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Any luck in receiving Gross Rent from PM?

Discussion in 'Property Management' started by myhillg, 16th Oct, 2015.

  1. myhillg

    myhillg Member

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    Hi All,

    I have been battling with our PM to try and get the gross rent sent to us and pay all expenses from a LOC. By all expenses I mean I wanted to pay the monthly PM fees as well as the usual rates/taxes/strata...

    But I want to have my cake and eat it too - I asked if they would remit the gross rent, but still pay all the fees and invoice me separately for all these expenses, they could even direct debit the LOC if they wanted.... but no dice.

    The best I could get is for them was to send the council/tax/etc to me and I will pay direct (difficult when overseas and no AU postal address) but still all PM fees will be deducted from rent.

    I would prefer to run up the LOC as much as possible as it will not be used for some time and funds are available...

    Has any one had any luck in getting true gross rent sent to them?
    Or am I asking too much for their 5%?
     
    Terry_w likes this.
  2. D.T.

    D.T. Adelaide Property Manager Business Member

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    PM fees, no way.

    All the other stuff, no problem - strata, council, insurance, water, etc. Go nuts :)
     
  3. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Dunno about the PM fees, but if it's your property, you control where the bills get sent.
    If you want to pay them, contact all the distributors of the bills to send them to you directly.
    Is this extra work of paying the bills yourself and doing the extra accounting worth the small amount of interest?
     
  4. TMNT

    TMNT Well-Known Member

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    PM fees are deducted from the rent, so im not sure how they are going to guarnatee remittance from your offset, I thought direct debits are really hard and expensive for businesses to setup
     
  5. D.T.

    D.T. Adelaide Property Manager Business Member

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    They can be, but I don't see your point. There's no direct debit being used in the above posted scenarios.
     
  6. S.T

    S.T Well-Known Member

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    Offer to pay their PM's fees upfront, might work? Say 6 months in advance or something.
     
  7. The Y-man

    The Y-man Moderator Staff Member

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    Why? What would you achieve from this? :confused:

    The tax effect would be the same.....

    The Y-man
     
  8. TMNT

    TMNT Well-Known Member

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    direct debiting the fees out of hte guys LOC account for all the fees etc while getting the total rent minus nohting deposited into one of his accounts,

    thats what he wants , so he wants the fees taken separately out of another account which would mean setting up a direct debit arrangement
     
  9. Chilliblue

    Chilliblue Well-Known Member

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    Why bother
     
  10. See Change

    See Change Timing Lord Premium Member

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    Can't imagine any pm wanting to do it . It's not normal business practice and they'd have to do something out of their normal routine .

    Pm fees vary each month , so they'd have to send an invoice to you for you to pay it .

    Cliff
     
  11. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yeah i got that bit, thought you were referring to a different idea though sorry.

    PM software and statutory trust accounts in general aren't designed for that, it'd be a bit of a workaround to do it that way.
     
  12. Ace in the Hole

    Ace in the Hole Well-Known Member Premium Member

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    Don't confuse and further complicate matters for PM's, they struggle minimising mistakes as it is...
     
  13. chylld

    chylld Well-Known Member

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    This might work, assuming of course that the PM provides an invoice for the prepaid management fees so that it's 100% clear that the payment is for income-producing purposes

    Ask your financial adviser :) (edit: or just read what Terry posted below)
     
    Last edited: 16th Oct, 2015
  14. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    This is for debt recycling.
    Some PMs charge a flat fee. You might be able to pay them a fee upfront every month or 6 months even. It should be possible with their systems too. They could just charge a flat 0% - receive rent in their trust accounts, deduct nothing, pass it on. Separately receive the fee.
    Should be simple - but I have yet to hear of anyone actually doing it.
     
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  15. S.T

    S.T Well-Known Member

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    Hey @D.T. being a PM, wouldn't you like to be paid 6 months in advance if it were offered?
     
  16. Terry_w

    Terry_w Solicitor, Finance Broker, CTA Business Member

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    $50,000 pa in rent at 8% fee = $4,000 per year in agent fees.
    This could be diverted to your non deductible debt - instead of using cash to pay it you borrow to pay it. And you get an extra $4k x 5% $200in deductions per year. This could save someone around $74 per year if they were on a 37% tax rate (actually less because it would be paid monthly).

    Then think of the compounding effects.
     
    Last edited: 17th Oct, 2015
    Observer likes this.
  17. S.T

    S.T Well-Known Member

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    Absolutely! This is what the OP is trying to achieve i think.
     
  18. D.T.

    D.T. Adelaide Property Manager Business Member

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    Regular cashflow has its perks as well :p
    So if you pay 6 months management in advance and the tenant doesn't pay rent, then what happens?
     
  19. chylld

    chylld Well-Known Member

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    I personally would worry about whether that 6 months payment will still be seen as an expense related to producing income... since there is no corresponding income for part of that fee. Could result in the LOC becoming contaminated?

    My previous PM flat-out said no, but forgot to ask my current PM... have just asked and crossing fingers for a positive reply :)
     
  20. D.T.

    D.T. Adelaide Property Manager Business Member

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    In theory if the invoice actually stated it was to cover the duration then I think that'd be ok. A tax expert can confirm.

    In reality, even if it is a fairly simple thing to do, having different arrangements for everyone is an administrative burden in itself.