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As of February 2017 I have provided new property management fees for 2017.I have also created a special bonus at the end that will tell you exactly how much you are spending on an agent.In the past many Property Owners were basically forced to use an Agent to help manage their investment properties because of a lack of tools and resources available to property owners to go DIY on a professional level. However many owners still use an agent and as always the first thing investors think of when using a Property Manager is the cost.The cost to use a Real Estate Agent to help manage your property differs from one city to another and Agent to Agent across Australia.If you do your research you will find most agents charge around $1500 - $2500 per year depending on a range of factors such as the rent amount, fees and how often you need to find new tenants.After speaking to a range of other professionals and researching my own competitors throughout the last 7 years I have found the below to be an average cost schedule for most reputable Real Estate Agents in 2017.Management Fee - 7.7% - 8.8%Lease renewal - $200Advertising - $150Postage/Admin - $8 per monthAs an example, If your property was $400 per week and you advertised and renewed your lease within the one year the basic cost of using a Real Estate Agent will be around $2047 at 7.7% management fee.The above fee schedule does not involve other costs that will be similar if you used any quality level of Agency or managed your own property such as the costs to go to Tribunal, Landlord Insurance, smoke alarm servicing, TICA/NTD checks as these payments generally go straight to the company and not the Agent.Take note that some agents may charge a lower fee somewhere but charge higher fees or add extra fees elsewhere to make up for it. If you shop around you will be able to find that you can get it cheaper, but be warned this will normally come at a cost. I’ve personally charged around these figures stated above however I have had competitors charge 5.5% management fee; and no wonder a couple of them went out of business or got sued by an upset Property Owner for incompetent management or just the fact that they focus on quantity rather than quality.Using a cheaper agency, may be fine for a year or two but somewhere along the line you will find major faults and as I always say, ‘they always come running back’.As a Real Estate Agency, If you charge a much lower rate, you will get more business but this requires more work and extremely good systems but because the fees are so low its difficult to afford the staff and software costs associated to managing a higher number of properties.
The below is all new information as of February 2017.
Property management fees are getting a little more tricky.Some are going for a simple approach like 10% on rent collected with everything included except for miscellaneous things like fronting up at tribunal and tenant checks.On the other hand some agents are trying to display a real low figure to get you interested like 4.4% on rent collected but then charge hidden fees for routine inspections and all sorts of silly add ons.On average this could be used as a benchmark for agent fees in 2017:Management fee - 7%New Letting fee - 2 weeks rent plus GSTAdvertising - $180Postage/Admin - $9 per monthEFY Statement - $52You may also pay extra for:
- Tribunal preparation & attendance. (about $200)
- Lease renewal for current tenants. ($50 - 1 weeks rent)
- Tenant checks on NTD and TICA. (about $29 per check)
You can negotiate lower fees in some circumstances. For example if you have multiple properties next to each other or if the rent amount is more than $600 per week you have good grounds to start negotiating.Here is the special bonus I created. It’s a fee calculator to make it simple for you to work out your yearly spend on a property manager.The fees are adjustable so can change them to suit any quote you received.Download the bonus fee calculator below.
Prefer Google Spreadsheets? Click here
A new alternative to real estate agents in the Australian market is Cubbi. The philosophy behind Cubbi is to have a transparent renting experience for both landlords and tenants. Where things get done 24/7 in real time via an online platform - leases get signed, rents get collected and maintenance all gets done without the need for an agent.The services provides considerable savings, charging a low fee of 2% and a one time advertising fee. Click here to calculate the savings between using Cubbi and an agent.
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