Let's Talk About Fees

Generally speaking, companies that charge lower fees (or discount their fees) will not be able to provide the level and range of services as those who charge a fair fee and commit to offering value. Why?... because they will not have the financial resources to attract, train and retain appropriate professional staff and/or provide the technology, systems and backup required to be highly effective.

The key to securing a good financial return on your property is having it let in the shortest possible time frame, for the best possible rent, to the best possible tenant and having it pro-actively managed during the tenancy.

Property management fees vary, with some companies having higher management commission and monthly fees but lower letting fees, or vice versa.

To get a total picture of the cost of managing your property, you need to calculate the total annual cost for each property management firm (i.e. management fees, letting fees, lease renewal fees, advertising, statement/postage fees, maintenance fees, court appearance fees, insurance claim fees etc etc).

And don't forget to factor in vacancy...how long is you property vacant between tenancies on average? Has your agent tickled your ears when quoting rent? This could cost you thousands!

Comparing these fees across various property management firms may show an annual variance of up to say $300.00 per annum.... so based on a $300.00 per week rental property this is equivalent to one week's rent, therefore, if the company charging the lower fee takes one week longer to secure a tenant for the vacant property, any saving in management fees has already been eroded. A prime example of this is where some agencies hold "rental open homes" if a prospective tenant is asked to wait a week for the next open home that's a weeks rent lost simply because the agency is saving time rather that considering the loss of income and arranging the inspection quickly at the convenience of prospective tenants

Therefore, finding out what resources they put into letting properties and asking about their vacancy rates (i.e. the % of vacant properties in their rent roll), is an important first step in choosing the right property management company, there are many more areas of management that can cost you financially so take the time to do some homework, after all this is an investment you are entrusting.

How much is your property manager really costing you?

When was the last time you received a detailed maintenance and condition report?
Is your investment deteriorating due to lack of attention and limited recourses?

When was the last time your property manager offered you something of value?
Advice that reduces risk and protects your income, advice on how to maximise your tax deductions, advise on how to grow your investment portfolio?

When was the last time your property manager contacted you with good news?
Just to let you know they are looking after your fantastic tenants, that they sent them a letter and gift thanking them for the way they care for your property? Do you know a high percentage of tenants vacate a property due to repairs not being attended...is your property manager passing on the request or avoiding conflict because they are worried about your reaction?

How does your agent treat prospective tenants looking to rent?
Try secret shopping them... make out you are looking to rent a property in the area...you will then find out how they treat people looking to rent your investment....remembering they are your bread and butter!

What is happening behind closed doors?
Often owners think no news is good news....I always say, you will never know how much can go wrong until it does!
How strong are the systems & procedures within the department? how thorough is your property manager with preparing a tenancy, pre condition reports, tenancy agreements, monitoring rent payments, actioning tenancy breaches? do they keep conversation records? are maintenance issues addressed immediately and recorded with action dates and times? Did you know your tenant can legally vacate during a fixed term agreement if notice is given about a necessary repair and it is not actioned?

You may think that this is not our concern, this is the service you pay for and you expect to receive it.... but how do you really know what happens behind closed doors?

My suggestion....FIND OUT....before it's too late! You can do this by being more diligent in requesting information, like asking for a copy of the lease, the condition report, any pre tenancy photos. make random calls and ask when was the last inspection? how was it? (can they access the report immediately and tell you)?, ask for a copy of the renal ledger for the last 3 months, has the rent been paid on time? make that secret shop call and find out the leasing process, are there delays to view a property like open homes?

I could truly go on forever and give so many examples on how irrelevant fees are as a percentage and how important it is to engage a company who will provide value in their service, minimise risk, maximise return and give you peace of mind. This will far outweigh the difference in commission!