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Rental Property Management rates

By 26 April 2012 27

Hello fellow rioters.

This query is for those investors/landlords who lease out their properties through a property management agency. What are the common rates and charges going around at the moment.

Is it worth going through a property management agent or is it better renting out by yourself? Any advice/suggestions is much appreciated.

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27 Responses to
Rental Property Management rates
DeskMonkey 2:14 pm
26 Apr 12
#1

Most agency fees are anywhere from 10 – 12% (but possibly higher). If you have a portfolio of properties (more than 1) that you are bringing in, you can negotiate your fees down considering the amount of business you are bringing in. If you have a house to sell or are looking at buying another one I would also try negotiating the fees down.
Unless you’ve had experience as a property manager I would recommend that you go through an agent for your first time. Your agent will (should) lodge a bond, create a comprehensive inventory, provide you with plenty of information about how they work and be in touch with you throughout the whole process. Generally agencies charge two weeks rent to find a tenant and this covers administration fees and advertising – something you can save on if you were confident enough to do yourself.
If you feel confident in searching for, interviewing and arranging leases for your own property/ies I would recommend looking up the Tenancy Advice sites in your state (http://www.tenantsact.org.au/) (http://www.tenants.org.au/) as it provides extremely useful information and checklists on how things should be done.
You will have heard many scary stories about agencies in Canberra, and to find the best match with you, I would ask your friends/family/work people on their experiences and interview each person that is recommended to you. You need to be comfortable with this person because they will be looking after one of (if not THE) biggest asset you’ll have.
Start with local owners before you go the big guns. I have found the smaller Canberra based companies care more about you and customer service than your money.
Also look for experience. Someone who has lived in Canberra all their lives and has worked in real estate for a long time with give you honest truth about rental markets and what to expect. Newer people are more interested in getting your property on the books for commission.
Best of luck!

DeskMonkey 2:22 pm
26 Apr 12
#2

Sorry – Websites for landlords:
NSW – (http://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Being_a_landlord.html)
ACT – I couldn’t find a site specific for landlords but the Tribunal Court website had some good information. (http://www.acat.act.gov.au/residential_tenancy/residential_tenancy)

If you have the time I’d suggest reading both sides of the story so you know what is to be expected from both parties (should you manage the property yourself.)

mickey 3:52 pm
26 Apr 12
#3

DeskMonkey said :

Sorry – Websites for landlords:
NSW – (http://www.fairtrading.nsw.gov.au/Tenants_and_home_owners/Being_a_landlord.html)
ACT – I couldn’t find a site specific for landlords but the Tribunal Court website had some good information. (http://www.acat.act.gov.au/residential_tenancy/residential_tenancy)

If you have the time I’d suggest reading both sides of the story so you know what is to be expected from both parties (should you manage the property yourself.)

Thanks heaps for taking the time to advise. This is going to be my 1st investment property so I do want to rent out through an agent. I have heard good things about a couple of different agencies, so I will be talking to them in the next week or so. Additionally, I will try to negotiate with the agency that I am buying the property through, they should be able to give me a good deal if I rent out through them as well? Atleast that is the hope!

VYBerlinaV8_is_back 4:02 pm
26 Apr 12
#4

Definitely use an agent – call other investors for referrals.

I pay from 6.6% to 8.5% depending on the the agent.

gp 9:52 pm
26 Apr 12
#5

We have 3 with one agency @ 7% + GST each, and used this as a ‘match it’ with another agency for our other 2 properties.

Seeing as the management fees themselves are tax deductible, Mrs GP and I would strongly recommend going through a property manager. Having a professional distance between tenant and ourselves is an aspect we like, and we don’t like having the 2am calls about needing a plumber. :-)

Also the accounting and paperwork management provided by a good agency is a godsend at tax time.

For what it’s worth, Luton in Dickson has been good for us for some years now.

DanielK 10:48 pm
26 Apr 12
#6

Have been renting out two or more properties for most of the last20 years.

