Property Managers Questions

Once my IP is settled I have the current owner to sign a 1 year lease to rent it and I was planning to use the REA that sold the property to me and obviously knows the vendor. I also plan to let out my current PPOR as well soon, as I travel overseas for several months.

Some questions are:

  • What do I need to know about hiring a PM?
  • Do they have much difference in price, service and should I get several quotes?
  • Will they work out a better deal if I'm going to use them for 2 properties (although it will probably be another office for each property as they are in different suburbs)?
  • What happens if there is a problem when I'm away like the tenant moves out suddenly or something goes wrong with the plumbing etc?
 
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You'll see a lot of stories venting about PM's on this site - unfortunately, the only sure way is to get a reference from another property investor with similar requirements.

Definitely interview them, ask lots of questions and "what if..." scenarios.

Cheers,

The Y-man
 
Yes I just spoke to the REA for that IP and they are going to send out a booklet. Their prices are 7.7% but it will be 6.6% if I have them manage both properties. This price is inclusive of almost everything apparently including advertising etc.

I'm in the Newcastle area so if anyone knows a good one here then please let me know.
 
The easiest thing about being a PM is the management side of it. If they are highly organised, with good commuincation skills it is easy for them. The hardest part is they have to be able to analyse tenants to ensure that they are good tenants and not baddies in disguise, therefore make sure the PM has good people skills.
 
Is it just me or does 7.7% seem high??. Highest i have ever payed is 6.6% which i think is more of standard rate L.J Hooker (and i only have 1 property with them).Best rate i have come across for me anyway was 5.6%(BresicWhitney).Both do a great job with my properties but that would vary from area to area like anything else i gather.With multiple properties with the same agent i personally think you can do even better than 6.6%.
 
Is it just me or does 7.7% seem high??. Highest i have ever payed is 6.6% which i think is more of standard rate L.J Hooker (and i only have 1 property with them).Best rate i have come across for me anyway was 5.6%(BresicWhitney).Both do a great job with my properties but that would vary from area to area like anything else i gather.With multiple properties with the same agent i personally think you can do even better than 6.6%.

Nope... I don't think so anyway. It is on the upper side but still within reason. It all depends on what service you receive. Can't compare apples and oranges. Some arrangements can go as high as 16.5%, that I know of at least. But that is a full service, 100% rental guarantee etc....
 
The hardest part is they have to be able to analyse tenants to ensure that they are good tenants and not baddies in disguise, therefore make sure the PM has good people skills.
Yes I will remember that although I guess if I use one of the agents then they might just be using whoever is available!

With multiple properties with the same agent i personally think you can do even better than 6.6%.
Someone I spoke to said they only pay just over 3% so I guess there are cheaper options if I can find them as long as they still provide a good service.
 
Monsoon, I think you'd find it hard going to find a PM that charges 3% in total (check the "someone" you're talking about as sometimes PM break their charges down into management and rent collection fee) though perhaps an investor with multiple properties through the same PM might be fortunate to negotiate such a low fee.

Generally expect to pay anywhere between 6-8% for PM fees.
 
Hi Monsoon, My hubby and I had a lot of experience with PM and we managed one IP ourselves for a while and we may get back to it. You need to establish a relationship with your PM and need someone you can trust. We found our PM through referral by a friend and with so many horror experiences with a few I am glad we found and can highly recommend The Professionals in Charlestown. We pay 7.7% but we are very happy with the service. John, owner/REA said once to us that by finding a good tenant for our IP that is one less headache for him. You need to make sure the PM inspects and reports damages and repairs diligently. You don’t want a run down property as it will be difficult to find descent tenants. John pays us fortnightly regularly because he knows if he is late with his payments that will affect us paying our mortgage. If we think their quotes for repair is expensive we are free to find our own plumber, electrician and we refer them to John if they are reliable and charge reasonably. We had access to his email and he uses direct deposit. He also sold our PPOR and I wished we engaged him first so we didn’t have to wait 5 mos. It took John 2 months to sell our property in a declining market with good results. Stay away from Creer, their staff turnover is very fast so the person dealing with your property changes all the time. We had them for 3 years only to find out they are not inspecting regularly and they failed to cancel our appointment twice so we turned up for nothing. One REA we dealt with held the rent for 4-6 weeks, I think they use our money first, and they do not send reminder letter if the tenant is late. We have to ask them and they charged us up to $20 for it on top of their commission. Make sure your PM has the authority to sign off minor repairs, may be <$500 and anything above will need your approval. Also make sure you have some money in the bank to cover maintenance cost and major repairs, about $3-5K. Also in cases when you lose a tenant and rent. Also get the PM to pay council rates and water rates, they should all be included in the services.

