As a landlord, property management fees are usually your biggest expense. But how much should you be paying? And what do these fees cover?
It’s important to note here that each agency will have its own schedule of property management fees. But, while the exact amount will vary from agency to agency, most will charge the same types of fees. You can also look at the average property management fees in NSW to get a sense of whether you’re getting a good deal.
Here we look at the different types of property management fees you can expect to pay. We’ll explore what property management fees for rental properties usually cover. And we’ll go over what you can expect to pay in property management fees in NSW.
The different types of property management fees
Generally speaking, there are three main types of property management fees. These are:
- Letting fee: This is the cost of finding a new tenant and setting up the lease. It covers:
- developing the marketing plan
- responding to enquires
- conducting inspections
- receiving and reviewing applications, and
- managing all the necessary documentation.
- Ongoing management fee: This is the cost of maintaining the lease once it’s been set up. It covers:
- collecting rent and following up on late payments
- managing maintenance requests
- conducting inspections
- liaising with the tenant and owner
- paying bills, and
- any other tasks that come up.
- Admin fees: These are the ad hoc property management fees your rental property may incur. They could include anything from account admin to attending Tribunal hearings.
Most agencies keep these fees separate. But some choose to merge them all into a single “property management fee”. This is usually a percentage of the rent received and charged at regular intervals.
How much does it cost to find a tenant?
There are two main activities involved in finding a new tenant – advertising the property and setting up the lease. As such, letting fees are usually calculated based on the:
- Advertising approach: Most agents will recommend listing the property online. This could cost anywhere from $200 to $500, depending on the type of ad. You may also want to have professional photos taken, which usually cost around $200. A sign is also an option, most agencies have generic signs and will not normally charge for putting a sign up.
- Letting fee: This is the agent’s fee for the time and effort they put into finding you a new tenant. It is often dependent on the length of the lease and is usually 1.1 – 2.2 (including GST) weeks rent. So, say your property is $700 per week and the agency charges 1.65 weeks rent – this would make the letting fee $1,155 ($700 x 1.65 = $1,155).
- Lease preparation: Once you have approved an applicant, the agent will set up the formal lease. This will usually cost between $30 and $50.
You may also need to pay a fee if your existing tenant decides to renew their lease. As this only requires a new lease to be set up, it will cost less than finding a new tenant. Generally, this will be about as much as the lease preparation fee.
How much does ongoing management cost?
As noted, each agency will have its own schedule for ongoing property management fees. Many will also base their price on the weekly rental and how many properties you have with them. As such, there is no hard and fast rule on how much this will cost.
That said, ongoing property management fees in NSW are usually 5.5% – 6.6% (including GST) of the rent received. So, say you’ve leased your property for $2,800 per month and your agent charges 5.5%. This would mean you’d pay $154 ($2,800 x 5.5% = $154) a month – or $1,848 a year – in management fees.
Some agencies, like Local Agency Co., provide a few property management packages. These target different property types, noting that they need different levels of management. They also allow landlords to choose the service that best suits their needs.
For example, at Local Agency Co., we have two packages. Our Cost Saver starts from 3.3% (including GST) and provides all the basics. Whereas our Peace of Mind starts from 4.95% (including GST) and is a more full-service product.
What other property management fees are there?
Depending on the agency, there is a range of other ad hoc activities that may incur a fee. This could include:
- Account administration: Some agencies will charge a monthly admin fee. This covers things like printing, document storage, and providing financial statements.
- Inspections: Some agencies will charge a fee for conducting mid-tenancy inspections.
- Tribunal appearances: If there are any issues with the tenant, you may need to take a trip to the Tribunal. If so, your agent will prepare for – and attend – the session on your behalf.
- Maintenance management: If your property requires any major maintenance work, your agent can look after it. But most will charge an extra fee to project manage this for you.
Looking for a Property Manager?
If you’re in the market for a property manager, give Local Agency Co. a call at 1300 258 888. Whether you’ve just bought your first investment property or are looking for a new agent, we can help.
Our team has over 20 years of experience in property management and specialise in finding high quality tenants, fast. We’ll work with you to develop a tailored advertising approach that suits your property and targets your dream tenant. We’ll also carefully review all applications to make sure you’re getting the best of the best.
What’s more, right now you can take advantage of our RENTdiculous offer! This includes complimentary online advertising and our 14-day new tenant guarantee.