First up tried the agency who sold me the investment property – not good service, particularly as I was OS at the time. Next time tried a “property management specialist” at a lower rate – constant problems of poor oversight and poor response to concerns.

Tried using the agency from which we bought our next property (Blackshaws in Manuka), but theirs was the highest rate!

Now we use Brightpartners in Manuka and we arein seventh heaven. Minimum fuss, high net monthly rental return and everything sorted out by the prop. Manager. Saving 1 or 2 percent in commission is a false economy when the agency often calls out the maintenance contractors for any little problem rather than assessing the most cost-efficient way of responding to A tenants request. A little thought can end up meeting/exceeding the tenants needs, permanently improving the property and minimizing tenant turnover and it’s associated costs and angsts

Darkfalz 11:38 pm
26 Apr 12
#7

If you have good tenants who are interested in staying long term, it’s better to rent directly. If you have a higher turnover place or don’t want to have to deal with potentially bad tenants, better to have an agent do it for you.

mickey 8:53 am
27 Apr 12
#8

Darkfalz said :

If you have good tenants who are interested in staying long term, it’s better to rent directly. If you have a higher turnover place or don’t want to have to deal with potentially bad tenants, better to have an agent do it for you.

I will be renting out a unit, so there should be low maintenance but I am still apprehensive in doing this myself. Maybe I can rent directly once I have observed and gained some knowledge and experience in how the system works.

Kurrajong 9:41 am
27 Apr 12
#9

I don’t know where you get the 8-12% from; way too high.

Typical Canberra agent fee is 7 to 7.5% + $5 per month admin fee. If they want to charge more, then negotiate. If you are going to pay the rates and other invoices yourself then they cant justify a high fee. Paying bills is not hard, but selecting the right tenant requires expertise.

Ask for a short list of prospective tenants and be included in the decision making process. They should not deliver one tenant already signed up to you (which some do!).

I know of others who pay well less than 7% if they let more than one property.

Everything is negotiable.

Best to operate your first property through a reliable agent. Big is not necessarily best. Experience counts.

Endrey 10:21 am
27 Apr 12
#10

I politely request that you stop buying all of the houses using what should be your tax to make my life as a renter more difficult.

am307 12:47 pm
27 Apr 12
#11

Darkfalz said :

If you have good tenants who are interested in staying long term, it’s better to rent directly. If you have a higher turnover place or don’t want to have to deal with potentially bad tenants, better to have an agent do it for you.

I agree Darkfalz, I have been renting the same property for over 10 years initially as the other half of a couple and now I am a single parent, looking after the home, with no dilemmas, I am renting through an agency , the rent goes up every year, I know the owners of the property but they are not interested in privately renting to me…frustrating and disappointing as I am not intending to go anywhere.

watto23 1:46 pm
27 Apr 12
#12

Endrey said :

I politely request that you stop buying all of the houses using what should be your tax to make my life as a renter more difficult.

Its not that simple.

DeskMonkey 2:20 pm
27 Apr 12
#13

mickey said :

I will be renting out a unit, so there should be low maintenance but I am still apprehensive in doing this myself. Maybe I can rent directly once I have observed and gained some knowledge and experience in how the system works.

keep in mind that Body Corporate applies to Units and some townhouses, Agents can also arrange payments for this on your behalf.

ghughes 2:58 pm
27 Apr 12
#14

In any other town, we would be embarrassed to air these ‘cost of living pressures’ in a public forum.

mickey 3:18 pm
27 Apr 12
#15

ghughes said :

In any other town, we would be embarrassed to air these ‘cost of living pressures’ in a public forum.

That is why we choose to live in the best town in the country.

milkman 9:12 pm
27 Apr 12
#16

Endrey said :

I politely request that you stop buying all of the houses using what should be your tax to make my life as a renter more difficult.

I generally buy at prices lower than what others will pay, meaning that I can rent at more reaosnable prices, thus making your life as a renter easier.

desertdreaming 8:15 pm
28 Apr 12
#17

A managing agent ? If you have a good partnership with your tenants, why bother lining their pockets. A good tenancy partnership is based on understanding – they know when to call you and when to call your pre-identified list of tradesfolk. Well-vetted tenants at the ‘front end’ of the lease mean that rents are paid and costs are correctly apportioned between you and them without quibble. The quality of renters in this town is better than average. Give self-management a go.

