PM adding a new $5 per month fee

My PM has sent me a letter saying he will be adding a new $5 per month fee because of some new changes introduced this month that he has to comply with. Like the database management and security measures and he has to pass that on.

Any truth in it or some bull crap they keep making?

Thanks

 

Your choices;

1. Accept the charges and move on with life
2. Object to the charges, then either pick option 1 or 3.
3. Leave for another PM

In business and in life the end user always pay, if they have to spend for database and security this is passed onto the clients in some form or the business has to wear it on its bottom line.

 

Are they doing a good job? Would you bother switching for $60 p.a?

Cheers

Jamie

 

Very frank responses for the OP here. However, unlike those businesses the landlord can't just pass on increases in costs to the tenant. Therefore I can understand the OP.
When people are starting out and building their portfolios - $60pa for this and $x later for that can add up.

 

That $60 will pale into insignificance once interest rates drop by another 0.25%

 

The $60 pa is not the issue here it is the behavior that I don't like. I bought this PM with the house and he gave me his management rates. I chose to stick with him because tenants signed up with him and I didn't want to disturb the tenants. It seems like he upped he rates as soon as I signed up.

 

How much your PM charges is not important.

How much cash ends up in your pocket over the FY (rent received - all PM charges) is what is really important.

Changing PMs is easy and it doesn't 'disturb the tenants'. You sign an authority form and the tenants change the bank account details where they pay their rent. That's it.

 

We always encourage investors to first try to work things out with their existing PM as good practice. Thereafter, if an investor chooses to move to our agency at a later time, it is a well thought out decision (not an immediate reactive choice) to ensure that the investor's best interests are upheld.

Ask for clarification of what the additional $5 funds - if it is to provide a better, streamlined business process to offer better outcomes for you it may be a worthwhile investment. If it is simply a 'fee grab' for no return of investment, then you may want to reconsider your position as you are currently doing. Will the additional funds be used to engage more staff to reduce the number of properties per property manager ratio? If so, that will offer great dividends in terms of follow through on matters rather than the option of overloaded PMs...at the end of the day, these are just thought starters - best to have a conversation to learn what the $5 increase translates to in terms of return on investment.

From a personal perspective, the PM services we have engaged for our IPs are based on quality of service rather than the cheapest service (our personal learning occurred when our phone calls and emails were not returned for over 4 weeks when we tried a cheap service a few years ago where we learnt the PMs had huge case lists)

At the end of the day, you have choices and the right to choose what works for you!

 

Do you have multiple properties with the PM? If so consider negotiating a better all-in rate.
I crossed out all of the inspections, re-letting to same tenant, software etc fees and just pay a New tenant letting fee and a % management fee.

 

New compliance requirements, a changing environment, many business costs seem to continually increase and it does cost a business money.

On the other hand the revenue of a property management business tends to increase passively over time as the rents increase.

In my own business we don't really get the opportunity to pass on rising costs clients. Instead we review processes to try to increase efficiency and try to increase revenue through diversification and attracting more clients.

Perhaps go back to your PM and let them know that the $5 cost should be something their business needs to absorb and that you don't see the need to pay it. Let them know that whilst they have the right to apply additional fees to their clients, you have choices of other providers.

 

Excellent points raised. Interestingly, the rents for our apartments have all fallen backwards hence no passive increases for the Brisbane apartment rental market

 

I don't think any property management agency would lose a business over $60.

If you are offended by it let them know. They are Likley to drop it anyway,

 

Yes Xenia, great point. Key message is to engage in a conversation with the PM agency

 

For what it's worth, I emailed my PM this afternoon about a few things and thought I'd toss this in to ask if I would be seeing an increase in their management fees. Their answer--they had no plans to increase their management fees.