So, you’ve secured a nice little investment property and you’re ready to reap the rewards of a rental income – great! First of all, you need a property manager to help you take care of business, however finding the right property manager can be a difficult task. Fees and charges will vary from one company to the next, so comparing costs to work out what you’re actually paying for can often be confusing.
Don’t worry, we’re here to help!
We’ve removed the guesswork and comprised a breakdown of the common fees and services you should expect from a property manager:
Management fees are charged on a percentage of the total rent monies collected, therefore the amount charged will depend upon the actual rent amount. These charges are associated with general management duties including:
- Rent collection and managing rental arrears.
- Paying and recovery of water consumption from tenants.
- Conducting regular rent reviews.
- Collating relevant information for the owner’s statement.
- 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.
Finally, most management fees only average around $1500 per annum for this comprehensive list of services – a small price to pay for a lot of peace of mind.
The letting fee is based on the weekly rent and only applies when a new tenant is found. If a tenant leaves their contract early, the letting fee is generally paid by the outgoing tenant as compensation for terminating their agreement early. Additionally, the amount charged depends upon the actual rent amount.
The letting fee is for services includes:
- Arranging, placing, recording and administering advertising.
- Organising, taking and uploading photographs of your property.
- Co-ordinating and conducting personal viewing appointments with prospective tenants.
- Administrating and processing applications for tenancy (100-point checks).
- Processing the application for tenancy, including reference checks.
- Negotiating the terms of the lease with both owner and tenant.
- Attending to the preparation and processing of lease documentation, including bond lodgement, general information for tenants, photocopying, keys, and the emergency plan for tenants.
- Compiling the ingoing inspection including photos (approximately 200 photos are taken for a standard size house).
Other fees may apply for important tasks relating to your property management, however, this varies 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.
- Maintenance project fee (for substantial renovations).
Cheaper property management companies may be tempting to maximise your income, but this can often result in far greater costs. Cutting costs means cutting corners, consequently increasing your risks as an investment property owner.
Good property management teams have adequate systems to maximise return while minimising risk, and take your investment as seriously as you do. Furthermore, they also have a better staff culture and less staff turnover, resulting in a more enriching property owner/manager relationship, hence a more enjoyable client experience.