Spykler 8:33 pm
28 Apr 12
#18

Darkfalz said :

If you have good tenants who are interested in staying long term, it’s better to rent directly. If you have a higher turnover place or don’t want to have to deal with potentially bad tenants, better to have an agent do it for you.

Perfectly summed up..As an owner of multiple properties, I have long term tenants and have always handled the lease arrangements, lodgements of bond, repairs etc..Only minor issues have arisen over the years..I have saved a fortune in management fees…BUT, if the occasion rose where there was a high turnover of tenants, it would be worth going through an agency simply to minimise the stress.

poetix 9:55 pm
28 Apr 12
#19

watto23 said :

Endrey said :

I politely request that you stop buying all of the houses using what should be your tax to make my life as a renter more difficult.

Its not that simple.

Yes, I believe it is. Negative gearing is just wrong, allowing those who have more than enough money to more easily exploit those who don’t (and who are unlikely to ever save a deposit, due to high rents).

nhand42 10:14 pm
28 Apr 12
#20

Property managers aren’t that expensive. Charges include a “letting fee” for each new tenant (usually 1 week’s rent) and you might have to spring for advertising costs (1 week). The property manager typically charges between 7% and 9% commission per year. For normal rentals ($400-500 per week) the annual commission works out to $2k which is all tax deductible.

The property manager will do two inspections per year, lodge the paperwork and the bond, chase the tenants for rent, and co-ordinate tradesmen for maintenance. They will also prepare the annual statement for your accountant and/or tax software.

Most tenants keep to themselves and aren’t any trouble. So going it alone can save you about $1200 per year in your pocket (that’s the $2k after getting $800 tax rebate). Or you can deduct 10% off the rent which makes your rental more attractive. That’s helpful in a competitive market.

Property managers sometimes stuff up, because they’re only human, and with 50-100 properties in a portfolio they aren’t always on top of things. My parents had a property manager who didn’t notice the tenants were trashing the joint. Many $1000s of damage later they sacked the property manager and evicted the tenants. My parents now manage the property themselves. Landlord’s insurance paid for the damage and the lost rent.

nhand42 12:28 am
29 Apr 12
#21

poetix said :

watto23 said :

Endrey said :

I politely request that you stop buying all of the houses using what should be your tax to make my life as a renter more difficult.

Its not that simple.

Yes, I believe it is. Negative gearing is just wrong, allowing those who have more than enough money to more easily exploit those who don’t (and who are unlikely to ever save a deposit, due to high rents).

It’s not that simple. Even with negative gearing the investor needs the property value to rise. If the property value falls they would have been better off hiding that money under the mattress.

Remember that with negative gearing the investor is already accepting a loss. Negative gearing just means you aren’t taxed on your losses, which is true for most other investments..

Bogan rags like the SMH like to play up the idea that negative gearing is making property prices high. The reality is the slow build rate for new housing and our rising population makes property prices high. We have a “dwelling shortage” which increases by 30,000 homes per year. That’s because every year we build 150,000 homes but we need 180,000 homes.

http://www.investmentproperty-melbourne.com.au/wp-content/uploads/2012/04/Housing-Demographics-to-2020.pdf

Builders need to get more efficient like the Germans and Scandinavians did with pre-fab. Only when supply is met and demand decreases will the prices go down.

