How Much Should A Property Manager Cost Me And Why?
When deciding the agency who should be in charge of protecting your wealth and financial freedom, it’s important to understand what fees you’re being charged and why. While cheaper property management companies may appear to be an ideal option to maximise your income by saving on expenditure, this can end up costing you far more in the long run.
Fees and charges vary from one company to the next, but you should expect your agency to complete the following tasks for the fees you’re paying.
Management fees are charged on a percentage basis of the total rent monies collected. The amount charged will depend upon the actual rent amount.
The management fees are associated with general management duties including but not limited to:
- Rent collection and managing rental arrears.
- Paying and recovery of water consumption from tenants.
- Conducting regular rent reviews.
- Preparing statements for the owner and collating supporting information for the
- Organising maintenance repairs and quotes.
- Liaison and regular follow-up with maintenance contractors.
- Organising special water readings when required.
- Organising keys for inspections and tradespeople.
- Copying/scanning of invoices.
- Attending to the payment of general property expenses such as council rates.
- Liaising with owners and tenants.
- Liaising with insurance companies.
- Attending to daily telephone, email and fax enquiries.
- Liaising with the strata company if applicable.
- Processing notices to vacate.
- Disbursement of the vacated tenant’s bond.
- Administration of advertising tribunal hearings.
- Some advertising activities.
- Legislation updates and compliance.
Most yearly management fees only average around $1,600 per annum for all of the above tasks. Quite a workload!
The letting fee is based on the weekly rent and only charged when a new tenant is found. If a tenant breaks their fixed term tenancy agreement prior to the end date, the letting fee is generally paid by the outgoing tenant as compensation for ending their agreement early. The amount charged will depend upon the actual rent amount.
The letting fee is associated with, but not limited to:
- Arranging, placement, recording and administering advertising.
- Arranging, taking and uploading photographs of your property.
- Arranging and conducting personal viewing appointments with prospective tenants..
- Administrating and processing applications for tenancy 100-point checks.
- Processing the application for tenancy, including checking of all references.
- Negotiating the terms of the lease with both owner and tenant.
- Attending to the preparation, execution and processing of lease documentation
including the bond lodgement form, general information for tenants, photocopying keys and the emergency plan for tenants.
- Compiling the ingoing inspection including photos (approximately 500
photos are taken for a standard size house).
Other fees may be charged for important additional tasks relating to the management of your investment property. This will also vary from one agency to another. These additional fees may include:
- Administration fee – also referred to as a statement fee.
- Advertising fee.
- End-of-financial year statement fee.
- Lease renewal fee.
- Routine inspection fee.
- Tribunal representation fee.
Property management specific agencies that have advanced systems and technology in place to maximise your return and minimise your exposure to risk must charge accordingly for their investment in such technologies. These offices also tend to have a better staff culture and less turnover of staff, which means a much more enjoyable and profitable client experience.