Find another PM Vs Self manage property

Hi Property investors,

Seeking PI wisdom.

Background In Short:
Receive a letter today from current PM, stating that they have sold the business.
The new owner of RE agency will take over end of this month, Feb 2016.
I used to pay 4.5% mgmt fee to current PM.
The new PM indicating they would charge 6.5% mgmt fee. plus 1 week rental ($650) (one off).

It's a very short notice. They requested me to reply to them asap.

relevant information:
- Tenant has been renting since 2012. Very good tenant. No issues. Average contact - once a year for minor fixes.
- Tenant is running a home business. They have insurance. My insurance also knows about it.
- It's a house

Question:
Is it better to find another PM, or try to self manage the property or just roll into this new contract with new RE owner/PM?

Thank you in Advance

Andy

 

If the management contract allows for it (and has been) reassigned, then you need to give appropriate notice as per what the contract says.

Plenty of info on the forum about PM vs Self Managing, both have their pros and cons.

You're basing this post on their fees though which tells us nothing. I'd rather have a 10% PM that was great than a 1% PM that was bad.

 

Id question why they are charging a weeks rent as a one off. That doesn't seem right.
6.5% still sounds very reasonable to me. I'd probably stay (without the extra week taken out).

Up to you and how well you know the legislation and think you can do it.

 

Just looking at this from a business perspective, if they just purchased the business there would be a 10% loss in the rent roll over first year, usually factored in and it occurs due to clients lost in the transition process.

They are increasing it by charging a letting fee and asking clients if they "want" to transfer.

Did I understand this correctly? They want to charge one week rent for the sake of transferring your property over to another management???
And they are asking if you want to transfer and not holding you accountable to the term of the contact they just paid for?

Each contract could be worth $5000
- $6000, that's what they would have purchased your management agreement for!
It does not make sense that they would be now giving this away or doing things to increase the attrition rate!

 

You know that you can renegotiate the terms and request that the 4.5% be reinstated. Attach it to a letter of termination in accordance to your agreement to strengthen your position.

Start looking for an alternative PM just in case.

 

Hi all, thanks for the input.

I just received the letter yesterday evening (after work). Still in the stage of gathering as much as information I could before making an inform decision.

@ D.T. – Thanks for the input. I went skim through the exclusive mgmt agency agreement, I signed in 2012, it appears that there is no “specific” clause stating that the RE agency can not terminate the agreement (considering, my assumption, that the contract has gone past “the period”). I am continuing my research as we speak in regards to pros and cons. I’ve read the pros and cons many times before, but now its affecting me – I am taking a more serious look into it.

@ Nemo30 – Thanks mate. I also has the same thought (one week rent one off seems not right). Will contact the potential* new PM to clarify today. Just got the letter/notice yesterday. I am glad you mentioned it.

I was lucky that the current PM only charge 4.5% fee. Thank you for your statement “I'd probably stay (without the extra week taken out).” It helps while I am weighing the options. I am concern if I could do it (self manage) or not (life is short).

@Xenia – Thank you for the expert advice. Very helpful insights.

I believe the letter indicates, the new owner is asking one week rent for transferring my property into their portfolio. The contract,I signed it in 2012. I believe / I assume, it has gone past the period. Since then I haven’t signed a new contract. I would assume that that particular contract just rolled over / Business as usual (BAU).

After further reading your comments (It does not make sense that they would be now giving this away or doing things to increase the attrition rate!”), it could be/highly likely (one week rent fee) is a typo. I will call the new owner of RE agency and confirm.

Your input is great. It’s very logical. I had *hunch” what you have mentioned, but unconfirmed. Now, some of the clouds on my mind cleared.

@Chilliblue – (“You know that you can renegotiate the terms and request that the 4.5% be reinstated. Attach it to a letter of termination in accordance to your agreement to strengthen your position.
Start looking for an alternative PM just in case.”) Thanks for the advice. Will do both. I am in the process of using that “find an agent search engine”. Great websites to browse potential good PM.

Best regards,

Andy

 

@Andy Lim post the suburb and see if anyone has any recommendations for a PM

 

Is it possible that you've misinterpreted the 1 week fee? It could be their standard letting fee which is payable when a new tenant is put into the property.

These days 6.5% is quite cheap.

 

Hi all,

@Chilliblue - I prefer not to mention the suburb, just in case.

@ Peter T - You are right on the money.

I called current PM yesterday afternoon/evening. It appears that my concern was a misunderstanding or typo. Like @Xenia 's comment, the 1 week fee and other fees only apply when they find a new tenant (future tense).

Thanks for the statement ("These days 6.5% is quite cheap") @ Peter.
My thought is " I don't mind 6.5%, as long as it's the market fee. I don't like to pay premium AND I don't like under paying PM. I like mutual benefit".
The current PM has organised a meeting with the new owner next week (optional).

My current PM is very good. I was lucky. Anyway, changes are inevitable. Move on.

Thanks for all the input. Will think it over the weekend. Do bit more research. Will be able to make an informed decision next week.

Best Regards

Andy

 

That's great Andy
I think give them a go.

 

To put your pricing in perspective, many of the PMs I know are charging 1.5 weeks letting fee and 8%+GST. 6.5% is about as cheap as it gets these days.

If you're happy with their service, this is worth a heck of a lot more than an extra 1% or 2%. I wouldn't be moving at this point.