OpenYourMind 7:54 am
29 Apr 12
#22

I posted this on a similar topic a while back:

Bit of general advice that may help. This is just opinion from experience and I don’t profess to be a lawyer, tax agent, estate agent or any other kind of agent:
– Have a professional depreciation company draw up a depreciation schedule for you. There’s a lot that you can legitimately claim and there’s different depreciation methods to use.
– If possible, manage the property yourself. The real estate agent doesn’t do much to earn that 10% of rent. Sometimes agents neglect things that you may notice and there’s this belief that the agent sorts things out if it all goes pear shaped with the tenant. This is also not always the case. All the paperwork you need for self managing is available online.
– Owning a rental property is unlikely to earn you quick bucks. You usually have to be in it for the long run – even then you can lose out. Have spare money ready as all sorts of expenses pop up during the year and before you can claim any on tax.
– Look after the tenant and they will hopefully look after you. Karma and all that.
– Choose the right tenant. Considering a couple with an older dog is often a good call as finding a rental property is hard for dog owners and they might stick with your rental longer term.
– Getting a bad tenant can be hell. You’ve got a lot more to lose than they do and the law is often on their side.
– Make sure there is a clear understanding on all aspects of the lease – particularly who pays water excess and other bills etc. Spell it all out up front in writing.
– Be meticulous with your condition schedule and take photos.
– Often you don’t make money from the rental and the only area of profit is appreciation of the property. If this isn’t happening, then it may not be worth maintaining that investment.
– Get appropriate landlord’s insurance..
– Be aware of how much land tax is. It’s usually a large cost.
– There’s an interesting thing with stamp duty in ACT. If you have purchased the property as an investment property, because ACT is leasehold, you may be able claim stamp duty on your tax return.

Hope this helps.

b_radical 9:17 am
29 Apr 12
#23

Recent experience gives a big tick to self management if you have the time/effort to do so.
Property Managers who care about both landlords and tenants are a scarce commodity.
Having experience on both sides of the fence I would have no hesitation self managing.
From my perspective the property managers do not contribute much for fees paid.
Do it yourself to keep all parties satisfied, if time permits.

basketofcat 11:26 am
29 Apr 12
#24

Is there an agent anyone would recommend for owners that are interstate or overseas? I don’t think self-managed would work for that… it’d be nice not to need to travel back and forth.

b_radical 1:54 pm
29 Apr 12
#25

basketofcat said :

Is there an agent anyone would recommend for owners that are interstate or overseas? I don’t think self-managed would work for that… it’d be nice not to need to travel back and forth.

If you have no alternative, use a small local agency such as “bright partners” as noted in an earlier post. Property management is their “bread & butter” so they obviously give it the respect it deserves. Larger corporate entities treat it with disdain as they chase the high commissions for sales.

mikal 4:21 pm
29 Apr 12
#26

poetix said :

watto23 said :

Endrey said :

I politely request that you stop buying all of the houses using what should be your tax to make my life as a renter more difficult.

Its not that simple.

Yes, I believe it is. Negative gearing is just wrong, allowing those who have more than enough money to more easily exploit those who don’t (and who are unlikely to ever save a deposit, due to high rents).

Sigh. I did the maths the other day. We’ve had a rental house for nine years now, mostly for emotional reasons (we didn’t want to sell it as we had a strong attachment). In that time we’ve made 4.5% return on investment once I factor in all the costs of having tenants in the building. That doesn’t include paying ourselves for any of the time and worry we’ve experienced.

Negative gearing only happens on rental losses — in effect, you can tax deduct the subsidy that you provided a tenant with. Overall, this makes the rental market more affordable.

If negative gearing is removed, then there will be a short term dip in house sale prices as land lords ditch the properties as being even more uneconomic, and then rents will spike up as the already too small inventory of rental properties shrinks even further. Alternatively, rents might just spike as land lords choose to pass on the extra cost to tenants.

Stopping negative gearing is discussed every few years. There is a reason it never happens.

sophiekt 5:45 pm
29 Apr 12
#27

Peter Blackshaw Woden/Curtin gets my vote – leasing manager is very knowledgable and the team works well. I pay 8.8% GST inclusive which isn’t the cheapest or most expensive in town. I have had friends who have gone with cheaper Agencies an found they got exactly what they paid for..and less. I prefer to deal with a professional company to manage my investment and when there have been issues such as a recent roof leak they knew what to do immediately and had the tradespeople available to fix immediately. Saved me a lot of hassle.

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