All Topics / Help Needed! / Who reckons they can solve this!

Viewing 11 posts - 1 through 11 (of 11 total)
• The Richest Man on Earth.
Member
@the-richest-man-on-earth.
Join Date: 2004
Post Count: 12

I have a managed unit that returns \$260 a week.
\$260 times 52 equals \$13,520.
According to the management statements the monthly returns are \$1,040. So far so good. Or are they?

\$1040 times 12 equals \$12,480.

Can someone tell me what happened to the other \$1040.
(i.e. Which equates to a total of 1 WHOLE MONTHS RENT).

I.E. Who actually has this money? Is it me, or is it the management company?

-Nathan

indigo_violet1625738
Member
@indigo_violet1625738
Join Date: 2003
Post Count: 14

Most property managers take one week’s rent as a ‘finders fee’ for sourcing new tenants – even if the property is currently tenanted, they also deduct fees for cost of drawing up a new lease, and a monthly administration charge. What you receive each month is the net amount – i.e the amount of rent less fees & charges. Best advice is to read your contract/paperwork you would have signed on purchase.

Best of luck

camnlisa
Participant
@camnlisa
Join Date: 2004
Post Count: 21

Hi Nathan

It seems too neat that your management fees and costs equate to exactly 4 wks rent. I’d say that your property managers are either shonky or like alot of people who think that if they times a weekly figure by four that they will end up with the monthly figure. What they don’t take into account are the extra couple of days at the end of each month (4×7=28 and most months are 30/31 days) which equate to an extra week every 3 months ie 13wks/3mths not 12. The correct way to get the monthly figure is to times the weekly by 52 and divide by 12 (ie 260 x 52 = 13,520 / 12 = 1,126/mth)

Good luck

Lisa

Jenny1
Member
@jenny1
Join Date: 2004
Post Count: 269

Hiya Nathan,

Just go back to your PM and ask them to clarify your statement, he will either have a logical response and give you a breakdown of this figure or squirm like hell!

Cheers

Jenny1

Derek
Member
@derek
Join Date: 2004
Post Count: 3,544

I assume that this property is relatively new to your ‘stable’ and as such you haven’t completed a full year of rent. Each month is a slightly different length and such there are typically two months in the year when a tenant will make an extra fortnights payment.

Bear in mind there are not exactly 52 weeks in a year either so some leeway needs to be allowed.

Hopefully this puts your mind at rest.

If on the other hand you have owned the property for 12 months your PM does have some explaining to do.

Irrespective of deductions made you should have received a full year of income ~ \$13520.

Derek
[email protected]
http://www.pis.theinvestorsclub.com.au
0409 882 958

Dazzling
Member
@dazzling
Join Date: 2005
Post Count: 1,150

Nathan,

First thing I’d establish by reading the lease is exactly what the lease says the rent shall be.

Normally the standard REI lease has three different blank spots. The PM fills in one and scratches out the other two. One for weekly rent, one for fortnightly and one for monthly.

Before you go in there all guns blazing, just double check that indeed your lease does say \$ 260 per week. It may very well say \$ 1,040 per month, in which case you’d look like a goose and the PM doesn’t owe you a thing.

You may have asked for \$ 260 p.w. to be the rent and some little 18 yr old office girl has stuffed up the calculation, converted it to monthly incorrectly and the tenant has signed the lower amount of \$ 1,040 per month and away you go. If that has happened, you’d better has some written documentation you asked for \$ 260 p.w., or you’re hooped again.

If the signed lease indeed says \$ 260 per week, a stern chat face to face would rectify things…..well in most cases it does with me.

Good luck, but double check the paperwork first.

thecrest
Participant
@thecrest
Join Date: 2004
Post Count: 992

If you’re paying one month’s rent in fees, one twelfth is 8 1/2% so it’s not too bad depending on what the local area market is paying for PM. However if in doubt, read the Managing Agency Agreement to see what you have agreed to, and the fees should be specified as deductions on your statement, and the total amount of rent collected should also be stated. If not, then the statement is false.
cheers
thecrest

thecrest | Tony Neale - Statewide Motel Brokers
http://www.statewidemotelbrokers.com.au
Email Me | Phone Me

selling motels in NSW

Forklift
Member
@forklift
Join Date: 2003
Post Count: 21

Nathan,
Another idea is to get quotes/estimates from other PM’s around the area and compare. Colate this info with the things that others, like Dazzling, Derek & The Crest, have put forward and go from there.

Cheers & good luck,

Forklift.

pyramid
Participant
@pyramid
Join Date: 2005
Post Count: 64
Originally posted by Jenny1:

Just go back to your PM and ask them to clarify your statement, he will either have a logical response and give you a breakdown of this figure or squirm like hell!

I reckon this is the best advice. So have you contacted the PM Nathan? What was the response?[evo]

Cheers
Pyramid

Member
Join Date: 2003
Post Count: 6

I’d like to think it’s a mathematical error because they’d have too much to lose by ripping you off for such a small but noticable amount. Ask them to provide details of their calcs to explain how they arrived at their result. Remember that barging in like a bull at a gate may make things difficult further down the track & a good working relationship with your PM is important.

Methematically, if they are working on 4 weeks per month: \$260 x 4wks x 12 mths = \$12,480 gross. The difference is the missing 4 wks @ \$260 = \$1,040. If ths is presumed to be the management fee their rate is 8.33%. As this is an odd rate the \$1,040 may include statement fees, etc.

The Richest Man on Earth.
Member
@the-richest-man-on-earth.
Join Date: 2004
Post Count: 12

Thanks everyone for replying to the email with all of your help.
It is just what was needed.

Just in case you are all wondering. The PM was contacted prior to having posted the topic, and yes, he did squirm a bit, but he was more dumbstruck by the situation.
But nevertheless, all of the replies that you lovely ladies and gentlemen put forward will be “colated” (thanks Forklift) into a plan of action and will be implemented, because it is something that everyone needs to be aware of.

Thank you all

Nathan

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