Purchased First IP, need help with Agency Agreement

Hi PC,

I recently joined PC to learn more about investing in property. During this short time I managed to purchase an IP with a potential to build a Granny Flat, based in Sydney.

It's my first time so bare with me.

The agent whom I purchased the property from has handed me a Management Agreement.

I am not too familiar with it but slowly reading through it, and the fee's seem excessive. (I have a few friends who shared their agreements with me as a guide). The agent does seem like a genuine guy, so I decided to give him a go.

But just to run it by PC:

Some points:
5.5% (doesn't state GST or no GST, will clarify)
Termination: 90 days (I've seen in forums, this is quite excess)
Expenses: $500 (I'm definitely aiming for $0, and to be notified on all problems)
EOFY statements: $20.

Curious what the difference between Management fee and Administration fee?


This is my first properly, so I apologize in advance if I sound a bit nit picky, I understand they do need to make money, but they do know about my lack of knowledge in property, so I do not want to get be taken advantage of.

Always happy to compromise.


-Sharky

 

I don't think it is a very good idea for the agency that sold you the property to manage the rental of the property.

Can you ask around and see if you can find a good property manager?

I don't really know who is in Sydney. @Gockie, @sash, @See Change, @Inov8ive, @Leo2413? Does anyone know a good property manager or do you know who might know one?

 

Thank you for your prompt reply. Is there any reason for this ?

 

5.5 is ok

The rest you just tell them what you want.

I have no problem with the selling agent getting the management if they seem like they will do a decent job, but the selling agent should be passing you to the PM, so you can see what they are like.

 

Yes. An agency that focuses on sales usually does a terrible job at managing properties in my experience. I could be wrong about yours but what indications do you have that they will manage your property well?

 

Honestly, he is probably the only REA that I've dealt with.

As I mentioned, he seemed genuine. He did ask a few times before and after I paid the deposit. To have him as the managing agent. Not sure if that's alarm bells.

 

Sydney's a big place . We only have one IP left in manly .

Cliff

 

No, they will often want the PM side, if they don't ask maybe they are lazy or know the place is trouble.

But you need to speak with the PM and staff, not the selling agent.

 

All people working in Real Estate are great at sales (even the property managers too!), you honestly will not know the right agent is looking after your property unless you have a great recommendation from someone you trust, who has experience with a few agencies or the agency has some kind of guarantee that means if things are not as they promised you can move on.

First thing I would suggest is do your research and see not just what your short list people tell you about their agency but also mystery shop their opens for vacant properties and see if their FB, Google or other reviews say. Plus see if they will spend quality time with you and make your life easier as you know you may what additional support being a newer investor. This is offen the best effort they will give you and will probably speak to what you can expect as a best case in the future in many cases.