Is this too much for a Brissy PM?

Half the issue (and I am guilty of this myself as an investor) is that we're only paying 8.8% and similar. I can tell you first hand the margins are not that big and as your rate comes down, the agency (usually) simply crams more properties per manager to make up for it*. Part of the issue with property management broadly is that high calibre, highly professional individuals who would do an amazing job managing multi-million of dollars worth of assets are attracted to much higher salaries in other sectors and industries.

I pay about 20% in the US and the difference in the individuals broadly speaking is astounding. I know they are paid 6 figures and a few of them have MBAs (yes, PMs with MBAs) and at the very least a business degree. A completely different business model but property management is taken much more seriously over there than it is here. Here, unless an agent/agency is the owner or management who is also working as a/the PM, there is really no money to be made on a cash flow basis under 300 properties on a rent roll and even then it is absolutely minimal. For an agency to install dedicated management to focus on the business and get the model right for their clients, rather than actually being the PM (which can affect service levels due to lack of focus in one area and the cycle continues), it's very different.

At the end of the day the market determines the price and in Australia we get it relatively cheap. I'm not saying that all PMs are hopeless, but I think we'd all agree as investors, PM is usually the weakest link in the investment equation across the range of professionals we deal with during our investing journey. I understand both sides of the fence very well and this is a very honest appraisal. Until we start paying more and agencies can hire people with business and marketing degrees on 6 figure incomes (or close to it), broadly speaking, the service levels will continue to frustrate us.

As I've always said, look for an agency that is offering a service proposition and not a price proposition. The race to the bottom already happened with airlines. It would nice not to see it happen with property as I for one would like to uphold the value of my investments for many years to come and I realise that my PMs are the ones who are going to make or break that.

*we do not do this, but we also stand by our rate as we firmly believe in a service proposition. We will actually help investors find an agency who charges the lowest possible rate it if that's all the investor is interested in.

 

I am only new to this but it sounds like you are getting some good advice. No one holds a gun to your head and its always good to compare apples with apples. My advice is ask around and list everything you are getting for your money. Cheep does not equal good, and on the same hand expensive does not always equal quality..

 

If I compared to Sydney only, then most PM's would appear to be a rip off

I was paying 5.5% for the best PM I ever met or had do anything for me in Syd, that was not a negotiated rate, and rent at that time was just on 300 IIRC, actually it started way under that from memory.

Quite a few others at that rate too, but some of them are not memorable for good reasons.

Also eslewhere not paying anywhere near 8.8 , only in far regional paying that and there is probably no viable other option, I have not asked for a reduction as rents are not like Sydney or other capitals. They also often know all the applicants, so is a good screen.

Then you look at places like Perth & you would think they are dealing with aliens or something, no good reason to be charging so much that I can see & I bet they also have a similar % of non performers.

I can see where the failings are and why, much like you specialist PMs, it provides opportunity for you.

 

I've decided to sign up with @Andrew Hancock after Andrew reached out to me and I had a good chat with Jodi from the company today. The PM attached to my buyer's agent did end up negotiating quite a bit, but in the end there were just too many fees they wouldn't remove in addition to the management fee. Things like marketing fee each time we need to advertise for a new tenant, lease negotiation fee for same tenant, and 'file transfer' fee (which I assume is triggered if I decide to change agencies) -- none of these are charged by the other agents I looked at in Bris.

Thanks for everybody's help. Looking forward to working with you @Andrew Hancock

 

Hi @Northboy,

It's great news and thank you for the vote of confidence. We're looking forward to working with you also!

 

Good on you @Northboy , independent agencies are definitely the way to go.

 

Raine and Horne Shailer park.
7.7%.
3 months free
No quarterly inspection fees...

 

Defence Force Housing charge these high end PM fees however repaint and recarpet at end of tenancies etc incl in cost.

Given this is a normal PM agency the fees are very high. I acknowledge that the profit margin of a PM business is very tight and only once some economy of scale is reached, however these fees are simply not competitive.

Good to see that you have explored an alternative option ...