Help me disecetProperty Management Fees - Sydney's Northern Beaches

Hi All,
Need you guys to help me decide if the Property Management Fees for the Property Manager I am considering are reasonable;
$150 fee to list on RE.com.au & Domain
7.7%
Letting Fee 1 week rent with GST on top
Lease Renewal fee 55% of 1 week rent
Lease prep fee $33
Admin $5 per month
$15 annual access to tenant database
The things I have a problem with are the reletting fee, Internet advertising cost and the $15 database cost. What do you guys think? Is this stock standard fees?
I plan to negotiate the 7.7% but just want to formulate a reasonable argument.
Thanks!
Sorry about the terrible spelling above, that will teach me not to re-read before I post

 

Impossible to tell if its reasonable as we don't know how good they are or what they propose to do for you. You're better off seeking recommendations from others who have bought in the area than analysing which will end up cheapest.

I'd rather pay 20% to someone who knew what they were doing than 1% to someone who didn't.

Have you seen how many complaints there are about the way PM's do things on these forums? That's because they chose with price as their first criteria.

 

This one was recommended to us & they answered all my questions, returned my initial call promptly. 2 property managers, 1 senior with 25 years, 1 junior but seems like she is all over it. I'm happy to pay them their worth. Just want to make sure this is in line with market rate. They charge 7.7% but when you add it all up its considerably more in 'extra' costs.

 

What do others in the area charge?

I pay 8.8% in Canberra, without the extra statement costs etc.

I do pay advertising at cost and the same letting and re-letting fees you've outlined above.

If they go to tribunal I pay an hourly rate.

 

with property managers, there is no such thing as stock standard as each office is different and will charge what they can.

Negotiate to what you are happy with.

The most expensive agents are the ones in the 5.5% or lower management rate, I love them because we take on heaps of their properties as many don't know what they are doing.

The disclaimer off course is that the ones that do know what they are doing and all going well don't have clients sourcing other property managers.

One thing to look at for the agency is rent arrears rate, should be below 3% for most agencies with over 100 properties. Red flags if above 5% (unless they are having an unusually bad month).

Vacancy rates - how quickly do they move their properties?
How do they handle repairs and maintenance, routine inspections etc...

Good property managers are the ones that can make a quick decision to set things right even in the absence of the landlords input.

Good ones offer solutions. Bad ones will wait to be told what to do.

ask them about some disaster stories and how they have handled them? 25 years experience - they should have seen it all.

set some hypothetical examples, if this happens what would you do? what if you can't get hold of me? .....

 

I would be more interested in knowing:

- who is the exact person that will dealing with property and their experiences
- are they certified or a licenced re
- what is their personality and is it compatible to your own
- how many properties do they look after and what is the maximum amount for this PM
- is your property their bread and butter type and how well do they know the area where your property is in
- who are there contractors
- what are their after hours contact for yourself and the tenant
- what hours /days is the agency open
- how often would they have open for inspections for a tenancy let
- what is there tenant screening policy
- how many inspections during the year once tenanted and if they arrange follow ups
- What is the agencies arrears policy
- what policies does the agency have in maintaining tenant and landlord satisfaction
- how often are you as a landlord communicated with

The one item that did stand out in your post was the $15 annual access to tenant database. Cross it out and also ensure that you only need to give 2 weeks notice to terminate the agreement.

Best of luck.

 

Technically a lease renewal is less work than a lease preparation so ask them why they charge the 50% of 1 weeks rent.

 

There is a difference between a re-letting fee and a lease renewal fee. Reletting is where tenant leave and the property is relet to a new tenant. A lease renewal is sitting tenant is signed up for a new (continuing) lease.

If they are trying to charge for a renewal than I see that as unreasonable. I also think the $150 to list on Re.com etc is ridiculous along with fee for access to the tenant database. These are their costs of doing business and should be covered in the 7.7% commission.

Cheers

 

Is it?

Can you back this statement up with proof?

 

Yes, actually.

In the quest to be best in the state, for about a year prior to starting my own business I maintained an Australia wide database of PM complaints. This was gathered from various forums, various friends / colleagues, my potential client list, friends at a LL insurance co, friends at tribunal, etc. Where possible, I found out which PM agency they were with. Using that, not too difficult to ask or find out their fee structure.

Once that was done, its simple to run queries on it (I come from an IT background) to get stats. Vast majority (83%) came from agencies with below average fees (for their state of operation). Do you think this is a coincidence? I think if going gung ho on building a rent roll using low fees to entice people, (unrelated but this is why I wouldn't ask a PM how many properties they have), then you have to do things that promote high staff turnover or drops in service levels.

Other interesting tidbits for you:

#1 complaint is about communication time which is why I implemented a guaranteed timeframe around this.

#2 was around complicated fee structures so I made mine a lot simpler to understand. You won't see threads asking them to be dissected.

 

Not every agency is trying to build a rent roll.

Do you have proof that those "on these forums" that "chose with price as their first criteria" had complaints that were caused by a certain (lower) price?

Good for you and you're entitled to self promote but I would like to see some proof of the above please.

 

Yes, as written about above.

Same as the bank surveys you see, they say x% do this or that, they don't send you the raw data.

 

wowww that is steep! I recently rented a house in Northern Beaches and all agents I talked to were around 5.5%. There was one that wanted to charge me 7.5%, I just told her not to bother coming if she doesn't match all others. So she agreed to 5.5%.

Besides 5.5% on NB is the norm.

Your rate will be a lot higher than 7.5% when you consider all other costs. And why would they charge lease renewal? They should charge you that if they are getting new tenant. Although what they charged you for RE and Domain is less than what I got charged ($200). Negotiate them down and get few more agents to come through, and just keep saying everyone else charges 5%.+GST (I hate when they add GST on all of their prices! It should be already inclusive)

 

Hi Excalibur,
I wish I had read this yesterday morning!
I have negotiated out all the 'extra' fees except the monthly admin. I was happy to pay the 7.7% until I read the above! We have dealt with a lot of the agents in the area the last time we rented our place out - it was 4 years ago but all rates seemed to be around the 8.5-8.8% mark (when you add it all up). The last agent we used started off ok but after a few weeks we felt like we we doing more management than they were. Their tenant selection was excellent though. Unfortunately the property manager changed and the new one was terrible.
This prospective property manager has been recommended, seems like she will be easy to work with and knows her stuff. Our unit is renovated and the unit block is well maintained so theoretically this is easy work for close to $50 a week for the property manager. I am of the theory if you pay for a fair days work you will get it in return. 2 PM's managing a 165 rent roll with only one troublesome tenant ending up in the tribunal. Zero vacancy at the moment and no rent arears as they chase them after 3 days. They sound good on paper!
@Excalibur1 is your house close to Mona Vale? What's the property manager like?

 

@Magnet bummer! As you said I hope they are as good as they sound. A good agent comes out only when there are problems and how they handle them. If you are unhappy with that you can always change. Wish you all the best.

I'm in Seaforth, so on the other side. My agent is really good so far. Dealt with any problem that came up, so she is worth all the 5.5% + fees and more. She is also the director at her agency so I guess that's why I got lucky. She really does work fast and there are no delays. She came recommended from another agent I work with regularly, when I was buying in Hornsby area. I will let you know if I encounter any problems. I think she is worth more than what im paying, so around Christmas she will get a nice gift.

Mona Vale is good area to build, a lot of large blocks still around....