

Company 2
Mgmnt $33x52=$1716
Admin $6.60x12=$79.20
Letting $550
Statement $0
Total = $2,345.20

So without scratching, company 1 is far cheaper

The other things to check out is how often do they disburse funds to owners & how many properties does each PM look after
Click to expand...
 
And the gap only widens if there is a renewal. Tell agent 2 to reduce the reletting fee as well. Make both agents go for a 12 month lease as you don'twant to be paying another midyear letting fee.
 
Why are you not more interested in what services they will supply rather than focus on fees only.

- How many inspections are undertaken each year. Are these photographed?

- What relationship do they have with what contractors and what are their fees.

- Which person will be looking after the property. What is their experience and how long have they been with the agency?

- What is their arrears policy?

- Will they supply you a financial year statement?

- Do they only disburse monies monthly or bi monthly?

These are only a few to mention.
 
Ill be listing one of my places tomorrow.

This is the arrears policy.
"Followed up daily from 3 days arrears up. If tenant falls into arrears of14 days a termination notice is immediately sent, giving tenant 14days to correct arrears. If still in arrears after termination notice expires, application made to Tribunal. "

Inspections carried out 2x per year. (3 months into lease and 6 monthly thereafter). Inspections can be carried out up to 4x per year.
 
menty said:
Ill be listing one of my places tomorrow.

This is the arrears policy.
"Followed up daily from 3 days arrears up. If tenant falls into arrears of14 days a termination notice is immediately sent, giving tenant 14days to correct arrears. If still in arrears after termination notice expires, application made to Tribunal. "

Inspections carried out 2x per year. (3 months into lease and 6 monthly thereafter). Inspections can be carried out up to 4x per year.
Click to expand...

Ordered 3 garage door remotes. Drove 80km to the property. Coded the remotes. Put them on the keyrings and drove back. Charge? 0. Service? Priceless.

And the next Landlord that phones me with 'what's your management fee' will have me call out the sparky to change a smoke alarm battery.
Don't you think it's just a slightly bigger picture??
 
Wow you guys are lucky, Wollongong NSW based Property Manager charged 7.7% inc. GST :-|

that's sounds like rort to me but yes I have to accept that there are not many choices available
 
JohnHenry said:
Wow you guys are lucky, Wollongong NSW based Property Manager charged 7.7% inc. GST :-|

that's sounds like rort to me but yes I have to accept that there are not many choices available
Click to expand...

That sounds a very good rate to me. I'd be very happy if all my PM's charged that rate. I guess it all comes down to what ones benchmark comparison is. One person's trash is another person's treasure.
 
Last edited:
I don't quite understand.

You could pay higher fees and get a good or ordinary PM or you could pay lower fees and get a good or bad PM. I could pay more and buy a house in Brighton or I could pay less and buy a house in Yarraville. The house in Brighton may be much better becasue it has a better repuatation but it decreases my cashflow.
So management fees can play a vital part in people's decisions. It seems it is ok to get a bargain, negotiate, pay 5k less for a house - but to chase cheaper PM fees is missing the big picture?
 
CHAOS said:
I don't quite understand.

You could pay higher fees and get a good or ordinary PM or you could pay lower fees and get a good or bad PM.
Click to expand...

Does anything expensive necessarily be comparatively good too? Don't think so.
I am not in favour of chasing cheaper PMs, but no harm in getting one.
 
Rixter said:
That sounds a very good rate to me. I'd be very happy if all my PM's charged that rate. I guess it all comes down to what ones benchmark comparison is. One person's trash is another person's treasure.
Click to expand...

now I feel grateful mate :)
I thought that I am paying way to high for that. Because in Sydney area, the PM can be as low as 4.4% inc GST
 
Be glad you're not in WA.
I have started ringing around since had a few minor issues with current agent missing items on inspections etc and have a new duplex almost ready to go.

Agent 1)
A Flat Management Fee of 18%
or
A Management Fee of 9.35% incl GST plus a Letting Fee of 3 weeks rent.
Plus charges for inspections ($100) etc.

Agent 2)
Flat 16% of gross collections
or
9.35% of gross collections
Leasing Fee (Equivalent to 2 weeks rent)
Property Condition Report $155.00 (Commencement of Tenancy)
Routine Inspections $ 55.00
Final Bond Inspection $ 80.00
Advertising Costs $ 15.00 ($15.00 per Week when Vacant)
Lease Renewals $ 85.00 (Every 6 to 12 Months)
Administration Charges $ 10.00 (Per Month)
Court Attendance if Required $ 99.00 (Hourly Rate)

While I will keep comparing the extra $1400 plus to what I am currently paying makes up for a lot. Current agent is OK could be better, could be a lot worse!
 
JohnHenry said:
now I feel grateful mate :)
I thought that I am paying way to high for that. Because in Sydney area, the PM can be as low as 4.4% inc GST
Click to expand...

I don't understand how Property Investors think they can get a good agency and PM to manage their property for 4.4% remembering .4% of that fee goes to GST.

Here are the facts to hire an experienced competent PM an agency in Sydney Metro you are looking at around $70,000 pa.

Average Property Rent $400 Per Week @ 4% gross annual income to business $832.00 meaning this PM has to manage 84 properties just to cover their wage let alone any general expenses (rent, electricity, phones, receptionist, insurances etc etc), meaning they have to manageup to 200 properties for the agency to break even. You just cannot offer a good service with a PM managing that many properties so to compensate the agency has to hire younger inexperienced and cheaper staff to assist the PM before they burn out totally..... the service decreases and the Property Investor is not happy.

Logic has to come into play here a low fee means one of 2 things, your PM is managing way too many properties for their sanity and will burn out and leave (or go to another agency who charges higher fees for and can afford to pay them what they are worth), or the standard of service you want/expect is not possible.
 
priscilla said:
I don't understand how Property Investors think they can get a good agency and PM to manage their property for 4.4% remembering .4% of that fee goes to GST.

Here are the facts to hire an experienced competent PM an agency in Sydney Metro you are looking at around $70,000 pa.

Average Property Rent $400 Per Week @ 4% gross annual income to business $832.00 meaning this PM has to manage 84 properties just to cover their wage let alone any general expenses (rent, electricity, phones, receptionist, insurances etc etc), meaning they have to manageup to 200 properties for the agency to break even. You just cannot offer a good service with a PM managing that many properties so to compensate the agency has to hire younger inexperienced and cheaper staff to assist the PM before they burn out totally..... the service decreases and the Property Investor is not happy.

Logic has to come into play here a low fee means one of 2 things, your PM is managing way too many properties for their sanity and will burn out and leave (or go to another agency who charges higher fees for and can afford to pay them what they are worth), or the standard of service you want/expect is not possible.
Click to expand...

Wow, you're right Priscilla.
I didn't even think about that, because the case is in different city:

Wollongong: 7.7% inc GST - this is due to the less competition between PM agencies and lesser property to manage.

Sydney: 4.4% inc GST - this is due to the fierce competition between PM agencies and more property to manage.
 
Brisbane is typically 9%, although you can get cheaper. I pay 5%, but I also do most of the work regarding arranging maintenance etc.
 
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