Property Management Fees are confusing and complex. With so many different fees it is easy to be unsure about what you get for your money. We are here to peel back the layers and explain the fees and offer an easy solution to take the stress and complexity away.
The “Management Fee” is the main fee that is talked about when leasing your residential property in WA. This fee can be as little as 7.5% up to 9.35% (both including GST) The difference in the range is usually to do with the experience and skills of the Property Manager or the system the agency uses (the latest software costs more). It is unlikely to find an experienced and efficient “senior” Property Manager that will manage your property for under the 9% range. By the way, many Property Managers call themselves “senior” when they don’t have a lot of experience. At Davey Real Estate we don’t give our PM’s the “senior” title unless they have 6+ years of experience within the industry. It is an important question to ask of the company and the Property Manager – “how long have you been managing property and how long has your company been managing property?”
The other important fee to consider is the “Leasing Fee”. This is the fee charged for leasing your property and is usually not included in the management fee. This, on average, is two weeks rent. So if you are getting $400 per week in rent for your property, then the leasing fee will be $800 and this is paid once a tenant has been secured and has started paying their rent.
A “Lease Renewal Fee” is often applicable on most properties too. This fee applies when a tenant renews their lease and covers for the negotiation and research that is put into the process. In a rising market, a bad Property Manager will not keep up with the market trends and you will miss out on money. A good Property Manager will complete a Comparative Market Analysis and educate the tenant on the updated market. They will then enter into negotiation on behalf of the Landlord to ensure that you are getting the most value for your investment.
Other fees that are common in Perth are Admin Fees (usually less than $10 per month), Marketing Charges (usually at cost) and the Annual Financial Statement (we have heard this charge can be up to $50).
How can I save on property management fees in Perth?
Shantell Kupsch (Senior Property Manager, Davey Real Estate Scarborough) says “There are a couple of ways of saving on the fee. The most obvious is if you have multiple investment properties, nearly all agents will discount to get your second or third property. The more properties you have, the higher the discount.”
Holly Mennell (Team Leader, Davey Real Estate Coastal) suggests that “some agents (such as Davey Real Estate) can provide a simple fee – all the fees are bundled into one fee and often it is a cheaper way to go – it is certainly easier to budget and understand.”
Signing a long term management authority will often lock you into today’s rates and you will avoid future fee increases. You should also look for long term tenants with long lease terms as this will also save you a considerable amount of money – usually up to two weeks rent every year!
Avoid the “Management Fee” Rip Off
There are some agents out there in the northern suburbs of Perth charging their management fee on ALL INVOICES not just the incoming rent. That means you can add 10% to your insurance, your water bills, your cleaning and anything else they arrange for you on your behalf. Be particularly weary of this with flat fees of 10% or amazingly low management fees. We think it is a little cheeky. That system may suit you but be careful to compare apples with apples when doing your homework.
For a full explanation of all fees and the average costs, please email us today at firstname.lastname@example.org.
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