Property Management Fees and Commissions  –  What do Real Estate Agents Charge?

If you have a property that you are looking to rent out , there are real estate agents that specialises in property management . Often the office has both sales and property divisions but it is the property management division that most concerns you. You would be looking for a dedicated property manager to provide the best service. For this service you will charged a rental fee or rental commission. This commission is for the property managers role in fully overseeing the rental of your property. This would include assessing the rental potential of your property, advertising and finding tenants, assessing the prospective tenants , completing all the documentation and managing the month to month rent payments and inspections.

It is always worthwhile to start the process of finding a good property manager by first getting an understanding of what your property could rent for . You can do this easily online by using the free service at Home Valuation Guide. click Here :

What is the average commission charged for managing a property?

The rate of commission charged is usually a percentage of the rental income and can vary from one office to the next and one state to the next. The historic range is from a low of 6 % to a high of 11 %. The average is 8.5 % This is for residential property management. Holiday or commercial rental commissions are often higher. The percentage of management fees charged is often a refection of the amount of rent that the property can bring in. For example , a property renting for $2,000 a week may attract a 6-7 % fee , while a home renting for $450.00 per week could be charged at 10 % commission. This is due to the fact that the same amount of work often goes into managing either property yet the total rent is much higher on one.

Information relating to commission rate charged by property managers is not regulated. It varies a lot. It is set by market conditions , such as how many real estate agents are competing for the management rights for your home or unit. While the information in our report : is recent historical rental data, the actual rental commission rate that you will pay is not widely advertised . You will need to find a good property manager and negotiate the best rate. It is often dependent on many factors such as the condition of your property, the nature of the local market as well as the property manager and services selected.

Property Rental Commissions and Rental Fees , are they the same thing?

The percentage rates discussed above represent the weekly or monthly management commission only. It does not include other costs or fees associated with the management of your property. These include the monthly statement fee , usually $5.00 – $10.00, postage or mailing fee , annual report fee for tax purposes. The property managers will also often add a percentage of commission on top of the repairs and maintenance cost for any repairs to your property. You need to ask these questions up front so you may choose to handle repairs your self. These charges of course varies again from office to office but should be taken into account when adding up the total of all the costs associated with managing your property.

How is the percentage of commissions and Fees calculated ?

The fees you will pay a property manager as their commission is nearly always calculated as a percentage of the weekly rent. Below is an example of how the amount is worked out.

Property Commission Payable = Weekly Rental multiplied by commission rate (%) Assume that the weekly rental price for a property is $600 and the commission rate is 8.5 %. The rental commission a property manager will charge in this situation is calculated as follows:

$600 x 8.5/100 which gives $51.00 a week . This is $2,652.00 per year.

Remember , this is not the only fee that you will pay. There are the additional cost mentioned above.

This could bring your total costs to above $3,000.00 in this scenario .

There is a lot more that goes into managing your property than simply collecting rent of course.

A good property manager will be well worth every cent as they can make such a big difference to the returns on your investment property.

Is it better to use a Property Manager or handle the Property Rental yourself ?

This is an important question. Often there is no choice as the investor owner is interstate or overseas and is not in a position to manage the property themselves anyway. However , the reason property managers are widely used is that it is not as easy as it seems being a property owner manager. According to a survey conducted by Property Research Group , 34 % of landlords who chose to manage their investment property by themselves and who were interviewed reported experiencing cases of tenants defaulting on rent payment. The survey also showed that landlords who enlisted the help of property managers in managing their relationships with their tenants had faced fewer problems. It may therefore prove to better to allow for the property management costs when calculating the total return of your property.

What is the agents commission charged by Property Managers in my area?

The simplest way to establish the rate of commission that property managers in your area are charging is by having them bid to handle the renting of your property. The commissions do vary a lot and it pays to check it out. Home Valuation Guide has established a list of the top property managers in each area that we can refer you: . Get the details of what other similar homes or units in your area are renting for before you contact the agent.

Tips for Finding the Best Property Manager

There are many other things that you need to consider apart from just the rental property management fees charged by a property manager. They include the following:

How many properties are they currently managing?

Before you ask anything else, find out the number of homes or units that they are managing at the moment. After that, ask the property manager how many employees they have assigned to manage the units. On average, a fully trained property manager can usually manage 50-70 rentals. This assumes that the accounting function is excluded.

Therefore, if you are considering hiring a property manager who is currently managing 80 units with no other support staff , you need to ask yourself , do you think they will be effective?

Does the property manager own a rental property?

Many property owners think that it is better to hire a property manager with their own rental properties since they can relate better to an investor’s experience. This makes sense but is not always the best situation. This is because it is possible that the properties and your tenants will be constantly competing with the managers and their property . If it happens that your manager has a vacancy at the same time as you, what guarantee do you have that your unit will be occupied first? Off setting this risk is the experience that an owner manager brings to the table.

How often should the property agent perform formal inspections?

An integral part of managing both the tenants and the properties is getting inside the properties on a regular basis. You therefore want assurances that the property manager you hire will regularly conduct formal inspections of your units. This varies from office to office but is usually quarterly or at the most half yearly.

Should Property Managers treat performing routine inspections as a regular part of their service.

This function is crucial and should be included in the monthly fees and attract no additional costs.

Is Communication with your property manager important?

The answer is a resounding yes. If you notice that during discussions your manager-to-be finishes sentences off for you, or is constantly cutting you off, you may face trouble in your future communications. Most novice investors are looking for good information and regular communication about the process . Not spoken down to or being treated dismissively. Be careful , as if this is an issue, the property manager is likely to give you poor service. The best managers understand who their clients are and want to always work to give first class service.

HVG has national affiliations with Real Estate Property Managers around Australia so we can assist you with obtaining a quotation for property management fees in Adelaide, Brisbane, Canberra, Darwin, Geelong, Gold Coast, Newcastle, Hobart, Melbourne, Newcastle, Perth, Sydney or Townsville.


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