Rental property management fees in Perth – are you getting value?
Take a closer look at what your rental property management fee is really buying – it’s not about minimising the cost but maximising the value.
Momentum’s 2024 Property Sentiment Report found the vast majority of investors, around 77%, use a property manager to look after their rental property.
This can make life easier for investors though, of course, professional property management brings its own set of fees.
While it can be tempting to pick the provider with the cheapest rental property management fees, it makes better financial sense to use a service that delivers on value. It can go a long way towards maximising rent returns and enhancing the capital value of your asset.
What do property management fees include?
The cost of professional property management varies according to the provider and the services you opt for.
As a guide, typical property management fees include:
- A one-off letting fee for signing up a new tenant
- An ongoing management fee, usually based on a percentage of weekly rent, and
- Advertising fees to cover the cost of listing the property when vacant. Photography and signage are usually additional costs.
Investors may also be asked to pay lease renewal fees, routine inspection fees, and final bond inspection costs.
Should a dispute arise, the owner will typically have to pay court attendance fees and fees to prepare a property condition report as required by WA law.
Not surprisingly, property investors can feel as though they face a conga line of costs.
At Momentum Wealth, our fees are streamlined into two simple and transparent fee structures: ‘itemised’ or ‘all-inclusive,’ with the latter being charged as a percentage of gross collections from your tenant.
As part of our initial consultation, we discuss the rental property management fee option best suited to your needs.
Even so, what matters is not how much you pay in management fees for your rental property but the service level your money buys.
Rental property management fees – finding value
As we’ve noted, it can be tempting to select the property manager with the cheapest fees.
However, this can work against investors.
Low fees may mean getting a bare bones service that does little to enhance rental returns or protect (let alone improve) the value of your property.
Instead of focusing of fees, be prepared to look under the hood of a provider to see what sort of service you’re receiving in return for your rental property management fee.
Importantly, look for a high-quality service that saves you time, reduces tenant turnover, and ensures your property is always well-maintained.
Ultimately, the litmus test of real value is a property manager who can suggest value-add modifications that can lead to a rise in your property’s rent or market value.
A quality property manager will also check in with you on a regular basis, and help you leverage their expertise and research by identifying ways to lower your risks and maximise your returns.
How to choose the right property management service
Rental property management charges are typically tax deductible. This helps to reduce the out-of-pocket cost, though it’s no reason to settle for second best.
The value of your rental property far outweighs any minor savings on management fees.
We recommend taking five key steps to select a property manager:
- Compare fee structures across different agencies. Don’t just look at the headline fee – ask for a breakdown of what’s included. Understand the service levels you will receive by enquiring about what the property manager does to earn their fees, how many properties they manage, and the professional communications you can expect to receive.
- Do your own research – online reviews can speak volumes about the lived experience of property investors.
- Look for transparency – ensure the property manager is clear upfront about all potential charges.
- Consider the size of the property management team relative to the number of clients they have. Is the property manager part of a broader team that may, for instance, include a buyer’s agent to give you the benefit of holistic service? Will they take your investment strategy into account and offer tailored advice to support your goals?
- Ask questions such as what is the manager’s process for marketing your property? Do they offer value-add recommendations? How do they deal with late payments?
The bottom line
In today’s market, an investment property is both a major financial commitment and a significant asset – one typically worth several hundred thousand dollars.
Scrimping on your rental property management fee may seem like a money-saving strategy. But in the world of property management, you get what you pay for.
When it comes to property management company fees, due diligence is key. Be sure to thoroughly research your options and remember that you’re not always comparing apples with apples.
A slightly higher fee can be the difference between earning average returns, or pocketing gains that set you on a path for investment success.
Contact Momentum to discover how we go beyond everyday management with a 360-degree approach that addresses your property’s performance from every angle.
Recommended
Does an apartment make a good investment?
The pro and cons of investing in a brand new house and land package
What’s the best type of investment property to buy?
Bank vs broker: which is best?
Cross collateralisation – what is it and why is it bad?