Renting out an investment property can be one of the best sources of income you will ever have. However, most property investors will agree that choosing someone to manage your property effectively is crucial to your success. A good property manager will handle all of the administration and property issues for you so that you can focus on continuing to build your portfolio without worrying about the minor issues that come with renting. But how much does a property manager usually cost, and what is included in a property management fee? We will demystify and answer all your property management questions for you.
Property management pricing
Typically, property managers will charge their fees as a percentage of your weekly rent plus GST. A number of factors will affect how much this percentage is – the most important of which is location. For example, property management rates in Sydney and Melbourne will be the most competitive, with the average rate in Sydney being 5.5% and 6% for Melbourne. However, once you head over to Perth, the number rises to 8-10%.
Of course, your property management fees are negotiable. Investors who own multiple properties under the same manager can arrange a lower fee, while single owners can discuss what is included in the base right to minimise additional costs.
What is included in a property management fee?
Most property managers will charge your standard percentage fee for basic ongoing property management services with a separate fee for additional services. We recommend carefully reviewing your contract before signing to see what is included. Although this will vary from agency to agency, your standard rental property management fee will consist of:
- Collecting rent and following up on arrears
- Organising and managing the payment of bills like council rates, strata levies, etc.
- Organising maintenance and repairs for the property
- Keeping you updated on legislation and laws that may affect you
What are some additional fees an investor might encounter?
- Letting Fee:
This is the cost involved in looking for new tenants. It includes receiving and assessing applications, negotiating the terms of the lease, and finalising the contract. In Sydney and NSW, the cost of this is generally equivalent to 1-2 weeks’ rent.
- Advertising Fees:
If you intend to advertise your property for lease, your property manager will arrange for the marketing and advertising, including listing and taking photos of the property. This usually averages around $300.
- Inspection Fee:
Some property managers may charge an additional fee for regular inspections to ensure your tenants are keeping the property in good shape.
- Lease Renewal Fee:
If you intend to renew a lease with a tenant, your property manager will charge a fee to prepare the lease contract and provide advice on rental pricing. This usually equivalent to 1 week’s rent.
- Annual Statement Fee:
Some property managers will charge you a fee for preparing your statements for the end of the financial year. This is an administrative fee that usually costs around $50.
- Tribunal Preparation Fee:
If you ever need to evict a tenant, many property management agencies will charge a fee to prepare the documents required to present your case to the Tribunal. Costs for this can vary wildly from a simple flat rate to $100 per hour.
Here at Wills Property, we use a structured, results-focused management process that has been specifically tailored to meet the needs of rental property owners. Call us today or browse our range of current properties.