VIC Regarding rental fees charged by PM

Hi everybody,

I'm new here and I also new to property investment in Melbourne. However, I would love to hear from your accurate suggestions and thoughts.

My situation is that I recently bought the investment property and settled on 12/12/2019. The SOLD board is still there for LEASE campaign.

The property manager (aka agent) has helped to run lease advertisement campaign since early December. However, they have not been able to secure tenancy.

Recently, through my private channels, I brought an prospective tenant to them to do the rental application. The agent helped with reference checks, contract, etc. The tenant was approved and finally moved in 14/1/2020.

Today, I received rental statement with charges such as letting fee, advertising fees, etc. to a combined total of more than $1000.

Do you think it is reasonable that they charge such fees? What shouldn't they charge? Just emphasize that the tenant who moved in was sourced by me.

I'm looking forward to your ideas and suggestions.

Thank you.

best regards.

 

Still had to do everything, still have to pay.

The sourcing part is quite a small component of the overall cost of advertising, home opens, sign, screening, condition report, documentation / contract, etc.

 

The property was advertised for lease, therefore you would pay for the advertising and marketing costs. The agency ran all the checks on the applicant and drew up his agreement etc - they would be paid for this service too.

 

But the advertising, home opens, sign etc. have been ineffective and did not bring tenants. So the PM is still be able to charge us for activities which have been useless to secure tenancy?

But I agree that condition report, documentation, contract etc. require time and efforts.

I'm asking for reasonable charges.

 

You mentioned the tenant sourcing part is small component but the agent has NOT been able to secure any tenancy for 1 month after house settlement, which cost us rentals more than $1500?

So, I can't figure out why sourcing is a small part. Should it be the most crucial part of property managing? Because with tenant sourcing, nothing else works?

 

Check your Management agreement. This wouldn't have been a shock?

 

The fact is you signed the agreement.

 

You finding a tenant before them does not mean they would not found a tenant though.

 

Does your management agreement have a clause providing that payment is subject to the work not being useless? If not, then why does it matter?

I mean using the same reasoning, are you going to try and argue your way out of the weekly % management fee on the weeks that nothing really happens and so the PM is being "useless"?

 

Reasonable, fair and should mean nothing unless they are in the agreement.

if you think they are incompetent, change agents. Following the terms of the management agreement.

 

#kevin-phan, I know exactly how you feel, you feel like you did all the work and the "hard " part of bringing a suitable tenant,

the reality is, you dont know whether the sign board was effective or not, you only need one tenant, and the right one, sometimes your board might bring in 100 crappy applications, so the board is doing its job

tenant approval requires checks, reference calls, analysing application history etc. etc.

in a perfect world I would be happy paying 50% of the leasing fee for bringing in the tenant, however, thats not how it works unless you put that in the managing agreement

 

Sometimes tenants are found before the last one left some times it takes weeks.
$10/20 below market rate might end up saving you time because tenant found quickly.

$1000 for a new tenant on 12 month lease seems about what I paid
The "lease" document can be 1.5x to 2x weekly rent
Advertising $100 to $250 plus

As mentioned in another thread not a good idea to have leases ending over the Christmas period.

Wait to you are advertising in an over supplied market and it takes many months.

 

You have simply not collected rent during this period, it has not cost you $1,500, it is only the fixed costs not the loss of rent.

What was the feedback from the opens? Was the priced right? What was the vacancy rate like? Were there issues with the property?

 

Hi Kevin, have you raised your concerns with your agent? I acknowledge you found the tenant and you should perhaps receive a discount. However, this is only one part of letting a property, there is all the paper work involved, negotiating and also the condition report.
For example depending on the size of a property it can take 2 hours for a pm to complete this. Charging a letting fee is apart of your fee structure as per your authority. Depending on your rental amount the average letting fee can be from 2 weeks to 1 weeks depending. The advertising amount is a reimbursement cost to cover the websites etc. if you fee as though the fees are not justified speak to your agent.

 

This sounds like a fair charge. The property agent don't work for free.

You could manage the property yourself and that way no need to pay PM.

I on the hand happy to a PM.

TB

 

there is certainly a opportunity cost if the agencies incompetence has resulted in no tenant for the past month, OP would have $1500 worth of rent in his account vs $0

but its not clear weather competency is the problem here

 

I don't know if the PM is good or bad, so I'll assume the PM is competent at this point.
I think the OP is failing to understand that their IP went on the market at about the worst time of year. It's hard to rent a place out close to Xmas and New Years. The rental market is now hot and I assume the PM probably would have found somebody sooner rather than later.

It could also be the case that the IP in question isn't desirable and the OP finding a friend to move in was actually lucky. Who knows. We certainly don't know all the details. BUT, OP, if you're hung up about this, you're probably going to have a tough time as a LL. Why not sell the IP instead and invest the money in other ways?