Understanding Property Management Fees & Letting Fees

Exploring property management fees is essential for property owners to understand the costs and what they encompass. Every agency has its own fee structure, although they typically charge similar types of property management fees and letting fee. To gauge if you’re getting a fair deal, you can refer to the average property management fees and letting fee in NSW.

In this discussion, we’ll break down the various property management fees and letting fee you may encounter, clarify what property management fees for rental properties typically cover, and provide insights for what you can expect to pay in letting fee and 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:

1. Letting Fee:

This covers the expenses associated with finding a new tenant and establishing the lease. It includes tasks like developing a marketing plan, responding to inquiries, conducting inspections, reviewing applications, and managing all necessary documentation.

2. Ongoing Management Fee:

This fee is for maintaining the lease once it’s in place. It includes responsibilities such as rent collection, addressing late payments, managing maintenance requests, conducting inspections, communication between the tenant and owner, handling bills, and addressing any unexpected tasks.

3. Admin Fees:

These are miscellaneous property management fees that your rental property might incur. They can encompass a range of tasks, from account administration 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.

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    How much does it cost to find a tenant? 

    When it comes to finding a new tenant, there are two main activities: advertising the property and setting up the lease. Letting fees are typically calculated based on these factors:

    1. Advertising Approach:

    Most agents recommend website advertising, which can range from $200 to $500, depending on the ad’s type and where you advertise. Professional photos, normally priced around $200, can enhance your listing. Additionally, using a sign is an option, and many agencies offer this service at no extra cost.

    2. Letting Fee:

    This fee compensates the agent for their efforts in securing a new tenant. It often depends on the lease’s length and typically falls between 1.1 to 2.2 weeks’ rent (including GST). For instance, if your property rents for $700 per week and the agency charges a 1.65 weeks’ fee, then the letting fee would be $1,155 ($700 x 1.65 = $1,155).

    3. Lease Preparation:

    Once you’ve approved an applicant, the agent will prepare the formal lease, typically costing between $30 and $50.

    If your existing tenant chooses to renew their lease, the cost will be lower than finding a new tenant, usually about the same as the lease preparation fee. Understanding these fees helps you budget effectively for property management costs.

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    How much does ongoing management cost? 

    When it comes to ongoing property management fees, it’s important to note that each agency sets its own pricing structure. Prices can vary based on factors like the weekly rental amount and the number of properties you have with them. As such, there is no hard and fast rule on how much this will cost.

    In NSW, typical ongoing property management fees range from 5.5% to 7.7% (including GST) of the rent received. For instance, if your monthly rental income is $2,800 and your agent charges 5.5%, you’d pay $154 per month ($2,800 x 5.5% = $154), totalling $1,848 annually in management fees.

    At Local Agency Co. we offer two distinct property management packages to cater to different needs:

    Cost Saver Package:

    Starting from 3.3% (including GST), this package leverages technology to provide cost-effective solutions while maintaining excellent property management services.

    All-Inclusive Package:

    Tailored for investors that doesn’t want all the added costs – such as finding a new tenant, advertising etc. In this package there are no extra’s like when your tenant moves out, just a higher management fee that takes into considerations all these costs and spread out over the year. The management fee starts from 6.6% (including GST).

    Our goal is to offer flexibility and choice so landlords can select the package that best aligns with their requirements.

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      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:

      1. Account administration:

      Some agencies will charge a monthly admin fee. This covers things like printing, document storage, and providing financial statements.

      2. Inspections:

      Some agencies will charge a fee for conducting mid-tenancy inspections.

      3. 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.

      4. 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.

      property management fees sydney letting fees searching for property manager

      Searching for a Property Manager? Look no further!

      Contact Local Agency Co. today at 1300 258 888.

      Whether you’re a first-time property investor or seeking a new agent, we’ve got you covered.

      With over 20 years of property management expertise, our team excels at securing good tenants swiftly. We’ll collaborate with you to create a customised advertising strategy that aligns with your property and reaches your ideal tenant demographic. Additionally, we meticulously assess all applications to ensure we’re recommending the best tenant for your property.

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