Property Management Fees
When engaging a Property Manager for your property in Brisbane there are many things to consider. One part of the decision-making process focuses on the property management fees and charges. The other part is the expertise and industry knowledge that comes by engaging with the right Agent.
Usually Landlord tend to focus on the lowest Management Fees without considering long term benefits.
The savings from lower Property Management Fees of 5% compared to 7.5% fees could be only $10 p.w or $500 over a year.
However an under rented property, additional weeks vacancy, maintenance not being attended to resulting in damage, not taking full advantage of non-rent related income like water usage reimbursements and depreciation tax benefits can cost a lot more than $500 saving.
Hence the need to get detailed understanding of what are the Property management fees, its breakdown and the importance of finding the right property manager.
Management Fees Vs The Right Property Management Company
The right property manager can add value to your property. Improving returns is not just about increasing rental values. It is about:
- reducing vacancy
- minimising unnecessary expenses
- ensuring that all income avenues are explored including property depreciation and tax benefits.
Total Management Fees associated with property management can be broken down into many different components or services. Usually these components or services are included by good property management companies. Some companies however, do not fully explain those services or give fullest advantages associated with those services to the property owners. Their are also some services which are generally not included in standard breakdown of management fees but can be very important.
A property manager might charge a lower headline property management fee, but charge excessive additional fees or have a higher fully inclusive management fee that is more cost effective over the year.
The other important consideration is the value added by the right property manager and the costs associated with a poor agent.
If a property manager does not have a strict arrears management policy, does not complete regular inspections; the cost of a tenant doing damage, owing rent or an extended vacancy can cost considerably more than any saving you receive by the reduced management fees.
Therefore, having an effective Agent will ensure that you are receiving the most from your investment property and work towards increasing your overall return. For example, having a Depreciation Schedule in place, claiming reimbursement of water charges from tenants where applicable, assessing and reducing risks, projecting future repair and renovation costs can add to considerable amount to your net investment return.
Property Management fees as understood by an Ideal Property Management Company.
Property Management is one of those services that is undervalued and usually under estimated. An ideal Property Management Company understands what is involved in successfully managing a property and do what is necessary to not only increase return, minimise expenses but also minimise the risk associated with owning an investment property.
The fees involved with Property Management include, but are not limited to:
Management Fee – Rent Collection Fee
The Management Fee is usually calculated as a percentage of the total rental income collected or in some cases a fixed rate per week or annum. Many agents just see this fee as a rent collection fee. However, the management fee should cover all aspects of managing your property:
- Rent Collection
- Owner & Landlord Service
- Risk Management Recommendations
- Accounting & Invoice Payment
- Maintenance Recommendations
- Routine Property Inspections
- Renovation/Refurbishments Recommendations
- Insurance & Rent Protection Services
- Water Usage Reimbursement
- Tenants Management
There is a lot more to Property Management than just rent collection. Management means Full Management, not just the collection of rent. Property underpins Australian wealth and the goal is to increase the value of your investment. That is the reason for investing, is it not?
Owner & Landlord Service
When engaging Asset Plus Property for your property in Brisbane you are assigned a Business Manager – a professional dedicated to your property needs and your individual requirements.
If you own property in different areas of Brisbane, you no longer have to worry that you will be dealing with multiple property managers. Your Business Manager will be your point of contact for all your property management needs. Simply one person focused on you, the client.
Risk Management Recommendations
Like all investments, there is a risk involved. Therefore, it is important to have proven, tested processes and procedures in place to manage all aspects involved in the day to day administration of a rental property followed by the ability to deal with the unexpected. We know the importance of making sure the rent is in your account to pay the mortgage.
We ensure that we disburse rent at the middle and end of each month, if this day falls on a weekend or public holiday we disburse on the previous business day to ensure the rent is always in your account and there are no delays in the funds transfer between banks because of weekend or bank public holidays.
Accounting & Invoice Payment
Accounting is an important part of the Property Management service. Rent should be processed and reconciled on a daily basis. Surprisingly, this is not an industry standard process. By banking and reconciling daily we can ensure that the rent is up-to-date and follow up accordingly. It is important for us that arrears management is a daily task not a weekly or monthly occurrence.
All accounts are processed promptly, to ensure accounts are paid by the due date and no unnecessary overdue charges are incurred. You will always receive a scanned copy of any account paid on your behalf. This ensures you know what work was completed or approved expense incurred. It is also important for tax time, when you need a copy of all expenses.
We will always run any anticipated expenses or maintenance past you, the Landlord, for approval to ensure you approve of the work being conducted and can manage cash flow accordingly. Many Landlords provide us with a working budget or maintenance limit. In these instances, we process maintenance under the terms approved and notify you of the work being completed.
