Hi
I am looking at an investment and am trying to work out all of the cost involved to make sure that it will be cashflow +ve what would i be expecting to pay for property mangement?
Thanks
My property Management varies from 6 to 7.5% plus G.S.T.
If you are wanting a quick estimate of total holding costs for an I.P, allow 20% of the rent to be swallowed up by the costs (not including loan interest).
This figure includes:-
4 weeks vacancy per year,
insurance (Landlord and building/contents)
rates (water, council)
management
repairs/maintenance.
etc.
In my experience I have never actually paid out this much (mainly due to low vacancies and minimal maintenance required) but it is always better to slightly over-estimate costs and under-estimate income.
If the figures look good after applying this rule then you know you won't get any unexpected surprises.7-10% of gross rental is reasonable but you need to consider other costs:
some charge for showing tenants through properties
some charge a "letting fee" for renewing the lease for the same tenant
some charge a "letting fee" for taking on a property with an existing tenant although they had nothing to do with the letting!
some charge for drawing up leases, inspection reports etc….These can all add up to 15 to 20% of your profits so they need to be factored in!
Dont forget that you can negotiate the PM fees.
I pay 6% at a reputable PM who charges 8% usually.So long as you dont bargain too hard and get the PM off side or dissinterested in doing the best job for you!
New RE I just signed with in NSW is 8% + GST as was another mainstream RE in QLD also 1 weeks rent leasing fee and $16 lease prep fee.
Hope that helps out.I get about 6% – 7% (in VIC).
I would shop around if you get quoted more than that though.
It seems like the percentage charged is sometimes less important than how good a job the PM does.
Make sure you get a property manager that will make some effort to keep your property occupied.
I would look at the services that they offer. You can sometimes get a great PM at a great rate, but generally you will get what you pay for. Pay peanuts and get monkeys!!
Happy Investing.
thanks i will keep that in mind having reented for about 3 yrs you can defffinitley tell that some property managers don't do alot!!!
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