Property Management Fee

[xsfat]

I've been looking around on various websites, and have noticed that the typical Property Management fee is around 8%.

My rental property is newly-built and in a nice Auckland central suburb. Hopefully, any maintenance will be modest, few and far between.

It should attract fairly reliable tenants, so I imagine there should be relatively less work and less conflict for the property manager.

Question - are property management fees similar across the board? Should I negotiate and expect to pay less? If so, how far should I push?

[DazRaz]

Finding a quality property manager is more important that negotiating the lowest fees. Find the property manager you want first and foremost.

[Davo36]

I pay 6% on my 3 apartments. But then the manager is another tenant, in an office space, onsite. So that helps.

[elguapo]

Finding a quality property manager is more important that negotiating the lowest fees. Find the property manager you want first and foremost.

Yeap, I'd argue the manager is more important than the property. It should be the first consideration, not, as it is usually, the last.

[Rosco]

A good property manager can only look after a certain number of properties, so they are unlikely to drop their price a lot, as why wouldn't they just get another full paying customer.

In saying that, there are quite a few new or smaller property management businesses that are charging less than the old standard 7.5% plus GST. They generally don't have flash offices, so can charge a little less.

Ross

[Anthonyacat]

The property manager I use advertises 6%+GST, but charges me 5%+GST. Her tenant finding and management skills are excellent, but her communication and accounting skills (she still uses spreadsheets for keeping track of rent - and not impressive formula-enriched modelling sheets, either) are lacking.

I'm happy with this compromise, a reduced fee in exchange for a little more work my side (as an accountant, I would be doing it anyway). But you do tend to get a lower quality of agent when you go for a lower fee.

In the end, you have to look at it, and think if the difference is worth the hassle. On a tenancy of say $350/week, 2%+GST is only $8 a week ($5.80 after tax). On a $600/week tenancy it is still under $14/week. Just get the manager you want, the price difference isn't huge.


As an aside, if I had multiple properties with the same manager, I'd certainly be trying to negotiate a better rate. I'm sure they get some cost savings out of it, no reason you shouldn't get some.

[imd6662]

Hmmm... I've encountered anything ranging from 7 to 13.5%.

As others have said, it actually depends on how good they are. You also need to account for the amounts added to maintenance (and how often this occurs), as well as turnover costs of tenancy changeovers.

It's occurred to me that there ought to be a performance based model, dependent on occupancy (or net rent achieved). Anyone seen any examples of this?

[steeneveld]

Look at flat fee options

A good property manager can only look after a certain number of properties, so they are unlikely to drop their price a lot, as why wouldn't they just get another full paying customer.

In saying that, there are quite a few new or smaller property management businesses that are charging less than the old standard 7.5% plus GST. They generally don't have flash offices, so can charge a little less.

Ross

I would suggest that you look at a flat fee manager as you have a new house in a good area. Why pay a percentage when renting an expensive house is often easier than one in a cheap area. There are lots of very professional boutique managers around now offering a lower cost structure. I started my property mangement firm 4 years ago (WeRent Property Management) with my own porfolio as the base. No offices and good mangement software keep the costs low. So perhaps look around for a good manger with a flat fee structure and hopefully you can get a good service while saving yourself a few $.

[propertysearch]

Hmmm... I've encountered anything ranging from 7 to 13.5%.

As others have said, it actually depends on how good they are. You also need to account for the amounts added to maintenance (and how often this occurs), as well as turnover costs of tenancy changeovers.

It's occurred to me that there ought to be a performance based model, dependent on occupancy (or net rent achieved). Anyone seen any examples of this?

The rates in Dunedin are sky high: 9% to 12%. No justification for such high management fees and given the high number of properties per individual manager the service is not real flash either. My experience is that the management agencies are more rent collectors and less managers resulting in owners being in a lucky dip. The last one was a dud.

[Axel4Life]

I pay 5% for my Auckland properties, They are excellent and the best I can get In Christchurch is 7.5% +GST and They aren't as good at keeping the properties up to current market rental rates.. The south island management companies are more expensive and seem to be more concerned about keeping the tenants happy than get you as the owner the best net return.

[propertysearch]

I believe that overseas investors are no longer permitted to self manage and I am wondering it the real estate industry has gotten itself a monopoly and are milking it for all that it is worth.

[alhendo]

Id be very focussed on what the property manager will do

I've been looking around on various websites, and have noticed that the typical Property Management fee is around 8%.

My rental property is newly-built and in a nice Auckland central suburb. Hopefully, any maintenance will be modest, few and far between.

It should attract fairly reliable tenants, so I imagine there should be relatively less work and less conflict for the property manager.