Routine Property Inspections
Routine Inspections and reporting should be inclusive of your Management Fee. At Asset Plus Property, we inspect all properties on a regular basis, report back to our Landlords on the condition the property is being kept, and importantly any maintenance issues found.
We send an email report with photos, not a tick and flick report that does not accurately portray the property.
Regular inspections are important not just to ensure the tenant is maintaining the property but also to check and plan for any maintenance or renovations.
We recommend annual termite inspections to ensure the property is protected and we recommend Landlords budget for ongoing upkeep. A property is a high value asset and needs to be maintained as such. During our inspections, we will provide Landlords with recommendations to keep or increase the property’s value. A deteriorated property does not attract the right tenant and begins to devalue over time.
Planning for re-painting or carpeting between tenants is important, if the property is getting to an age that requires it.
The work may not be required for 12 months, but budgeting for the work will make the task more manageable when the time does come.
Insurance & Rent Protection:
- Building Insurance Policy – Most risks can be mitigated by having the right insurance. Having a Tenant / Rent Protection Policy is just as important as having a Building Insurance Policy.
- Tenant / Rent Protection Policy – not only covers you against a tenant skipping but also covers against unforeseen circumstances like tenant hardship or damage which may result in a property becoming untenantable for a time.
We had it recently, where a tenant lost their job due to their company collapse. They applied to QCAT (Qld Civil and Admin Tribunal) to have their lease terminated due to excessive hardship. The tenant showed the tribunal that they could no longer afford the property, due to their loss of employment and had to significantly downsize. QCAT ordered that the lease be terminated in two weeks’ time and the tenant was allowed to vacate without penalty. In this instance, the Landlord did have insurance against this event and was covered for more than 6 weeks rent between tenants.
We also recently had a fire in a townhouse, due to a Samsung Washing Machine. In this instance, the building insurance covered the damage to the walls and ceiling, but not the floor or window coverings.
We successfully lodged a claim under the Landlords Tenant / Rent Protection Policy, which had a “contents component” in the policy that paid for new flooring, new blinds and even for the replacement of an air conditioner unit, which sucked in smoke.
Water Usage Reimbursement
Another service include in our Management Fee is the invoicing of tenants for reimbursement of water usage, where applicable. If your property is water efficient and individually metered, we will review your water utilities account and invoice the tenants accordingly.
This water usage reimbursement is a non-rent income and can equate to considerable amount over a year.
Handling tenant enquires is a large part of property manager’s role. It may just be providing rent paid to dates, providing ledgers or troubleshooting issues. All of this takes time and with us being the first port of call ensures prompt and professional handling of all enquires.
Communication is essential and we pride ourselves on communication.
Many of the services provide by Asset Plus Property’s Property Management in Brisbane goes unseen. We do our job, so you know that your property is in trusted hands.
The Let Fee is usually equal to one rent. A let fee is charged when an agent is required to find a new tenant for a property. This includes:
- Professional photography to display to prospective tenants,
- Flexible inspection times
- Review and vetting of applications
- Lease preparation
- Preparation of an entry condition report
- The process associated with assisting the tenant to occupy the property.
Letting a property is not just about putting a property on the internet and hoping it will let. The rental market is ever changing and in a soft rental market it is important that everything is done right to find a tenant quickly.
At Asset Plus Property, we are bettering the industry standard time on market by over 12 days or approx. 30%. A penny saved is a penny earned and this is the case with reducing vacancy.
By having professional photography, upgraded listings and flexible inspection times all go towards the success we have when finding a tenant. If a property does not present well, tenants will just skip it and inspect the next property. Where possible all our properties have professional photography to ensure the property is presented at its best online and attracts the widest range of potential tenants. We also install the largest signs possible to ensure anyone driving or walking by sees the property.
Flexible Inspection Times
Flexible inspection times are important. At Asset Plus Property, we do open homes, but we will also make the time to personally meet a single potential tenant at the property. It is all about numbers and getting as many people through the door as possible. We do everything we can to reduce vacancy and find the right tenant for our properties.
Lease Renewal Fee
The lease renewal fee is also charged on a percentage of the weekly rent or as a set figure. There is a lot of work involved in renewing a tenant’s lease. The lease renewal fee covers:
- the time & cost associated with negotiating, and
- The the & cost associated with preparing a new lease with a current tenant.
At Asset Plus Property we communicate with the Landlord at a minimum of 60+ days in advance to discuss any changes of the lease with the tenants, including increases in rent and general terms of the agreement. It is also important to plan in advance in case there is a plan to sell the property, move back into a property or renovate. It is a requirement under the RTA that tenants are provided with a minimum of 60 days’ notice if a lease is to be terminated, without cause. Planning in advance allows us to provide Landlords with the maximum time to consider their options.
