Hi there,
We have just bought our first investment property in Shoalwater WA – yay! I wanted to know if anyone has any tips on negotiating a flat fee for property management? I know that for example, a property manager might advertise 8% but then have hidden costs like tenancy inspections, petties and administration etc. We think it would be wiser to know what we are up for each month/week with no nasty suprises. As we are negatively geared (unfortunately) we feel this would be a safer strategy to begin with. Does anyone know what a reasonable flat fee would be? If any of you have tried to do this or have any advice or experience in this area, I’d love to hear from you.
DeeI would not suggest using management for your first IP. As your business(real estate) is small, you’ll need to keep costs to a minimum.
Once you build up quite a few houses and feel that the burden of managing all of them is to much you can manage some out.
Though read a book on how to manage your own IP, they will surely have lots of tips that will help you move into positive cashflow.
Im not sure about the fees or any of that. never heard of it. I thought it was just a flat fee, i guess thats what you get when you assume things.
Christopher.
Dee,
I negotiated a much lower rate with my manager, but that was because I have multiple properties, all in the same town 700km away from home! In which case they are a necessary evil. I must say my manager does a great job, especially finding and interviewing prospective tenants – I would never have time for all that! Just be aware – when they advertise 7% or 8% it doesn’t usually include GST, advertising and letting fees, or incidentals, like postage and banking fees. They can even charge you for a mid-month report. So it can quickly add up – if you can do it yourself, go for it!
Good luck!
BlossIhear that the fees in WA are substantially higher than other states. I have seen fees (in eastern states) range from 6% to 8% plus GST, but many put on little extras such as postage, admin, etc etc plus relet fees, inspection fees etc etc.
I don’t know how much you can negoitate with one property. I wouldn’t be too concerned as you will only be saving a few dollars each month. More important is the quality of their service – do they do inspections, chase up arrears quickly etc.
And I would never manage a property myself. I like to get some distance between the tenant and myself, it is easier to put the rent up that way – much harder if you become friendly.
Terryw
Discover Home Loans
Parramatta
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When you say they charge 8%. Does that mean that they are charging you 8% of your rent(income).
Say you were renting out at $250a week , they would charge you $20 a week.Yep, that’s exactly how they do it (plus all their little extras).
Bloss
PS don’t forget it’s all claimable!
Bloss
Interesting points of view! We bought the place through a buyer agent, due to the Perth Market being so heated, our lack of experience and feeling overwhelmed. They inlcuded a property managers details in the report in which a draft contract was included. I know that we don’t need to feel obligated to choose them,but it goes like this:
Management fee – 8.8% of annual gross collections/annum
Property condition report @ commencement of each tenancy – $99.00
Final Bond inspection @ termination of each tenancy – $88.00
Routine inspection reports – $49.50 (every 3 months)
Postage/petties etc – $9.90/month
Advertising up to $220.00
Fixed management fee – N/A
Like Terryw, I don’t want to be directly involved with tenants because I know my limitations and I am likely to be taken in by sob stories. To avoid that senario and until I develop more business savy, I feel more comfortable with a middle man.I don’t know anything about the WA market (other than what people keep telling me) but those prices seem out of this world!! We’re not paying anything like that over here in Qld. I’m sure with a bit of ringing around, you should be able to do better than that, especially since agents are scratching for rental properties over there, aren’t they??
I would suggest having a look on the internet at the rental properties in the area. You should be able to get a feel for the different RE agents, what they have on their books, what they’re charging in rents, and which one you like the look of. You can start your phone enquiries from there. You never know, you may be pleasantly surprised at the response!
Good luck!
BlossManagement fee – 8.8% of annual gross collections/annum
Property condition report @ commencement of each tenancy – $99.00
Final Bond inspection @ termination of each tenancy – $88.00
Routine inspection reports – $49.50 (every 3 months)
Postage/petties etc – $9.90/month
Advertising up to $220.00
Fixed management fee – N/AThis is absolutely ridicoulous!!! What is the 8.8% fee for if they are charging extra for everything else?????
Investment Property Management
http://www.adprop.com.auManagement fee – 8.8% of annual gross collections/annum
Property condition report @ commencement of each tenancy – $99.00
Final Bond inspection @ termination of each tenancy – $88.00
Routine inspection reports – $49.50 (every 3 months)
Postage/petties etc – $9.90/month
Advertising up to $220.00
Fixed management fee – N/AThe above is very similar to what I am paying for property management of my Perth property. In addition to the above, I am required to pay one week ‘letting fee’ each time there is a change in tenants.
David
Being a beginner and looking at the charges outlined, it seemed a little steep to me. It seems that I need to do some phoning around and ask questions about how they deal with unpaid rent, how fast, do they have regular maintenance workers that they use, how many on books? The house is a 1970s 3×1 on 804sqm. We are currently making cosmetic improvements before we get tenants in there. Would the property manager be the one who recommends the rent to be charged after we’ve finished? This agent is in Mt Lawley (about 50km away from Shoawater), but I was advised by the buyer agent and the selling agent that this is not uncommon for property managers to be this far from the property. Do you guys use PMs who are located closer than that? Would it be an angle of negotiation for using a more local agent by pointing out that they don’t have to drive as far for inspections in petrol expenses in trying to land a flat fee? Has anyone noticed a correlation between what you pay and the service you get?
