‘What are your fees?’ Your decision to engage a property management company based solely on the answer to this question can prove to be your most expensive mistake.

The most transparent item with all property management companies is their management fee, but the truth is that this is only one of more than 20 fees that a property management company can and usually does charge.

Let’s say you earn $400 per week in rental income. Your gross yearly rental income is $20,800, assuming full occupancy. Firm A charges you an 8.5% management fee which adds up to $1,768 per year excluding GST. Firm B charges you a 7% management fee which adds up to $1,456 per year excluding GST. If everything is equal, you have saved $312 which is just under one week’s rent.

However, this is rarely the only fee your property manager will charge you. They will often charge you other fees such as:

  • Letting Fee: charges range from 1 weeks to 3 weeks rent
  • Lease Renewal Fee: ranges from $100 per lease renewal to 1 weeks rent
  • Monthly Administration Fee: ranges from $5.50 to $20 per month per property
  • Advertising Fee: charges up to $240 per letting
  • Routine Inspection Fee: up to $77 per inspection
  • The Property Condition Report Fee: up to $220 per in-going inspection
  • The Tennant Internet Database Check Fee: up to $55 per letting
  • The Tribunal/Court Attendance Fee: up to $110 per hour
  • The End of Financial Year Fee: up to $110 per statement
  • Property Inspection Fees for attendance of third parties such as valuers and quantity surveyors: up to $150 per inspection
  • Disbursement Fee: up to $5.50 per payment
  • Insurance Claim Fee: up to $150 per hour
  • Renovation fees: up to 20% of the renovation costs

By thinking that you are saving money by reducing the fees from 8.5% to 7% can in fact be a false economy. Now that you are aware of all the possible fees, is this how you should choose your property manager?

The following questions should be asked of your potential property manager before engaging their services:

Question 1:

Is the principal of the property management company personally involved in the day to day operations of the property management department?

Why is this important?
The majority of principals of traditional real estate offices are not involved in the daily operations of the property management department, their focus is usually on the sales department.

Question 2:

Is the principal of the property management company a property investor?

Why is this important?

A property investor understands everything you need to do to maintain and grow your property portfolio. Most principals of real estate companies are not property investors but think they are property investment experts and will gladly tell you how to manage your portfolio.

Question 3:

How many years of specific property management experience does your team have?

Why is this important?
Many people use property management as a “way in” to the property industry and have very little knowledge or experience in managing properties.

Other important questions to ask are:

  • Does your property management company have a specialist property management business coach?
  • Is there a communication policy?
  • Is there a complaints policy?
  • Do they also sell properties?
  • Are they fully insured?
  • How often do they disburse rent?
  • What is their rental arrears policy?
  • Do they attend all property inspections or do they simply hand out keys?

To find out a total of 36 questions which need to be asked and why the answers to these questions can be so much more costly than the fees alone, please download a free E-Book at www.brisbanerentalappraisals.com.au

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