Hi All,
We have just purchased our first investment property.
Keep in mind we only have 1 investment property to be managed. We have received a proposal from the agency that sold us the house (lets call them L).
Despite only having 1 property we let them know that family members (whom own a few properties in the same area) are disgruntled with another agency having sold their rental role to lets say agency H. We gave no promises but told them if family gets fed up with the Agency H handling their property management they might want to move and if they look after us word of mouth is a good thing!
Another thing Agency L is a new branch so at the moment only has 3 properties managed. However the property manager has come from another branch where she managed 220! So it would be very personalised service for now.
Okay now the proposed property management deal presented to us.
2 weeks rent letting fee (no mention of PLUS GST on this) which includes:
Showing property to prospective tenants
Tenant qualifying and reference checking.
Verifications of employment and income of tenants
Preparation of lease and lodgement documents
Remittance of Bond
Thorough sign up interview
Condition of entry report with photosNIL advertising charges for L’s website, realestate.com.au and domain.com.au
lease renewal fee of half a weeks rent plus GST
End of year financial summary at $10
5% plus GST ongoing management fee which includes:
Collection of rent
Disbursement of rent to owners (on a weekly basis)
Contacting, organising and paying tradesman
6 monthly inspection, report and photos included in the management fee
Zero tollerance on arrears including SMS reminders prior to rent due, 1 day after due and follow up letters when 7 days in arrears
Services of notices included
Monthly newsletters
Rent reviews
vacate process, bond disbursement and exit condition reportsNIL advertising
NIL tribunal appearance feesFirst three months NIL Management Fee as well.
I know the ongoing management fee is great for only having one property! But is the 2 weeks letting fee standard or has he jacked up the letting fee to make up the first three months being free? Or to make up giving us a lower management fee percentage?
Also a couple of other considerations if I try to shop around.
The agent owns the photos from the sale of the property and is happy to allow us to use them free of charge in the advertising for the rental. Also the agent also sold the house the vendors are moving into so is looking for settlement of both on same day which we are happy with.
I am worried if I shop around and get another agent that we will be refused access to the property for prospective tenants during the 3.5 months we will be waiting for settlement. The current agent whom we bought it from has known the vendors for a long time (being a regional town) so can organise access to show prospective tenants. The same might not be afforded if we go elsewhere.
This sounds like a really good deal to me but its our first rental property so thought I would ask all you experts in here!
There is no way that I would pay half a week's rent for lease renewal. $50 at most. And once you have a couple of properties with them, negotiate it to zero. Remember that all a lease renewal is, is a phonecall to the tenant from the agent asking if they want to renew, and posting them a renewal notice. That's not half a week's rent money worth of effort.
Two weeks letting fee is a lot. I'd be aiming for 1 week – payable only if they find you a suitable tenant. On the other hand this is sort of offset by the lower management fee.
You also want to be sure they are using TICA database to check up on tenant's background, and not charging you per search.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
If your investment property is in Melbourne Metro area I may refer you to a major property agent (I know her personally) and they will look after you very well and I believe will be cheaper over all. Email me if interested.
Cheers
JacM wrote:There is no way that I would pay half a week's rent for lease renewal. $50 at most. And once you have a couple of properties with them, negotiate it to zero. Remember that all a lease renewal is, is a phonecall to the tenant from the agent asking if they want to renew, and posting them a renewal notice. That's not half a week's rent money worth of effort.Two weeks letting fee is a lot. I'd be aiming for 1 week – payable only if they find you a suitable tenant. On the other hand this is sort of offset by the lower management fee.
You also want to be sure they are using TICA database to check up on tenant's background, and not charging you per search.
Hey everything comes with a price doesnt it?
Half a weeks rent is going to be around $170. How much would you get charged to get some good quality photographs of the place for a rental listing? (Assuming I will be able to access a house I have not actually settled on yet) I am sure this is going to be worth more than $120 which I am getting for nothing.
I was already thinking of trying to haggle them down to 1 week for letting fee (I would never agree to pay if it is not tenanted who would?)
On the other hand for the sake of an extra $340 I will be given co-operation from current vendor in relation to allowing access to prospective tenants to allow me to get a tenant in on week one. If I find another rental agent there is a chance (because I did not add special clauses for access into the sale contract as it was my first investment purchase and didnt think of it) I wont get access till I settle for photos / propsective tenants being shown around etc. Paying a 1 week premium to have three months access to the property to have a renter from day 1 of owning the property surely must be worth it. Rather pay the premium than risk not having rental income for a few weeks!
The charges outlined in my original post are the only charges so there is no extras like charging per search etc.!
How many people with only 1 investment property get 5% plus GST for management fee?
anandd wrote:If your investment property is in Melbourne Metro area I may refer you to a major property agent (I know her personally) and they will look after you very well and I believe will be cheaper over all. Email me if interested.Cheers
Anandd thanks but as already said in my original post it is in a regional area hence why I would prefer someone local.
Also since when is bigger better? Major property agent means heaps of properties to worry about which means probably wont get the type of focus I would be hoping for.
Sorry, didn't see the 'regional' bit. Bigger can be better depending up on how the relationship works. I have a relationship with this Agent who manages my few properties and atleast another 10 referred by me (of my friends/ clients).
How many people with only 1 investment property get 5% plus GST for management fee?
we will be getting 5.5% at family rates also in a regional areaBMW wrote:How many people with only 1 investment property get 5% plus GST for management fee?
we will be getting 5.5% at family rates also in a regional areaBMW thanks. Can I ask how much your paying in letting fee? and is there a re-let fee attached?
That’s pretty good rates in my view …. I’ve got a couple of IPs (none regional) & have chosen local agents to manage them as they know the area and based on history, managed to keep my vacancy rates low. Overall, I pay around 5.5% management fees, 1.1 week leasing fees & no other costs for advertising or rental summary statements (both monthly & yearly as I’ve chosen email option).
However, I believe in “you get what you pay for” and hence would be sceptical of an agent lowering their fees just to get you through the door. It may be worth asking for some reference from them too …. all the best
jadamo76 wrote:BMW thanks. Can I ask how much your paying in letting fee? and is there a re-let fee attached?we haven't signed any contracts yet but two weeks rent is the norm in this area.
management fee is generally between 7-9% (so i have been told)Hi Jademao,
Looks good, except for the 2 weeks letting fee. If you could get this reduced to one you would have a great deal if they are a good agent.
Cheers
5% seems really good. I haven’t seen anyone charge a two week letting fee before – only one week. So that seems a bit steep. If you manage to secure long term tenants than its a good deal – if your regularly churning through tenants, it could be expensive.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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