Property management blue chip areas vs entry level areas

I am about to rent out a 4 bedroom new build in a premium Melbourne suburb and am shocked by the proposed agents fees.

Consider this situation (all 3/4 bedroom homes):
House 1 - $400 p.w. (Western Suburbs, Melbourne) - Agent 1 receives 4% management fee ($16 p.w).
House 2 - $350 p.w. (Brisbane) - Agent 2 receives 7% management fee ($24.50 p.w)
House 3 - $2000 p.w (Inner city, Melbourne - brand new build) - Agent 3 wants 7.7% ($154 p.w)

So all 3 agents are managing a 3-4 bedroom home however one agent wants 10 times more than the another in quantum per week just because the rent is higher.

What is a reasonable management fee on a brand new townhouse at $2000?
What fees do you negotiate and how do you do that?
How do you choose an agent in a blue chip area?

 

6.6 to 7.7 (inc GST) in Melbourne is quite typical I am afraid - whereas in Sydney anything between 4.5 to 5.5 is what you'd expect.. You can negotiate (just ask and given the high rent you should get a discount). Keep in mind that a $2000 pw rental is as high end as they come and you would want your property to be looked after by the best PM, top personal service, including someone that would find great tenants quickly and will look after them in the long run.

 

The Property Management industry is largely commission-based as is much of the real estate sector (sales agents, buyers agents, etc).

At the bottom end of the PM barrel there are some "entrepreneurs" who do capped price or fixed fee management services - a sales pitch aimed to snag clients along the lines of "why should you pay more based on what your property rents for - it's all the same work", or is it? In reality, there's a very good reason for that, generally the work involved all round between managing a 2 bedroom **** box which rents for $250pw is vastly different to managing a 5 bedroom 7 bathroom million dollar property, etc.

At the end of the day, you get what you pay for, good luck.

Nb. look how well that worked out for Purple Bricks..

 

No. Typical PM fees in Melbourne are 4.4-5.5% inc GST. In QLD it's typically 7.7% inc GST. In Perth it's typically 18-20% inc all their fees.

OP your Melbourne PM is taking the Mickey with their quote of 7.7%. Definitely shop around and you'll get rates of 4.4-5.5% from good quality property managers. PM me if you want a recommendation.

 

Feel free to share these good quality PMs in Melbourne that are willing to work on 4.4% inc GST and we will be grateful - thanks.

 

Sure thing just send me a PM if you're serious. I've got a few IPs in Melbourne and have always paid 4-5%. Feel free to share your PMs in Sydney which charge the same amount as in Melbourne.

 

I'll PM you. I have a few properties in Melbourne and a few in Sydney as well.

 

The OP also said he's paying 4% in Melbourne on his first IP so it's not unusual. I think you'll find PM rates in Sydney and Melbourne are similar at 4-5%.

OP, maybe you should get your Melbourne PM to also manage your newest IP if distance isn't an issue and you're happy with them.

 

Any chance House 3 is being rented out furnished? Furnished rentals (executive short stay leases) tend to have higher fees as they are more work but if it's a normal house then I can't explain why it's that much except that perhaps your house 1 rate is not normal.

 

As a melb property investor, I have always paid around 5.5% (plus a few annoying extra fees) for decent enough management.

There are agents out there that market themselves as 'premium', focus on higher end suburbs and charge a higher fee, but really not sure if they are better.

As a Sydney PM, I put the same amount of effort in whether its $400pw or $2k, and I'm more willing to negotiate the fee down to below 5% if its a higher rent.

 

Each agency works on a different business model - how many properties does a grunt need to manage to recoup their wages, allowances, on-costs (workers compensation, payroll tax, FBT etc), training, office costs (administrator, trust accountant/book keeper, rent, desk, REIV membership, office running costs, RE.com/Domain monthly fees etc).

Does an investor get better service from a PM who manages 150 properties of low value or 75 higher value properties?

High priced rentals attract higher maintenance tenants who have higher expectations. Lower socioeconomic tenants are more concerned with keeping the roof over their heads and not necessarily as aware of their rights as those who can afford a high priced rental due in part to the circles in which they mix that is street smarts vs calling on a mate who's a lawyer.

 

My property manager in Adelaide charges me 8.8% plus routine inspection fees of $33 a quarter, and EOFY statement fees...and...and .
Looking to change!

 

Speak to @D.T. best PM in Adelaide