Good luck
 
Hi Monsoon,

I also think it will be difficult to find anyone under 3%. Actually I'd risk saying impossible.

I had a look at my local Statement for you and I pay 5% +GST. I know it's a darn good rate but the PM's around here are desperate for more properties to let.

To be fair and to reiterate what Sue has said, I have a relationship with the Principal of this Real Estate and have purchased three properties from him. I have known him for 10 years.

Is that 6.6% including GST?

You could always try some of the lesser known realestates. I would think an unknown would be more willing to bargain a better discount over the likes of the LJ Hookers etc.:)

Regards JO
 
Monsoon, I think you'd find it hard going to find a PM that charges 3% in total (check the "someone" you're talking about as sometimes PM break their charges down into management and rent collection fee) though perhaps an investor with multiple properties through the same PM might be fortunate to negotiate such a low fee.

Generally expect to pay anywhere between 6-8% for PM fees.
I think the ones I spoke to only charge $30 for a setup and fee and $5 a week for something else. I think nearly everything else is included.

Hi Monsoon, My hubby and I had a lot of experience with PM and we managed one IP ourselves for a while and we may get back to it. You need to establish a relationship with your PM and need someone you can trust. We found our PM through referral by a friend and with so many horror experiences with a few I am glad we found and can highly recommend The Professionals in Charlestown. We pay 7.7% but we are very happy with the service. John, owner/REA said once to us that by finding a good tenant for our IP that is one less headache for him. You need to make sure the PM inspects and reports damages and repairs diligently. You don’t want a run down property as it will be difficult to find descent tenants. John pays us fortnightly regularly because he knows if he is late with his payments that will affect us paying our mortgage. If we think their quotes for repair is expensive we are free to find our own plumber, electrician and we refer them to John if they are reliable and charge reasonably. We had access to his email and he uses direct deposit. He also sold our PPOR and I wished we engaged him first so we didn’t have to wait 5 mos. It took John 2 months to sell our property in a declining market with good results. Stay away from Creer, their staff turnover is very fast so the person dealing with your property changes all the time. We had them for 3 years only to find out they are not inspecting regularly and they failed to cancel our appointment twice so we turned up for nothing. One REA we dealt with held the rent for 4-6 weeks, I think they use our money first, and they do not send reminder letter if the tenant is late. We have to ask them and they charged us up to $20 for it on top of their commission. Make sure your PM has the authority to sign off minor repairs, may be <$500 and anything above will need your approval. Also make sure you have some money in the bank to cover maintenance cost and major repairs, about $3-5K. Also in cases when you lose a tenant and rent. Also get the PM to pay council rates and water rates, they should all be included in the services.

Good luck
I might give John a call tommorow, thanks for the post and information to help me.
Hi Monsoon,

I also think it will be difficult to find anyone under 3%. Actually I'd risk saying impossible.

I had a look at my local Statement for you and I pay 5% +GST. I know it's a darn good rate but the PM's around here are desperate for more properties to let.

To be fair and to reiterate what Sue has said, I have a relationship with the Principal of this Real Estate and have purchased three properties from him. I have known him for 10 years.

Is that 6.6% including GST?

You could always try some of the lesser known realestates. I would think an unknown would be more willing to bargain a better discount over the likes of the LJ Hookers etc.:)

Regards JO
Good point, I'm not sure if GST is included, will have to find that out, if I remember it was included. Yes good point about trying some smaller companies although that can also have a few things to be careful of.

Actually I got the 3+% figure from you recently as you said in an email, but you have a lot higher figure above? :)
I have worked out a deal with my Central Coast properties and get charged 3.5% for PM.
 
