Hi Everyone.
Well I'm in the process of acquiring my first investment property so I'm clueless in the areas of what management will charge for looking after the property.
The investment is a commercial property in the Western suburb of Melbourne. The quotes I got from a particular Agent are:
– Management Fee = 5% of Annual Rental.
– Leasing Fee = 10% of Annual Rental.
So this may sound like a dumb question but would the two fees suggested above equates to 15% of my rent collected from the Tenant?
Also does $500 for Marketing Expenses and $850 for Re-Leasing sound reasonable?
Thank you in advance.
Not sure about the Melbourne scene however 4-5% + gst is not unreasonable for management fees (it would depend greatly upon the property).
Letting fee 10-11% + gst likewise would be ballpark.
This hurts in the first year however the agent should achieve a lease longer than 12 months (a waste of time otherwise) – push for a minimum of 3+ depending upon the type of property (retail you have to offer minimum of 5 years). Hence your letting fee is a one off then you are up for 5% annually.
Advertising fee – get the agent to wear it (at least initially), you may have to contribute to a letterbox drop but not to internet/shopfront advert. You may also have to pay for a signboard – but resist the urge to pay for it.
Releasing fee – I take this to mean if the tenant exercises the option or the tenant wishes a new lease – how does this compare to their letting fee?
Oh so the Letting fee is a one off. That's good news as I thought it would be yearly (what a noob I am).
They are charging $500 for advertising fee as a package and $3 a month for mails etc if it was to be Re-leased.
Well the lease as it stands when I take over will be 10+5+5.
As you've said it seems reasonable so I don't need to feel ripped off then?
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