By Jamie Horner
"Money is a tool. Used properly it makes something beautiful, used wrong it makes a mess!" Bradley Vinson – Author and Wealth Coach
What are the standard fees for an agent managing a residential rental property? Are you looking for a property manager to rent out your investment property but not sure what you should be paying? Read on to find out about the fees currently charged for experienced property management services in Perth, the best approach to assessing what fees you should be paying, and how you can save on rental fees.
When assessing your options for hiring a property manager, the experienced and well-established property management agencies fees are very similar. A breakdown and explanation of the fees are below:
Management – 9.35% of the gross collections
The management fee charge covers all the day-to-day management items such as collecting and disbursing rent, liaising with owners and tenants, managing processes for rent arrears and organising maintenance and quotes.
Letting/leasing – 2.2 weeks to 3.3 weeks rent
The letting fee (or leasing fee) charge covers the cost of finding and securing a tenant for a vacant property. This includes an assessment of the rental value, conducting inspections with prospective tenants, processing applications, lease execution and bond lodgement.
Advertising/internet marketing – $165 to $380
Your property manager or leasing consultant will write an advertisement for your property and use the best available photos to place your property on key internet portals. These may include www.realestate.com.au, www.domain.com.au, www.rent.com.au and www.reiwa.com.au.
Additional options such as professional photography, floor plans, feature listings and signboards are also available. Professional photography is highly recommended to maximise your chance of renting the property as fast as possible.
Property Condition Report – $225 to $450
The Property Condition Report details the condition of your property at the commencement of each tenancy. This document is legally required to be provided to the tenant in a prescribed format within 7 days of commencement of the tenancy. The price for this service varies based on the size of your property, gardens and level of furnishings included.
Inspections – $77 to $110
Inspections are usually conducted 4 to 6 weeks after the tenant moves in and then every 3 months thereafter by your property manager. These inspections monitor the wellbeing of your property, document how the tenant is caring for the property and identify any required maintenance.
Lease renewal – 1.1 weeks rent
When the current lease on your property is due to expire your property manager should implement a proactive plan. This will include organising a lease renewal where possible to ensure your property remains tenanted so that you can receive an uninterrupted rental income stream.
Final bond/outgoing inspection – $225 to $260
An inspection is conducted when the tenant vacates the property. The property manager will carefully compare the state of the property to the original Property Condition Report, noting wear and tear, maintenance items, any damage and items requiring cleaning. They will then finalise the disbursement of the bond based on the outcome of the inspection.
Administration – $9.90 to $16.50 per calendar month
A monthly administration fee is charged to cover ongoing administration costs such as phone calls, photocopying, postage and facsimiles with the owner, tenant and maintenance contractors.
Annual tax statement – $55 to $88
An end of financial year tax statement that summarises all income and expenditure.
There are other fees or costs that may come up during the course of management when certain incidents arise or you request these additional items. It's important to check if these are covered or added to your existing fees. Examples include:
Signboards, virtual tours, professional photography and feature listings when leasing;
Database and credit checks when processing applications;
Higher management fees and an inventory report on furnished properties;
Court fees; and
Summary of fees
*This example does not include the percentage of other disbursements collected on your behalf (e.g. water)
Is there a simpler structure?
If this seems overwhelming and you are after a simpler way to structure your fees, speak to your property manager about an all-inclusive fee. All-inclusive property management fees are great if you have a high turnover of tenants, as it reduces many of the ingoing and outgoing costs. The all-inclusive fee is ideal for owners who prefer the simplicity of a single fee for their budgeting and financial planning.
How to save on property management fees?
Secure long-term tenants: many of the property management fees arise when a tenant vacates as you then have to source a new tenant. The best way to avoid these fees is by securing tenants on longer-term leases at competitive rates.
Have one property manager: if you have multiple properties speak to your property manager about negotiating a lower rent for managing your whole portfolio.
Increase your rent: as the management fee is a percentage of the rent, you can negotiate a lower management fee if your property achieves high rent amounts.
Fees versus Service
It’s easy to focus heavily on fees and finding the cheapest management fee, but at the end of the day it’s essential to remember you're employing someone to care for your property assets, so make sure you're also getting:
value for money;
a property manager you can trust who has experience, knowledge and expertise; and
service guarantee (a good property manager will be happy to offer a no lock-in contract).
About the author
Jamie Horner is the licensee at Empire Estate Agents. With over 20 years' experience in property and strata management in Perth, Jamie and the team help owners to achieve all their property investment needs.
Need more information or help with any other of your property investment questions? Feel free to call and speak to us. Feel free to call and speak to us at Empire Estate Agents on (08) 9262 0400 or email email@example.com.