Ha! That will teach me. I must have been dreaming! I had a look to post this thread. :)

EDIT:
No, I wasn't dreaming - it was 4.5% on a 2005 Statement and I bet it was 3.5% when I first bought it roughly 2 years before that!:)


Regards JO
 
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Property investors do have different requests of PM's and I think you will find they may have a range of fees. ie, from low hands on to high hands on. An absent owner, naturally would prefer a high hands on PM. Be careful just looking a %, as they do change from area to area, often depending on the rent. If the average rent in one location is $800.00 then 5% equates to $40. An area with an average of $400, then 7% equates to $28. Generally, in high rent areas, PM's can afford to work for a lower rate, than in the lower average rent areas. After many years, I now view PM's like insurance. You cringe when you pay the premium, but are hugging yourself when you make a claim, and find you have a good one, rather than ..... well
good luck
 
Property investors do have different requests of PM's and I think you will find they may have a range of fees. ie, from low hands on to high hands on. An absent owner, naturally would prefer a high hands on PM. Be careful just looking a %, as they do change from area to area, often depending on the rent. If the average rent in one location is $800.00 then 5% equates to $40. An area with an average of $400, then 7% equates to $28. Generally, in high rent areas, PM's can afford to work for a lower rate, than in the lower average rent areas. After many years, I now view PM's like insurance. You cringe when you pay the premium, but are hugging yourself when you make a claim, and find you have a good one, rather than ..... well
good luck

That sounds like some good info and I'm looking into LL insurance etc. I decided to call several agencies and they ranged in price from 5.5% to 8.8%. I decided to use the agent that I purchased the IP with as it should be a smooth transition as the Vendor will continue to rent for 1 year. They wanted 6.6% but I asked would they go with 5.5% and they said sure so that wasn't hard.

I have decided with my other place to use a local agent as I would prefer local advertising etc and they would be active in the area so should be able to keep and eye on the place better as the other agents are in another area. So they also will go with 5.5% and that seems quite reasonable. I still have to go through all the details but it seems ok.
 
Monsoon $5 a week is a lot (maybe a month? for statements etc?)

As mentioned you need to look at ALL costs.

If one is 8.8% all inclusive that is nearly the same ($22) as one at 6.6% with $5 a month statement fees ($21.50) (based on $250 a week rent). You need to compare on your rent.

Also check leasing fees (some 1 week, some 2 weeks), advertising etc.
It all adds up.

In this case I don't believe the saying "you get what you pay for" as I've seen good and bad in all price ranges. I'd look at the agent not just the price (but you know this). Some are good sales agents but not good PM's

7.7% seems pretty standard for me (Sydney). I negotiated all mine a bit lower. Only one IP with each and not high end rents.

Yesterday I did my pre inspection on my Blacktown property that settles on Monday. I was going to leave it with the listing (and selling) agent but I looked at the tenants statements (to check if they paid regularly) and the rent has hardly moved in 2 years. It went up $5 in January.:eek: It's way under market rent. I changed agents. They will take over on Monday and increase the rent. Hope the tenants don't freak out :D If they decide to move out I'll paint and replace the carpet and the rent will be higher again.
 
Monsoon $5 a week is a lot (maybe a month? for statements etc?)

As mentioned you need to look at ALL costs.

If one is 8.8% all inclusive that is nearly the same ($22) as one at 6.6% with $5 a month statement fees ($21.50) (based on $250 a week rent). You need to compare on your rent.

Also check leasing fees (some 1 week, some 2 weeks), advertising etc.
It all adds up.

In this case I don't believe the saying "you get what you pay for" as I've seen good and bad in all price ranges. I'd look at the agent not just the price (but you know this). Some are good sales agents but not good PM's

7.7% seems pretty standard for me (Sydney). I negotiated all mine a bit lower. Only one IP with each and not high end rents.

Yesterday I did my pre inspection on my Blacktown property that settles on Monday. I was going to leave it with the listing (and selling) agent but I looked at the tenants statements (to check if they paid regularly) and the rent has hardly moved in 2 years. It went up $5 in January.:eek: It's way under market rent. I changed agents. They will take over on Monday and increase the rent. Hope the tenants don't freak out :D If they decide to move out I'll paint and replace the carpet and the rent will be higher again.

Yes I did decide on them for several reasons and not just the price, mainly from how they spoke on the phone. I will be going over all the details like monthly statement prices etc before I sign anything, thanks for the tips.

2 years, well you must have a few IP's I guess as I'm sure I will be keeping updated on what my 2 properties are rented for but I'm sure it would be easy to lose track after you get a few. :) I hope the transition goes smooth for your new agent.
 
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