If you are looking to rent out your property, the best decision you are going to make is to hire a property manager to handle them. However, it pays to know the fees involved when hiring a company for your property management.
For those who are new to the property rental business, fret not, as we have made a comprehensive list of all the fees involved in property management. We also made a short explanation for each for you to understand why such fees exist. Read on, so you are better equipped when you decide to hire a property manager.
The Average Rate for Property Management
In Melbourne and around Queensland, the commission may vary from state to state, and it can range between 7% to 9%. In the end, the commission will depend on the property, the types of services, and the local market standard. You should also note that you have to pay GST on the property management fees, make sure that GST is included on the proposed rate.
Some companies may charge additional fees on top of the property management fees; you have to understand this carefully before signing on the dotted line. You should also note that there are other types of property management fees that you should know about. Here they are.
This is the fee you need to pay the property managers for the services they render. These services include rent collection, arranging inspection, repairs, and maintenance, liaising with the tenants and owner, among others.
A property manager will collect a specific fee for their services rendered to source a new tenant to a vacant property. The service includes inspections to find a suitable tenant, conducting checks on the applicants, arranging legal documents, and collecting bonds. The fee should also include a condition report on the rental property.
This fee involves the marketing activities conducted to seek tenants for the rental property. It includes payment for ads, photography, and others.
Lease Renewal Fee
Most tenants sign on a one-year lease agreement. When the lease period is about to end, both or any one of the parties might want to extend the contract. It is the job of the property manager to negotiate with the tenant on the owner’s behalf. He or she will charge a fee that is, in most cases, equivalent to a percentage of the annual rent.
Routine Inspection Fees
A property manager will inspect your rental properties regularly to check its condition. However, this does not come as free; they charge a service fee.
Annual Statement Fee
When you need an annual summary statement that covers your last financial year, you need to pay the property management company a fee.
A property management company may also charge a small fee called administration fee, which would appear at your monthly statement. This fee covers postage, trust accounts, and phone calls.
Repairs and Maintenance Fee
When negotiating with a property management company, the owner should specify the type of repairs and maintenance to be covered without their approval and how much is the cost. This will allow the property managers to act immediately, even without the consent of the owner, especially when he is not around the area. The repair and maintenance fee will help to have the property in good condition at any time.
Holiday Accommodation Fee
This type of fee is different from the standard property management fees. This fee covers the services rendered when the property is vacated. It includes cleaning and maintenance fees, booking, and others, depending on what is written in the contract.
You need this information before you enter an agreement with a property management company. As a landlord, you may think that you can cut costs by handling the property management yourself, but it can be a headache. The charges involved in hiring a property manager outweigh the stress of managing a rental property.