That's not totally true as ther is a thing called economies of scale at work. Also, a lot of the work is performed by low paid employees.
If it wasn't profitable agencies wouldn't do it. Simple.
And agencies make a hell of a lot of money selling their rent rolls. I cant quite remember what the multiple of earnings per tenant to sell is but its very high.
Agencies build up their rent roll with a sole view to selling at a a later point. Can be very profitable.
This is very true, and if it wasn't no-one would do it.
The cashflow for running a rent roll is very poor until it reaches a certain size. Property Managers are poorly paid in Qld because of the lack of cashflow profit and service is often a non event. A friend in Sydney who is a PM gets paid more than ours do.
The multiple is different for every area but it isn't per tenant, it is based on a calculation taking management fee and annual rental return into account.
The other reason for owning a rent roll is for a listings base. A rent roll provides sales opportunities to the business. These are the 2 primary reasons for owning a PM dept. but cashflow is definately not an advisable reason. Some agents think it is when they first get into it but find out fast that it is running at a loss and cut corners to survive. Thats when Landlords get crap service and complain bitterly, and rightly so.
Real Estate is a business, it is meant to be profitable. There is a real estate agency on every corner right throughout Oz (and prob the world for that matter) and competition is often the best method of controlling cost to consumers. There is always someone who will perform a real estate service cheaper, others who have a higher price structure with a possible greater service standard and most who are middle ground (market value as determined by consumer demand). Your job is to select one to suit you.
As for low paid employees - not many of them left with the lowest unempoyment in decades and surging costs to employees forcing businesses to consider casuals and contractors. And what will happen if Paid maternity leave comes in......but that's another debate.
Real estate isn't voluntary or a charity. If you don't like what you are paying where you are then find an agency that suits you. Like everything in life, if you want what you want get your hands dirty and make it happen. Sit on your butt and complain and ultimately no-one listens anyway.
Kev
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