Property management fees

Question for a general opinion:

Why are property management fees a percentage of rental income?

(Do cheaper rental properties simply receive less attention from a property manager?)


Bonus question: Why do property management fees in Perth seem to be consistently higher than in the eastern states?

 

Because it costs more to operate the business in WA - days are shorter due to no daylight savings yet they still have to pay the same wages bill.

 

Great question!

WA is higher because it's become the norm for the fees to be higher in WA. I don't think there are any significant operational costs/differences to explain it.

In the U.S.A Property Managers are university educated and paid a six figure wage, go figure!

I don't think anyone really looks at the net fee at the end of the month and decides to vary their service level based on the rent of a particular property, but by the same token you could hopefully expect a better standard of service in a more expensive area as a result of that agency receiving higher overall fees.

I'd really love to charge a fixed fee, which I think would be fairer to the clients who have higher rents and therefore pay more, but I worry that it's not the norm in the market and would put people off.

 

So are most of the PMs for commercial/industrial/retail property - expected to hold B Prop Economics or equivalent.

 

Do you think it's fair to ask for a lower % rate when you've got an above average property next to another essentially identical property for 45% less rent? This is my exact experience. Same street a 3/1/1 is rented for near enough half the cost of my renovated property. Which should, being newly fitted out should have way less issues for them to attend to! I'd rather a fixed fee because it's simply easier. I'm very happy with the service and I did negotiate a slightly lower rate, but I still feel it's overly expensive.

 

Do you discount your chargeout rate (or increase it) based on the expected difficulty of the work?

 

I’ll hit a mark

5.5% inc gst
First contract 1 week rent payable
No charge for the resigning of a lease
Nil charge for email statement
Nil charge for annual eofy paper statement

 

Charge out rates are usually hourly based.

I would argue that a lower priced rental might actually take more time out of a PMs day to manage.

 

Low rent can also equate to low expectations vs high priced rental and high maintenance tenant eg. if you're paying $2k/wk you want your money's worth - pool cleaner/lawns maintenance bod didn't show up, inclinator/winch on boat ramp not working etc

 

I assume the "commission" approach is designed to align the interests of the owner and the PM at the point of fixing the rent. On a commission basis, the PM is usually focused on getting the property tenanted asap at or above market rent.