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What You Need To Know About Property Management Fees

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According to a recent ASX investor study, property investment in Australia is one of the most popular ways to supplement current income, accumulate wealth and save for retirement

With rental prices increasing in Sydney by 10% in the inner city and 5% Sydney wide in the past year, and Melbourne rents also at record highs it’s clear there’s no shortage of demand for rental properties. 

While this paints a pretty picture for potential property investors, there’s still the question of managing your property (or properties) once purchased.

Is it best to be a DIY property manager to save on fees or use a real estate agency?

If you have one rental property then taking on the duties of landlord is entirely feasible. Many people like a hands-on approach so they can do their own advertising, interviewing, rent collection and property repairs etc.

But you need time and energy to manage a rental property. Add a few more properties to the mix and duties start to become difficult to manage on a day-to-day basis. Therefore, using a real estate agency becomes a practical solution, and one that most people would turn to.

What do property managers do? 

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The main reason that people may prefer to use an agency for property management is to chase up tenants who default on rent payments.

But property managers usually offer an array of services for landlords from day one including: advertising properties, vetting tenants, managing bonds, property inspections and attending tenancy tribunal hearings (if necessary).

They can make the overall experience of being a landlord much easier. Linda Tuck, Director of Cairns-based Property Ladder Realty, says a property manager facilitates an arms-length relationship between a tenant and landlord. She believes that DIY property managers set themselves up for stress, confusion and time-wasting when dealing with tenants over trivial tenancy issues.

How much do property managers charge?

For new investors it can be tempting to forgo using a property manager because of fees but if you can’t, or don’t want to, be hands on, then it can be money well spent...and tax deductible.

But since there are no standard regulations when it comes to property management fees, it pays to look around before you sign up with the first agency you find.

Fees for rental management in Australia vary widely from state to state, and agency to agency. It also depends on your property and the local market as to what they may charge.  

In general, a property manager will take a letting fee to cover the tenant selection - usually something between 1 to 4 weeks rent - and then a flat monthly fee to cover other services - usually 5 to 10% of the rent.

Look out for hidden property management fees

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Depending on where you live in Australia, agencies may charge extra fees in their overall structure, such as, admin fees for routine inspections or any maintenance and repairs. Read your contract carefully for terms and conditions that specify extra fees charged by the agency, and ask questions if you’re unsure what the fees are.

Look out for:

  • Statement fees
  • Admin fees
  • Re-leasing fees
  • Inspection fees
  • Maintenance & repair fees
  • Final inspection fees, and more!

As you can see it’s a good idea to compare and contrast a few agencies so you know what you’re getting for your money, and if you think the fees are justified.

Need a property manager? Download our homeowners guide to finances and access property managers for free at Bricks+Agent.

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Topics: Property Advice, Home Improvement

Rafael Niesten

Written by Rafael Niesten

In his early 20s, Perth local Rafael Niesten, won a scholarship to study in Canada, with that came the opportunity to volunteer at a local radio station. That spawned his entrepreneurial streak, returning to Perth in 2001 he set up community radio Groove FM. More by luck than design, they became successful, too successful as they took a significant chunk of the Perth Market. This sent up the red flag with his commercial competitors who saw to it that he came before the Australian Broadcasting Authority and on technicalities such as the number of volunteers he was forced to move on. He received the citizen of the year award for Western Australia (youth) and was a finalist in the Australian of the year awards (Youth). Falling on his sword he turned to running small and large scale events, all the while buying, renovating and selling properties. Buying and selling land and renovated houses provided a grounding in the property industry. He founded a cloud based medical grade voice recognition company, followed by co founding the first true cloud application for private practice in the health sector. He successfully exited these ventures at the end of 2016 and began building Bricks+Agent.