Negotiating a long-term lease with a tenant can provide certainty to both Tenant and Landlord. Vacancy and finding a tenant is costly. Having a long-term tenant that looks after the property and pays on time can add significant net return to a property. i.e.
1 week vacancy and let fee charged on average equals $500 + $550 = $1050 or $20 p.w in lost income.
Disbursement fees, previously known as ‘postage and petties’ used to contribute to the cost associated with mailing and printing. Now that most communication is via email, the Disbursement Fee covers:
- the costs associated with the ever increasing banking
- Trust account management.
It is a requirement that an independent auditor audit all trust accounts and that no bank fees be charged to a trust account. Many sales only offices have decided that maintaining a trust account is too expensive and as a result do not hold funds on behalf of clients.
Asset Plus Property’s core business is Property Management which includes holding rental funds for clients. We take this responsibility very seriously and ensure that our trust account reconciles daily, is audited thoroughly and meets all the requirements of the Act.
Other Common Fees in Property Management
At Asset Plus Property our service is an all-inclusive service, meaning you know what you are being charged and can budget accordingly. Other common fees charged by other Agents includes:
- Advertising and Marketing – your property will be advertised online and accompanied with professional digital photos and detailed description.
- Repairs and Maintenance Management – Certain repairs are considered urgent according to the RTA, and require immediate action. Should such a situation arise, we can arrange necessary steps to ensure property maintenance according to your instructions.
- EOFY Statement Preparation – this involves preparation of the end of financial year tax statement
- Periodic Inspection Fee – a routine inspection is conducted every 3-6 months. A detailed report should be provided with the condition of your property and provide recommendations for general upkeep.
- Project Management (Renovation Management)
- Invoice Processing – this fee includes the direct debiting and receiving of rental funds, payment of creditors and disbursements, as well as payment into the account of the landlord.
- Mediation/Tribunal Fee – Many Landlords believe that this related to either evicting a troublesome tenant or a tenant who fails to pay rent. Quiet often we actually attend QCAT for matters that are not tenant related or a tenant is taking actioning against the Landlord.
QCAT handles disputes between neighbours over fencing and trees. Since the introduction of the Neighbourhood Disputes (Dividing Fences and Trees) Act 2011, we have attended QCAT on many occasions to resolve matters relating to overhanging branches, trees on boundary and disputes over fence replacement.
It is also common to attend QCAT for resolving disputes between Tenants and Landlords over excess rent increases, tenant financial hardship or access. Not all QCAT hearings are to evict a tenant; these are usually the exception not the rule.
The reason we charge a Mediation/Tribunal Fee is that a senior person prepares and attends the hearing, someone who is acting in your best interest. Having an unprepared or junior attend could result in an unfavourable order in a case which may have been seen a different outcome.
Property Management Fees Vs Benefits
The saving achieved by going with a discount agent could be well outweighed by an agent who does not manage your property properly. The difference between savings from agents Management Fees of 5% to 7.5% could be $10 p.w or $500 over a year.
However an under rented property, additional weeks vacancy, maintenance not being attended too resulting in damage, not taking full advantage of non-rent related income like water usage reimbursements and depreciation tax benefits can cost a lot more than $500 saving.
Our fees are industry standard but our service is anything but. By engaging Asset Plus Property you will deal with a professional who looks after your property and adds value to your bottom line.
Legislation allows the owners of any income producing property to claim depreciation as a tax deduction.
Unlike other expenses involved in holding a property, such as repairs and maintenance for example, an investor does not need to spend any money to be eligible to claim it. We can assist you in engaging the right Quantity Surveyor to prepare your depreciation schedule.
What differentiates Asset Plus from other Property Management Companies?
Many real estate agents core business is residential sales and only have a property management team as an offshoot. This often results in lack of focus and attention. Asset Plus Property is an investor focused Property Management and Investment Company.
Our Property Management Fees is fully inclusive and we go over and above to ensure our clients not just meet their investment goals but exceed them.
Having a team whose business is entirely property management focused has allowed us to build the knowledge and expertise needed to manage any kind of property successfully.
Expertise is not learnt, it only comes from experience.
Asset Plus Property is celebrating our 10th year and during this time we have seen it all – from the 2011 Brisbane floods, to the November 2014 storm event and everything in between.
Our success is built on our client’s success.
Our motivation is to build a long term relationship with our clients. Many of our clients have been with us and have grown from one investment property to a portfolio of property.
If you are being charged in excess of 8% to manage your investment property, then Speak to Asset Plus Property today about our current promotions and our ongoing competitive rates.