It seems in WA mosts agents charge these sorts of fees – collusion maybe? So getting them waived may be hard, but you should still try.
I think it best to get an agent nearby the property. These days many look for property on the internet (better check that they list on the net too – they may charge another fee for this!), but many renters start looking in windows of agents of the towns they want to live in. So it may be a bit harder to rent if the agent is out of town.
Terryw
Discover Home Loans
Parramatta
[email protected]
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
looks pretty standard to me in our state where we pay a premuim for……….?
Sorry, can’t think why we pay so much..
Check that 8.8% doesn’t then include GST..because the standard rip off, I mean fee is about 9.35% in WA
We’ve negotiated most to 8.5% though andhave gone through the fee’s structures with a biro of late and reducing the associated costs..
There is a great post i put on this forum somewhere with all the WA fee’s
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsFees are increasing, markedly in some cases..see below (from a year or more ago..Needless to say this didn’t happen, we negotiated and got the pen out, how many people that received these increases wouldn’t have though I wondered)
Letting fee-
From 8.5% to 9.35%Fixed letting fee for each new tenant-
From N/A to 2 weeks rent +GST (less 1 week if paid by tenant)Management fee-
From 8.5% to 9.35%Property condition report-
From $60 to $80Final bond inspection-
From $38.50 to $65Inventory reports-
From Nil to ?by negotiation?Routine inspections-
From $38.50 to $45Court Attendances-
From Nil to $99 p/hrPostage and Petties-
From $5.50 p/mth to $5.50 p/mth (same)Meeting attendances-
From Nil to $99 p/hrAdvertising-
From ?as applicable? (?) to $60 p/wk max when letting IP*What do you think of these WA PM fees ?*
“Money is a currency, like electricity and it requires momentum to make it Effective”
Online Positive Cashflow and Renovating CalculatorsI emailed agents in the local area via realestate.com.au last night and this is what one of them has sent through:
FEES CHARGED
INCLUSIVE OF GST
Schedule of Fees
Property ManagementManagement Fees – 9.35% of the gross collection for unfurnished
11.00% of the gross collection for furnished
17.25% of the gross collection for holiday accommodationProperty Condition Report – $93.50 for properties exceeding 2 bedrooms
$66.00 for properties not exceeding 2 bedroomRoutine Inspections – $44.00 per quarterly or $60.50 per half yearly
Bond or Final Inspections – Free of charge
Inventory (Furnished only) – $44.00
Leasing Fee – 6 mth lease is two weeks rent + GST, less one week paid by tenant
12-mth leases is three weeks rent + GST less one week paid by tenant
Note this is charged every time a new tenant goes in
Advertising – $15.00 per article in newspapers.
Rent list, Internet, window all free of chargeAttending Court on – Free of charge
Behalf of LandlordPostage & Petties – $5.50 per month for one property
$2.75 per month for each additional propertyMaintenance – $5.50 – organizes & finalize
Insurance Claims – $27.50 – every claim that we do on behalf of you
Title Search – $16.50 (waived if copy of title provided)
This one states that they don’t do flat fees because it usually ends up being more expensive for the landlord. Another states they will do a flat fee of 14.9% but it will only include management fees, postage & petties and routine inspections. Looks like I’m going to have to brush up on my math and convert charges to a percentage and work out if I’m being ripped off or not. Thanks for the advice so far
Those fees are ridiculous!
I want to become a property manager in WA!
Terryw
Discover Home Loans
Parramatta
[email protected]
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi there. I’m a newy here. I’ve owned a doz or so properties in WA over the years and the management fee’s have always been around the price that you’ve mentioned. I would suggest that if you’re going to look at managing them yourself you go into a newsagent and ask for a property management ‘kit’ that’s available. (sorry, can’t remember the name, but they will know!) I have always preferred to manage properties myself. You get to meet prospective tenants face to face, you’re more eager to show a prospective tenant through at 7pm, you will always answer your phone if you’ve advertised a property, and generally you’ll have less ‘gaps’ between tenancies because of this. The key to success is based upon how astute you were when choosing your tenant and always check references. Go for local agent (definately!) if you manage it yourself. The MT Lawley agent will only ‘sell’ your management to a local agent sometime down the track. Good luck and you will be fine if you get that kit I’m talking about. Regards Pip
Oops …. (post above…2nd last line or so) I meant ‘If you DON’T manage it yourself’!!!
It gives me the absolute SH%TS. Really pisses me off.[skull]
I’m in Perth. When i model purchases in excell, i put in 18% of rent as the overall management fee.
Personally i want nothing what-so-ever to do with the tenant side of investing, so its an annoyance/serious grievance i have to put up with.
Cabo Wabo
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