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One of my rental property's maintenance cost is 25% of gross rental income,

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  • One of my rental property's maintenance cost is 25% of gross rental income,

    How can i control it as it is managed by Property manager? Any suggestion would be appreciated!!

  • #2
    Originally posted by Palmtree View Post
    How can i control it as it is managed by Property manager? Any suggestion would be appreciated!!
    Need a bit more information like:
    1 - age and building materials
    2 - general condition
    3 - what area of the country
    4 - what type of things you have been paying for and at what price.

    Some dwellings could cost 50% of rent just to keep operation as many variables to why maintenance & repairs occur.
    Plan and invest wisely - You only get one life so make the most of it!

    Comment


    • #3
      what sort of things are costing that much?
      Maybe you need to replace some things rather than continually repair?

      Comment


      • #4
        What is the PM telling you (either before or after the event) and are you getting detailed invoices. What hourly rates are being used and what margin is the PM adding. Are you getting regular inspection reports and maintenance reports? Is there a connection between the people dong the maintenance and the PM. (Might not be an issue but good to know.)

        The PM is your employee and you need to be managing him/her. The work may be perfectly valid but unless you get details from the PM who knows.

        People on this Forum can advise if you give more detail.

        Meantime, suggest put a limit on how much the PM can spend without prior authorisation from you. Them make sure you get the details.

        Comment


        • #5
          What is the rental income and cost of maintenance?

          We have a property that cost us up to 50% one year but then the following years as low as 3 percent.

          cheers,

          donna
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          • #6
            Could this be an odd year or is this on a regular basis?

            In one of my rentals in Taumarunui one year where I had to install a new heatpump that ate up ~30% of my annual rental income. It might sound a lot but this was a one off.
            www.PropertyMinder.co.nz
            # Property Management
            # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

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            • #7
              Obviously your rent is too low.

              Comment


              • #8
                Thanks for all the replies.

                This property was built in 1960's, located in North Island. This is the second year I have owned it. When I bought it 2 years ago, it was in quite bad condition, I spent quite a bit money completely renovated the two beds room flat at the bottom as it was not in rentable condition. The three beds room house upstairs is the one that have been having lots of maintenance expense. It still need to be paint over inside and outside, new carpet.

                My property manager has a handyman business as well, so he does some of work, charge $65+GST on Labour. Percentage Management fee on gross rental income is reasonable, on the top of it, he charges 10%+Gst on any work that he arranges, such as if a plumber invoices him $115, he will charge me (115+11.5)*1.15=145.5 (But the pluming work may only be 1/2 labour,lets say $40, then charge $20 for a few screws, then $30 travel fee, service charge $10. 40+20+30+10= 100 *1.15=115. )

                Also, sometime, plumber will come to assess, then come back to repair, that will be two invoices, 2 travel fees, 2 GSTs. I found that it is hard to accept. I thought if a plumber who is reguarly working for a propery management company, get lots of jobs from them would just come and fix things. one bill then it is done.

                For some big things, he will email me, but I didn't relise that you can actaully set the limit for authorise.

                To be honest, I think because of the bad condition the house was when I took over, I am sort of prepared to have higher maintenance fee that other house specially for the first a few year. But I would like to know what I should be pay and what is tenant's responsibility, and what is normal when you have a PM.

                Also, What should I do to reduce thise expense? Should Ijust not provide dishwasher even there is an existing old one. It has broke down once last year and the repair fee was $264.5. Things like that.

                There are quite a few thing I need to do to keep this house in good shape like Paint inside and outside, change carpet, but thinking about all those fees, it scare me.

                Comment


                • #9
                  1 - Replace the DW with a new one from M10 for under $500 - can claim full amount as under 500 has 2 yr warranty and should be good for 5 yr at least. We generally never fix things over 200 as once 1 thing goes more always follow, EG. New stoves are $480 + freight out of Auckland. Avoid having fridges, washing machines etc for this reason.

                  2 - Plumbers & sparkies are expensive and they all charge travel etc now days.
                  Tips: We get all switches / plugs (we supply) replaced when we reno as keeps them good for 10 yrs and hard for tenant to blame fair wear and tear when things break. Sparky there for 2 hours and generally no call outs for years to come.

                  Do the same for plumber and get all tap washers replaced / faulty taps etc (you can do these yourself also - instructions on youtube).

                  3 - send a handyman in to check, oil, clean, fix all doors, windows, gutters, locks, sink traps, etc will cost 3 hours labour but prevention is always cheaper. I do this for all our places twice yearly and maintenance costs have plummeted, tenant satisfaction increased and vacancy decreased.
                  Last edited by ScottSI; 05-08-2015, 04:22 AM.
                  Plan and invest wisely - You only get one life so make the most of it!

                  Comment


                  • #10
                    PS

                    Property is not a passive investment as people think - it take continuous maintenance & repairs to keep your property running at optimum returns. It can be contracted out but this increases costs and decreases your profit so always a balancing act.

                    I spend many hours trying to work out how to do this moving forward and having a life outside maintenance.
                    Plan and invest wisely - You only get one life so make the most of it!

                    Comment


                    • #11
                      My property manager has a handyman business as well, so he does some of work, charge $65+GST on Labour.
                      Lol. There's ya problem.

                      Comment


                      • #12
                        Originally posted by marklowes View Post
                        Lol. There's ya problem.

                        Exactly! I would be cautious about some of the repairs the PM recommends if they have their own company
                        www.PropertyMinder.co.nz
                        # Property Management
                        # Ad Hoc Tenancy Services / Rental Inspections / Terminations and Notices

                        Comment


                        • #13
                          Originally posted by Palmtree View Post
                          he charges 10%+Gst on any work that he arranges, such as if a plumber invoices him $115, he will charge me (115+11.5)*1.15=145.5
                          The plumbers invoice would be GST inclusive.
                          So the PM charges 10% on the $115 = $11.50
                          + GST on what the PM charged = $11.50x1.15 = $13.23
                          Total bill then $115 + $13.23 = $128.23

                          Otherwise the PM is charging GST on the GST plumbers bill as well.
                          I hope it is just your example that is loose.

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                          • #14
                            Hi, my property manager didn't charge service fee if I replaced an old item (e.g. fridge or dishwasher) with a new one although he would charge me if I have it repaired. so, you should negotiate with your PM.

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                            • #15
                              Originally posted by Wayne View Post
                              The plumbers invoice would be GST inclusive.
                              So the PM charges 10% on the $115 = $11.50
                              + GST on what the PM charged = $11.50x1.15 = $13.23
                              Total bill then $115 + $13.23 = $128.23

                              Otherwise the PM is charging GST on the GST plumbers bill as well.
                              I hope it is just your example that is loose.


                              I have double checked all those expenses. PM sent me a copy of all the management fees they charge, I was trying to matching with those invoices he sent me. That's how I found out the 10%+gst mangement fee is actually on the invoice ( GST inclusive). Fo example, the dishwasher repair fee is 230 GST inclusive from the repair man. he will deduct from rent. He then charge me 26.45 for his fee which (230*10%)*1.15=26.45.


                              What's the normal amount PM should charge in this case?

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