Lease Renewal fee?

Yea those $14 heaters seem ok

 

It certainly does come down to revenue, equally for the investor.

I personally have no issues with a reasonable flat fee renewal.

But again, I am still yet to find a reasonable and fair explanation to my mind as to why it should cost over 300% more to renew one lease over another.

There are still some investors who will simply passively accept paying such a discrepancy in fees. I do find though, that a lot more of us are looking more closely at the financials and choosing good PMs with '1 week rent' renewal fees only for the lower rental income properties, and using PMs with a different business model (i.e no renewal fees) for the higher income or 'blue-chip' properties.

By charging over 300% more for a lease renewal, it's a shame that some really good PMs miss out on properties that would earn them 300% more per week than a lower income property.

I have one PM in West Lakes who, when this discrepancy was mentioned, simply adapted his business model by removing the '1 week rent fee' clause and now only charges me a $50 'admin fee' for lease renewals, thereby keeping my business and subsequently putting well over $2000pa per property into his pocket.

And again, as always, YMMV

 

That is a valid point and has merit to what he does.

Opinions aside, the fact is that this is a business and the market is different in each state which influences the operation of real estate agencies.

I think we can agree that a business standpoint that D.T. runs a smooth operation as he can separate the management and lease renewal.

 

Clearly from my personal chat contact with DT and his very good reputation on the forum, I can fully agree that his service is indeed exemplary

The thread however, is regarding about something completely different, namely, the validity of charging a week's rent as a lease renewal fee. Some people find it acceptable, some do not. As stated above, I find it acceptable for my lower income properties, but not for the higher income properties, and clearly many investors share this opinion. And that's all it is, an opinion. Each investor has the decision making power to spend their income, wisely or unwisely, according to their own choices. If that choice includes paying over 300% more for an identical service with the same PM, that is their right.

But again, I am still yet to find a reasonable and fair explanation to my mind as to why it should cost over 300% more to renew one lease over another when using the same PM.

As always, YMMV

 

D

Diligent Property Management has no add on fees such as lease renewal fees only the industry standard one week re-let fee to source new tenants to recover marketing, advertising, Open Homes, inspection by private appointment, tenant establishment etc

At the end of the day there are many business models that are offered in a free market context ...clients enjoy a great variety of choices

 

Industry standard is different in every city

 

Please share more information about your business. Are you involved in both property management and selling investment properties to investors? If both, what kinds of properties do you promote for investors...and do you work closely with developers bringing on new stock to the market?

 

Indeed industry standard does vary across States and Territories

 

I don't have a beef with a small flat-rate renewal fee. However a sliding scale based on rent (eg one week's rent plus gst) is a bit much. It is no additional work to renew a lease on an expensive property compared to a little cheapie rental.

With that said, you get what you pay for. Most PMs will charge "some kind of renewal fee". If it's small and their service is great, cop it on the chin. Saving a few dollars a year to dodge this fee only to find yourself in the hands of a bad PM is a very expensive mistake.

 

Hi Diligent PM

We specialise in property investment management, property investment advice on a fee-for-service basis and mortgage broking. We don’t sell properties of any kind nor do we refer clients to developers for purchases. Unfortunately, most of the time that someone is referred to a developer there are large commissions involved which generally are built into the purchase price and thereby inflating the property beyond it’s true open market value for the investor. Although there is nothing wrong with commissions, we don’t believe it’s right that these are borne by the consumer by being built into the purchase price of anything.

We do refer to Buyer’s Agents on a fee-for-service basis where the purchasing is unbiased by the price. We also refer to other property related services that in our years of investing we feel are important when building a good team around you.

Finally, we are also proud members of the Property Investment Professionals of Australia (PIPA) where we are required abide by a Code of Conduct which can be found on their website here. Unfortunately due to property investment not being deemed a financial product and therefore unregulated by the Corporations Act there are many shady operators out there. PIPA is an industry body advocating ethics and the regulation of the industry and in the meantime, companies who choose to do so can become members and operate in line with how we feel the industry should be regulated.

 

That sounds about right in my experience.

 

Do you only work in Adelaide?

 

Yes. Have worked elsewhere as well. Plan may be to open additional branches elsewhere in the future.

 

just curious,
obviously you cant be everywhere all the time, are you planning to franchsie your business?

I always find it hard to manage people remotely

 

We have only owned IPs in Queensland but have never paid fees for a lease renewal, just the standard one week (plus GST) for a new tenant. Can't see how a renewal fee is justified, maybe $50 for administration would be OK.

Sounds as if things are different in other states.
Marg

 

Yea, there's a few different potential models. I'm focusing on building / running a top quality operation here first and foremost.

 

I sincerely hope you stay passionate and genuine about what you do
and not turn to **** once you get bigger like so many other people