Let’s talk property management fees
When it comes to investment properties, there are both incomings and outgoings. And if you have your property professionally managed by a real estate agency, one of those ongoing costs is property management fees.
Typically charged as a percentage of the rent, these fees cover a whole host professional services behind the scenes.
So, let’s talk property management fees and what they cover…
How much are property management fees?
Property management fees are usually about 9-10 per cent of the weekly income of your property.
So, if your investment rents for $600 per week, you can expect about $54-$60 to be deducted for management fees each week.
Saying that, the figure can also vary, with some agencies charging as little as 5 per cent and others commanding as much as 15 per cent.
What they cover
Property management fees generally cover the day-to-day management of the property, including:
- Financial management, including the collection and disbursement of rent, and paying out expenses such as repairs.
- Communicating with the renter and owner
- Co-ordinating maintenance and repairs
- Regular routine property inspections
That said, the actual list of tasks covered under the ‘management fee’ umbrella can vary. For example, some agencies may charge a lower percentage for general management but have an additional fee for routine property inspections.
Additional expenses
In addition to the property management fees, there may also be additional costs associated with the management of your rental property.
These tend to relate to things beyond the day-to-day running of the property, such as:
- Rental agreement commencements and renewals
- Advertising and marketing costs to secure a renter
- Tribunal representation fees, if required
- Administration fees for paperwork and documentation
What property management fees really pay for
Management fees might pay for specific administration tasks associated with your property, but what they really pay for is peace of mind.
Ideally, they should give the owner confidence that the property is being professionally managed by someone who knows the relevant rental law, follows the right processes and procedures, and ensures the property is well looked after and generates an appropriate income.
And while they might be an expense, property management fees can save a whole lot of time, hassle, and money in the long run.
After all, good property management ensures:
- The right renters are selected
- The rental law is upheld
- The property is looked after
- Rent is paid on time
- The value of the property is maintained
Check before signing
As we’ve mentioned, property management fees can vary from agency to agency, which is why it’s important to understand exactly what will be covered under your agreement with your property manager.
Before signing any property management agreement for your investment, read the fees and charges carefully, and if you have any questions about what’s covered and what’s not, don’t be afraid to ask.
