When you’re looking for a property manager you may have many questions on your mind. What’s included in the services they provide? Where is my money really going or how much is too much? When you add up all the costs of an investment property it’s important to get a full scope. An investment property needs to be managed in the right way so it continues to be a valuable asset.
Property managers can be tricky to understand. Depending on what you’re looking for, it may take some time (and research) before you find one that meets your needs. However, we know how hard it is to weed through all of the information. But by reviewing the manager’s property management fees it becomes easier to identify which one may be right for your property.
Many people are unaware of what property management fees include and where their money is going. It may sound like a simple concept, but you would be surprised with how many homebuyers don’t know that they have to pay these hidden costs when purchasing a new house. In this article we’’ll explore the ins and outs of managing your own real estate investments or hiring professionals.
What a traditional pricing strategy looks like
You’re bound to find it hard finding a property manager for the first time, as there are various factors that might influence the amount you’ll be charged. It is also difficult to get an idea of what your average cost will be or how much they charge per week if their rates depend on many different variables such as location and type of management.
It can be hard to make sense of how much you are supposed to pay thanks to lots of different factors. Some property managers only choose to look after properties in certain areas or property types. Usually, property managers charge commission on the services they charge. These charges factor in weekly rent plus GST.
What can make my fees higher?
The suburb your property is situated in can have a big influence on property management fees. You may get charged up to 6 per cent for a popular suburb in Melbourne while in rural suburbs you may be charged a higher 10 per cent. Another factor to consider is that rates can be negotiable. If you’re someone with multiple properties a property manager will often try and offer a lower rate if they get the chance to manage all of them. Even if you’re the owner of a single property you can still negotiate the types of services covered in the property management fees and rates.
It’s for these reasons it can be difficult to find accurate and consistent information on property management fees from a single property manager, suburb, or property type. This is why it’s so important to shop around and find property management fees and services that match your needs. A property manager may end up charging you higher than average fees if you’re taking advantage of more services than you actually need.
Watch out for these services which may incur more fees:
Leasing fee
This can add up to almost 2 weeks worth of rent and can include the tasks of receiving and assessing applications, negotiating lease terms, and finalising the contract.
Advertising and marketing
Fees for marketing and advertising activities can start from $300. This could include the cost of professional photography, writing up listings, and advertising the property on certain platforms.
Tribunal fee
In the unfortunate scenario where you have to evict a tenant, your property manager may charge you for the service of preparing documents for a tribunal hearing. This fee can be anything from a $100 flat fee to $100 per hour for the service.
Annual statement fee
An annual statement needs to be prepared for tax purposes. This outlines all the necessary details you may need to report your rental property for tax purposes. The service fee for this can start as low as $55.
Renewal fees
As the period of your rental property’s lease comes to an end it’s time to renew it. This process of renewal involves your property manager preparing documents for lease contract renewals and advice on pricing the rent.
General admin fee
This fee covers the general admin work that goes on to keep your rental property running. Tasks that count as general admin can include preparing reports, generating spare keys, and preparing reports.
How do I find out if I’m paying too much?
It’s always best to shop around with property managers. If you’re comparing their prices it’s best to compare the services they’re providing. Some may offer lower prices because they’re doing less work for you. Others may charge you more based on the more expensive areas they work in or the clientele they have become accustomed to.
So do your best to get quotes from multiple property managers. It’s the only way to find out what’s really out there in the market. And don’t be afraid to throw them a few curveballs. Ask them about fees for services and tasks that may be outside of their usual skillset. Do whatever you can to get as much foresight into how much they may end up charging for their services.
