mmm Interesting question. This makes me think why do we base our fees as a percentage of the rent? Why don’t we just have a fixed fee that increases each time there is an increase in rent or each year with CPI? Then all properties would achieve the same amount of fees

Margaret www.dmrealty.com.au

perhaps we should understand what the landlords definition of ‘property management’ is and what he would like to receive?  If we think we just collect the rent, maybe we would be happy to do this for $20 a week….

on the first property we manage we have given him a high standard of service detailed report every 12 weeks regarding his properties condition , have organized a number of contractors to fix problems EG new hot water system and stove. and have organized a maintenance schedule to get the property up to standard over the past 12 months. we are ready to go once the tenants leave to paint and replace the carpets to re market at a higher price.

we have had to do a lot of work for the $20pw

perfect, estimate the hours and divide it by the money you received and this is your answer.  Discuss this with the landlord and I am sure he will find he is getting a good deal on property one and not to haggle anymore on property two.

Emily I see your point and where you are going

but I know his answer will be do you have any other properties on your books that you rent for $250pw and he knows I do. how do you manage them and make money.

so if you can manage them for $20 and make money why not mine

would you take this management on at 3.5%?

or risk losing both

So a couple of points are;

If you charge X% for your great service on the unit why would they expect a lesser value of service on the more expensive property?

Perhaps if anything your inspections may be even more diligent since there are more expensive fixtures and fittings in the newer property?  

Further, your inspections will take longer for a larger property – but yet you are still only going to charge the same percentage not increase it. 

Maintenance occurs in dearer properties too.    Infact, in my experience sometimes organising repairs etc are more complex if items are still under warranties etc et

I have a serious issue with charging a flat fee for property management (unless of course you are talking a substantial portfolio with additional works to be undertaken as part of the overall asset management agreement).

If you are only getting $20pw from the unit, which is a tiny %, maybe you should look at the fees charged on all managements. Is it possible to make a profit at this level of remuneration?

Franc, although less than my agency charges, I wouldn’t say 8% is “tiny”.   What is the average % for M/Fees in your area?

Generally 7% + gst on residential. I have heard annocdotally that in WA PM fees exceed 8%.

I generally see a mix which includes retail (sometimes down as low as 3%) and comms around 5%