Over the years, property management has evolved and the industry is becoming increasingly responsive to the needs of Property Owners and Clients. As such, the cost of property management fees as well as changes in pricing offer the “all-in-one” package or the “pay-what-you-pick” packages continue to be industry offerings today.
So What is the Cost of Property Management Fees and How Has This Evolved?
In the past, the regular practice for a property agent was to charge for each individual property service they perform. For example, lease renewal fee for renewing a lease, inspection fee for routine inspection of property etc. These itemised services that a property manager performs each had a fee tagged to them.
However, today, real estate rental property management cost trends, from “individual property service charges” have slowly emerged into a “all-in-one” service package. In recent years Property Owners have requested an all-inclusive fee or also known as a flat rate/ flat fee. Here, the management fee is not determined by the services offered. Instead, a single fee replaces all individual fees.
An all-inclusive fee single fee is usually a gross percentage of the total rent that Owners pay every month irrespective of services provided. This one fee encompasses all the typical property management fees that Owners will incur in their property journey. It pays to look closely at the property services covered as inclusions could vary and there could be extra charges for tribunal, annual statements and other services.
The breakdown of these real estate rental management costs or fees can generally be divided to ongoing management fee and leasing fees. Details of how these costs are segmented are in this blog.
What do Property Management Fee Cover?
They typically include the following:
- Collection of rent
- Follow up with arrears
- Repairs and maintenance
- Payment of strata or utility bills such as water rates etc
- Communication with the tenant including notices
- Responding to maintenance issues and repairs
- Ensuring that the repairs are conducted to standard
- Liaise between the Owner, Tenant and Strata Management Company (where applicable)
- Keep the Tenant and Owner Updated on the latest changes in legislation
- Administration and Tax Statement preparation
- Production of the advertisement or marketing campaign
- Photography and writing of the advertisement
- Responding to potential tenant queries
- Interviewing, screening and checking references for potential tenants
- Lease renewal fees
- Leasing Fees
- Property Inspection Fees
- Property Condition Report – ingoing and outgoing
- Lodgement of Bond
- Routine and Final Inspection Fees
- Tenant Enquiry Fees
- Court Attendance Fee
So, What Are The Pros and Cons of a Customise vs An All-Inclusive Real Estate Rental Management Fee?
There are benefits to both the Property Owner and the Property Managers for an all-inclusive fee. For the Owner they know exactly what will be deducted each month for agent fees and gives them some stability with cashflow. For the Agent similarly, they will collect a fee each month irrespective of services provided and provides them with some stability in income as well.
There are also hybrid versions of an all-inclusive rental management fee where the percentage will be lower and some real estate rental management costs are charged separately such as leasing fee, internet advertising, Property Condition Reports as well as administration fees.
However, it is entirely up to the owner of the property to negotiate a fee package that suits them – whether that’s standard fees for service, all-inclusive or a hybrid version of both. What is important is that the decision is not made based on the cost of property management fee alone, but on sufficient research as well as a sound understanding of both the explicit and implicit rental management costs involved to ensure high net return on your property.