Property management fee 7% is it too high?

i have purchased an IP in melton recently ..the nominated agent qouted me 7% management charge. Is it a standard fee or should i look for something cheaper given that i m expecting $290-$300 per week and this is my first property.

Any suggestions are helpful and welcome.

 

I have a few properties. 7% is a little high, but not ridiculous. You've gotta look out for other fees (especially a new lease). I usually try for 6.5%

This is some info for one of my properties: Imgur: The most awesome images on the Internet

 

It's high in my opinion and there is also additional fees. You can shop around and get a quote from the agents nearby and may find cheaper rates like 5.5% inc GST but if the agent is already managing the property and the tenants are already there, it may be beneficial to stay with them.

This calculation shows roughly what you should expect and be ready for

* Management fee = 7%+GST = 7.7%
* 1 week (or 2 weeks) + GST they take at the start of the tenancy = (1+0.1)/52 = 2.1% (or 4.2% if 2 weeks)
* Admin fee = $5 or so per month + GST = 0.4%
* Advertisement and professional photography say $250 +GST = 1.8%

* You should also add a vacancy factor to this figure. Assuming 2 weeks vacant = 2/52 = 4.2%

If it's an ongoing lease you won't have ads and vacancy. Also the agent may not take the first 1 or 2 weeks so you will end up in 8.1% costs + insurance +maintenance

If it's a vacant property, the costs could be minimum 18.4% + insurance +maintenance or more depending on the vacancy period for the first year but will drop next year if the tenants stay.

 

Gee don't buy an IP in QLD then, 7% is low-average, the large branded agencies are charging 10-12% plus

 

You might want to look for a new agent then? The highest I have heard in Brisbane is 9% plus GST, around 8% plus GST is common.

 

Really? Every PM I looked at (and my current PM'S) in Brisbane are either 7 or 8% + gst.

 

Why expect a lower percentage on a lower rent? My guess (PMs welcome to correct me) is that a $300pw property is on average just as much work as a $600 one, if not more, for half the return.

 

Does the 7% management fees include routine inspections, annual statement report and ingoing reports? I have been quoted 6.6% but have to pay extra for those reports.

 

I paid 7.7% management @ gold coast

 

C'mon.

1% increase/decrease is $150.

I would rather pay 8% and get a good PM then pay 6% (save 2% or $300) and get a slack PM.

It is not how much you pay or don't pay a PM that matters. It is how much that ends up in your bank account that is critical.

I have made $8,000 more in a year by paying a PM 8% than paying another PM 6%.

 

Whether a particular management fee is "high" in a particular suburb depends on the suburb and what the PMs on offer are all charging, and the level of their service. 7% is a smidge higher than what you need to pay in Melton. Be wary of PMs that prefer not to put the rent up on a tenant. All your bills will go up each year (council, insurance, water rates, trades) so as long as the market supports it, the rent needs to go up.

 

Only the cheap desperate agents going for volume charge under that here.

 

I've taken over a property from a member on this forum. Tenant defaulted in rent (not agents fault), agent got vacant possession in February through tribunal.
We took over in April - the agent had not advertised the property yet. Did not show mitigation of losses and therefore sabotaged bond claim and insurance claim as a result.

They were cheap agents but do you have any idea what carrying those kinds of losses and vacancies cost to a landlord?

Just find someone who knows what they are doing. Good agents come in expensive forms and cheaper forms.

Bad agents are both expensive and cheap too. I've seen some crappy agents with an inflated self worth charging ridiculous prices.

Find someone you like and just pay them their normal fees. I would never ask an accountant what they charge, I would go with the one I like and they charge what they charge.

 

7% is on the high end for NSW. However, the agent and support team is excellent. The proactive with rental reviews and thinks a few steps ahead with answers to obvious questions landlords will have. Also a gun at tribunal.

As other members pointed out, fee bracket vary from state to state.

 

Each state is different to what they charge for property management services. In QLD the average property management fees is 8.8% including GST. If there is any agent that is doing less I would definitely be asking what it includes and doesn't include so you don't miss out on anything as part of management for your investment property.
Hope this helps
Samantha Ellis

 

Still a lot cheaper than the average WA Property Managers fees

 

Exactly, why is 15% considered normal in Perth?

 

I guess it's not really comparing apples with apples but I pay just under 9% in Canberra/NSW

Cheers

Jamie

 

Because cowboys haven't undercut the crap out of it yet, so PMs can actually get what they're worth there.

 

Hahaha.. After Uber taxi and Uber eats, here comes Uber manage......lol