property management %

[Xenia]

Xenia, surely you know the anser to that ... At 8.5% I still paid extra for lese renewals/ preparation fees / condition reports.... In fact the percentage forto include all in the management fee was much more than 10%, cna;t remember exactly

perhaps we pay more in Perth, but can't be THAT much more surely

Actually I don't know the answer to that. I had dinner on Saturday with a group of NSW investors including some sales agents. They were telling me about property management agencies in NSW who charge 5% management and run their rent rolls at a loss hoping to pick up some sales commissions somewhere along the line from their roll to make up the loss!

5% management fees would not help to support a business in the long term. The result will be a cap in rent roll growth. Burning out of the pm, because she has to manage more to help with the loss and an eventual sale of the rent roll to relieve the pressure.

Not a smart business model to have at all and I really feel sorry for the property managers and also their bosses who are obviously not trained enough in how to run an effective business.

We all make mistakes which are overcome by changing systems, people, marketing tactics etc... I know I have been guilty of many growing pains in my business but the 5% model is just a business having fatal cancer right from day one. It will eventually kill it!

 

[jaycee]

I told you knew the answers !

 

[GoAnna!]

Actually I don't know the answer to that. I had dinner on Saturday with a group of NSW investors including some sales agents. They were telling me about property management agencies in NSW who charge 5% management and run their rent rolls at a loss hoping to pick up some sales commissions somewhere along the line from their roll to make up the loss!

5% management fees would not help to support a business in the long term. The result will be a cap in rent roll growth. Burning out of the pm, because she has to manage more to help with the loss and an eventual sale of the rent roll to relieve the pressure.

Not a smart business model to have at all and I really feel sorry for the property managers and also their bosses who are obviously not trained enough in how to run an effective business.

We all make mistakes which are overcome by changing systems, people, marketing tactics etc... I know I have been guilty of many growing pains in my business but the 5% model is just a business having fatal cancer right from day one. It will eventually kill it!

I have an agent who gives me very low fees range from 5% to 6.5% plus gst. In return I give her really well presented properties, pay for professional photograpghers etc. They usually let on first inspection. Together we have nearly tripled the rent since 2001 so I think she does ok and so do I.

We also communicate in "bulk" with looking at say lease ends in one e-mail rather than looking at each individually. They don't sent me the glossy letters they send the other owners which is fine I want the steak not the sizzle.

They don't reply on sales to make it work. They don't do sales.

 

[ermen]

i get charged 5% + GST (all in 5.5%)...

Weekly rental is 410 for one..

However I'm not too happy with mine.. he's too reticent..

This is Sydney inner west...

 

[Howdy Doody]

I'm just signing up with my first property manager. In my initial telephone conversation he quoted 7% but then reduced it to 6% with a 1 week letting fee and no monthly statement charge. Then I rang back to confirm all the prices and services and he dropped it down to 5% + GST and I didn't even ask for a discount. This real estate agent seems to do a lot of rental properties in the area. Maybe it's as Xenia says. They subsidise one area of their business in the hope of making money in the other.

 

[Xenia]

I have an agent who gives me very low fees range from 5% to 6.5% plus gst. In return I give her really well presented properties, pay for professional photograpghers etc. They usually let on first inspection. Together we have nearly tripled the rent since 2001 so I think she does ok and so do I.

We also communicate in "bulk" with looking at say lease ends in one e-mail rather than looking at each individually. They don't sent me the glossy letters they send the other owners which is fine I want the steak not the sizzle.

They don't reply on sales to make it work. They don't do sales.

That's great for you Go Anna and you may not be their "average" client. What are their "normal" charges?

An average $350 per week property on 5.5 or even 6.6% management fee times 150 properties would be running at a loss if run efficiently!

It can be done with bare minimim staff and cutting alot of services out. The long term affects are poor quality sevice and pm burnout and hence high staff turnover which is so common for this industry! I just can't see any other way around it unless I'm missing something!

My next business should be a consulting service for property management agencies! There is obviously a market for it!

I'm suspecting the case is different in GoAnna's situation where the agency is running efficiently but has decided to discount one client for the benefit of multiple easy turnover properties! Am I right?

 

[Xenia]

I'm just signing up with my first property manager. In my initial telephone conversation he quoted 7% but then reduced it to 6% with a 1 week letting fee and no monthly statement charge. Then I rang back to confirm all the prices and services and he dropped it down to 5% + GST and I didn't even ask for a discount. This real estate agent seems to do a lot of rental properties in the area. Maybe it's as Xenia says. They subsidise one area of their business in the hope of making money in the other.

That's fantastic for you! Well done!
The pm though needs some serious sales training

 

[GoAnna!]

That's great for you Go Anna and you may not be their "average" client. What are their "normal" charges?

An average $350 per week property on 5.5 or even 6.6% management fee times 150 properties would be running at a loss if run efficiently!

It can be done with bare minimim staff and cutting alot of services out. The long term affects are poor quality sevice and pm burnout and hence high staff turnover which is so common for this industry! I just can't see any other way around it unless I'm missing something!

My next business should be a consulting service for property management agencies! There is obviously a market for it!

I'm suspecting the case is different in GoAnna's situation where the agency is running efficiently but has decided to discount one client for the benefit of multiple easy turnover properties! Am I right?

I think 8.8% plus lease renewal fees is the norm. Surely though Xenia its the net amount that's most important. I am sure they would rather say 6% of $150K rent than 8.8% of $55K ? (same amount of properties)

 

[GoAnna!]

After thought

The owner is happy. She is enjoying life in France

 

[Xenia]

I think 8.8% plus lease renewal fees is the norm. Surely though Xenia its the net amount that's most important. I am sure they would rather say 6% of $150K rent than 8.8% of $55K ? (same amount of properties)

Absolutely! That's why I put the $300 per week property as an example. It would make sense to charge a 6% management fee on a property with a rental of $1000 per week!

At $300 per week (or less) on a 6% management fee the business would be suffering financially and the rent roll would not be sustainable long term!

 

[lura]

Given the cost of operating - I don't understand why businesses would want to run their property management business at a loss. You need to seriously think - if they are willing to run their business at a loss - what about your investment? What corners will be cut?

I seriously think you get what you pay for. As a business model it isn't sustainable in the long term to undercut management fees on average rental properties.

Price is what you pay - value is what you get.