Question - are property management fees similar across the board? Should I negotiate and expect to pay less? If so, how far should I push?

Id be very focussed on what the property manager will do. Not just collect rents. Cn they prove they do quarterly inspections. As property managers we are very focussed on return on investment. Dnt spend money that doesnt protect your property or get you ore rent.

[spaceman]

... My experience is that the management agencies are more rent collectors and less managers resulting in owners being in a lucky dip.........

QFT

Cheers
Spaceman

[ScottSI]

I will add my 2 cents worth.

I also want to say their are private landlords out their who know their stuff and are very skilled at management but many people are busy and lack the knowledge, or are out of the region to their property.

Why pay for management - So you are left alone by tenants, houses get filled and the paperwork is all in order.

Being left alone eg. when the tenants rings up about the stove not working (at 6pm) and we spend 15 minutes teaching them about the timer yet again, or our PM goes round and swaps the blown lift out element for free instead of calling a sparking saving you $ 100 +.

When the tenant rings up with a blocked sewer and sewage is flowing out the back yard. We can spend a 1/2 a day organising things, checking tradies doing what they should, getting quotes etc and we charge about $ 20 -40 for completing that task extra so a lot less than the staff member cost me.

When the tenant rings up with another reason why rent will be late, or how their 10th nana has just pasted away etc.

Paperwork - Correct notification not given for an inspection - $ 1000 fine at TT, Untidy house tenant moves into - $ 3000 fine at TT, go to TT and we have the photos, video, documents signed / initialled, notes recorded on system of conversations etc. Often people ring us to manage their properties because things are going bad and they don't know what to do.

We have all seen the articles on trashed houses and while this can happen to any owner it does seem to happen more for private LL's.

Property management is becoming a huge documentation war in my opinion. You hardly ever need this but when you do, by god you better have it all sorted and ready.

While top end houses can have easier tenants a lot of the time, any tenancy can go bad as suddenly their personal life has drastic changes.

While we charge for completing an inspection before one is completed, notification letters have to be sent out, then each one takes basically 1 hour to travel too, inspect and document (raw data, photos). Then maintenance has too be processed, tenant issues dealt with, raw recorded on the system and summary letters created and dispatched (collectively takes a couple of hours all up)

Daily jobs like processing rent, chasing arrears, owner statements, tribunal processing, renewals, advertising, showings, vettings, the day goes fast and then all the other jobs that pop up on top.

We are 7.5% + GST on gross rents collected and offer a rent arrears guarantee and we manage in Dunedin, Ashburton, Christchurch, Nelson/Motueka, Hastings and Napier.

We don't have flash offices in every region, we have a central office that controls all administration, tribunal processing (my job), rent chasing, advertising, bookings etc and the property managers are based out of their cars which are equipped with a portable office. Some owners want to see offices and that's fine but our system keeps our costs down and allows us our service guarantee.

The actual cost of weekly management varies for every property over the year but it is charge at a consistent fee of course. Some weeks lots of time is put into a property (example is when tenants are being placed or leaving as no addition charging for showings, advertising, credit checks, inspections etc) and then other weeks minimal work occurs but still work.

[spaceman]

Being left alone eg. when the tenants rings up about the stove not working (at 6pm) and we spend 15 minutes teaching them about the timer yet again, or our PM goes round and swaps the blown lift out element for free instead of calling a sparking saving you $ 100 +.

Not really for free is it????....assuming you've been charging 7.5% of the rent every month

When the tenant rings up with a blocked sewer and sewage is flowing out the back yard. We can spend a 1/2 a day organising things, checking tradies doing what they should, getting quotes etc and we charge about $ 20 -40 for completing that task extra so a lot less than the staff member cost me.

Why would you be charging an extra $20 - $40 ....what were you collecting a percentage of the rent for????.....collecting the rent???....or managing the property????

While we charge for completing an inspection before one is completed, notification letters have to be sent out, then each one takes basically 1 hour to travel too, inspect and document (raw data, photos).

I can see it'd be fair enough to charge for an inspection for a property you don't manage.....but surely inspections would be considered a normally part of the management of a property for which you're already charging 7.5%??

Then maintenance has too be processed, tenant issues dealt with, raw recorded on the system and summary letters created and dispatched (collectively takes a couple of hours all up)

Daily jobs like processing rent, chasing arrears, owner statements, tribunal processing, renewals, advertising, showings, vettings, the day goes fast and then all the other jobs that pop up on top.

Surely all of the above are what most people would consider a normal part of managing a property....for which you charge 7.5%......n'est-ce pas


LOLZ....Maybe I'm a bit bitter and twisted.....but I've been through a few property managers and have yet to find one that was actually worth what he/she charged IMHO

Cheers
Spaceman