How much does property management cost? In Australia, ongoing management fees are commonly charged as a percentage of rent, with additional fees sometimes applying for services such as tenant placement, lease renewals and tribunal attendance.
The total property management cost depends on the agency, location, property and level of service provided. Here’s what landlords should consider when comparing fees.
How Are Property Management Fees Calculated?
Percentage Fees vs Flat Fees
Most agencies charge a percentage of the rent collected rather than a fixed amount. This means the management fee generally rises or falls with the property’s rental income.
Some agencies instead offer a fixed weekly or monthly fee, which can make property management costs more predictable.
Why Property Management Fees Vary
Property management fees in Australia vary between agencies, locations and levels of service.
A lower percentage isn’t necessarily cheaper once additional charges are considered. When comparing agencies, check exactly what is included and whether the quoted property management fees include GST.
What Is Included in Property Management Fees?
If you’re wondering what is included in property management fees, the ongoing fee will generally cover the core work involved in managing a tenancy.
Common services include:
- Rent collection and arrears management
- Tenant communication
- Routine inspections
- Maintenance coordination
- Financial reporting and statements
The exact inclusions vary between agencies. Some property managers will also seek owner approval before arranging maintenance above an agreed amount.
Ask for a written breakdown so you understand exactly what your rental property management fees cover.
Read more on ‘What is property management?’
What Additional Property Manager Fees Should You Expect?
The ongoing management percentage isn’t always the complete cost.
Additional property manager fees may include:
- Letting or tenant placement fees
- Lease renewal fees
- Advertising costs
- Tribunal attendance
- Additional administration or inspection fees
Do Property Managers Charge a Letting Fee?
Many agencies charge a separate letting fee when they secure a new tenant.
This covers work associated with advertising the property, processing applications, selecting a tenant and establishing the new tenancy.
Because additional charges vary significantly between agencies, landlords should compare the complete fee structure, not just the advertised management percentage.
What Affects Property Management Costs?
Several factors can influence how much property management costs.
1. Property Location
Fees can vary between states, cities and regional markets depending on competition, rental conditions and the service required.
2. Property Type and Rental Value
The type of property, rental income and complexity of the tenancy may influence the fee structure.
A property requiring more hands-on management may also involve different costs from a relatively straightforward tenancy.
3. Number of Properties
Owners with multiple investment properties may be able to negotiate a portfolio-based fee structure with some agencies.
Ultimately, the level of service, communication and reporting should be considered alongside the management percentage.
Are Property Management Fees Worth It?
Whether property management fees are worth it depends on how much involvement you want in the day-to-day management of your investment.
What Does a Property Manager Take Care Of?
A property manager can handle:
- Rent collection
- Tenant communication
- Inspections
- Maintenance coordination
- Arrears management
- Compliance requirements
- Financial reporting
This reduces the owner’s day-to-day involvement while providing professional oversight of the tenancy.
Property Management vs Self-Managing
Self-management removes the management fee, but places responsibility for the tenancy directly on the owner.
That means managing communication, inspections, maintenance, rent, compliance and issues as they arise.
For landlords with limited time, multiple properties or investments located away from where they live, professional management can provide considerable practical value.
Property management fees may also be deductible rental expenses in some circumstances. Owners should confirm their individual tax position with a qualified accountant or tax adviser.
How to Compare Property Management Fees
Knowing how much property managers charge is only one part of choosing an agency.
Before appointing a property manager, ask:
- What is included in the ongoing management fee?
- What services are charged separately?
- Are the quoted fees inclusive or exclusive of GST?
- How often will I receive reports and communication?
- How are inspections and maintenance handled?
- What happens when a tenant falls into arrears?
Don’t Compare the Percentage Alone
An unusually low property management fee percentage doesn’t necessarily represent better value.
Instead, compare the complete service: communication, inspections, reporting, tenant management, local experience and additional charges.
The goal should be finding a management service that provides appropriate oversight of both the property and the tenancy at a transparent cost.
Speak With Wolf Property About Property Management
How much property management costs matters, but so does what you receive for that fee.
Looking for property management in Tasmania? Speak with Wolf Property about your investment and get a clear understanding of our property management services and fees.
