The current day professional Property Manager is almost unrecognizable as compared to their predecessor of only 10 to 20 years ago. They are well trained in all aspects of tenancy law, property maintenance, trust accounting and most importantly, have highly developed interpersonal skills which is required daily in managing not only the investment properties of their clients, but also tenants and owners alike. Of course there are those in the profession that are ‘just passing through’, however connect with a ‘professional property manager’ and you’ll know you are in the presence of a true professional.
Property Management Specialists
10 years ago, Property Management was seen as a subsidiary of a real estate office which specialized in selling property and looked after the ‘rentals on the side’. Times have changed and these day’s stand-alone property management specialist companies are appearing and this in turn has seen the professionalism of the industry improve one-hundred fold. A person starting out in a career in Property Management can now have a fruitful and rewarding future in an industry which has evolved into its own profession. It has been wonderful to witness this first hand.
How much does professional Property Management cost?
There are two important aspects in relation to the cost of professional Property Management. The first is the tangible, tax deductible financial cost of having a professional Property Manager look after your investment property. The second, although more difficult to quantify, is in my belief a greater contributor to the success of the investment than the percentage rate of the management fee charged. This is the cost of ‘not having’ a highly trained professional property manager looking after you and your investment property. This encompasses the level of professionalism and diligence that the manager tasked with looking after your investment property displays on a daily basis. It is made up of hundreds of micro decisions made daily that if performed well, has the ability to save you considerable money and stress. Making the right decision with regards to tenant selection, maintenance, lease renewals, tenant arrears and so on can save an investor literally thousands of dollars a year. Hence, choosing the right Property Manager can often make the difference between a property being a great investment and one that is not.
Percentage of Rent
A percentage of the rental income received, charged either fortnightly or monthly by the management company, is the main cost of employing a professional property manager to manage your investment. In Brisbane, the average property management percentage charged is between 7% to 9% plus GST.
Some discount providers charge less than 7%, however, the service provided is often not comprehensive, more on that later.
Other common fees and charges
These can include:
- Let fee – equivalent to the first weeks rent plus GST.
- Lease renewal fee – either a fixed fee or a percentage of a week’s rent plus GST.
- Administration fee – usually a nominal sum per fortnight or month to cover cost associated with the trust account and postage etc.
- End of financial year statement – usually a fixed fee.
- Advertising – usually a fixed fee, dependant on the scale required.
Percentage versus a Flat Fee
A small number of entrants to the market of recent times are marketing their service at a ‘flat fee’, as opposed to a percentage of the weekly rent. My concern with this pricing technique is how the inevitable rise will take place in the future due to inflation etc. (refer Go Gecko) and the inherent lack of incentive to keep the rent in line with the market.
Beware the discounters
Like any profession, there are always those providers who are the low cost or discount providers. I have seen many come and go over the years. I have said it before and I’ll say it again, that it is simply impossible to provide a professional standard of Property Management to a client, their property and tenant for a discounted fee e.g. 5%. To enable these providers to offer such a discounted rate and continue to keep their door open, requires cost cutting behind the scenes, often hidden from the owner until such time as an issue arises and it all turns pear shaped very quickly. These issues often have the ability to cost the owner significantly more that the additional $5 to $10 per week that was being saved by going with the discounter.
Areas of management where I have seen service cut include:
- The number of properties managed by a single property manager in excess of 100 to 120 – service levels drop once this threshold is reached.
- Poor quality Entry Condition Reports – always ask for a copy and review.
- Poor quality Routine Inspection Reports – review in detail and ask questions.
- Poor quality Maintenance Procedures – must be timely and considered.
- Void of Risk Management Procedures etc. – thereby increasing exposure to litigation.
- Poor lease management – resulting in leases rolling onto Periodic, which exposes the owner to loss and insurance issues.
At Templeton Property, we charge the industry standard fees and charges and we do not negotiate on the level of service we provide. We invest heavily in our staff through mentoring, formal training and education and pride ourselves on our high staff retention and employee satisfaction levels. We are Brisbane’s most professional specialist Property Management company and we would love to chat to you about how we can assist you. Please call our office on (07) 3368 1988 to learn more.