A property manager should look after your investment property as diligently as you would. That’s what you’re paying them for. Some property managers will promise you everything, but drop the ball after you’ve agreed to let them manage your property. How can you avoid this? What should you look for in a property manager? Don’t […]
In Sydney, NSW the industry average for property management fees is around 5.5% of all rental income. However, depending on where your property is located you could be paying anywhere between 5% and 14%, with fees generally being lower the closer your property is to the CBD. Fees are an ongoing expense, so it clearly pays to do your research.
Some agencies will charge additional costs on top of this for other services, such as re-letting, new lease preparation and monthly administration, so you need to be mindful to read the fine print and do your research.
If you’re a Sydney-based property investor or landlord, chances are you’re here to compare and find out more about all the different property management fees in Sydney. The fees and charges you pay can affect the ROI of your property, so it’s crucial that you get a really good deal.
You might not realise it, but Sydney property management fees vary from suburb to suburb, are dependent on the local market, the type of property and what the agency or property manager wants to charge.
Find out more about what fees and charges you can expect below.
Property management basics
At the end of the day you need to choose a property manager that offers:
- Value for money
- Peace of mind
- An experienced background at managing properties like yours, and
- Professional and personalised service
A good property manager will ensure you achieve the highest possible rental return with tenants that are screened and checked. They are also the primary point of contact with your tenants, collecting bond and rent payments, managing inspections, dealing with routine maintenance requests and much more!
Property managers typically take a commission based on a percentage of the weekly rental amount. This could be anywhere from 5% to 12% depending on where you live in NSW.
How much are property management fees in Sydney?
Much like the commissions of real estate agents, expect property management fees to vary widely across Sydney, and even across New South Wales.
They will tend to be lower in areas close to the CBD or where there are lots of property managers servicing an area. Inner-city suburbs like Surry Hills will generally have lower fees than a fringe suburb like Penrith, primarily because of higher property prices and stiff competition from agents servicing this area.
In Sydney you can expect to encounter management fees that range from as low as 5,5% (a flat rate offered by Leasi) in or near the CBD, all the way up to 12% in suburbia, while the industry average sits at around 7.6%.
Remember that with the typical real estate property management model, lower fees don’t always equate to better service, and you can almost always expect to pay for extra support and representation for things like tribunal and advertising (all of this is included in Leasi’s flat rate of 5.5%).
So in general the lower the commission fee charged the fewer services are included, but you should always clarify this with any property management agencies in Sydney that you are considering.
Flat rate vs. percentage-based property management
How do property managers in Sydney charge for their services? The two most common fee models you will encounter in Sydney are percentage-based and flat-fee.
Percentage-of-rent fee model
This is the traditional way property managers have charged for their service. Their management fee is based on a percentage of the gross weekly rental. The range of services included in an agency’s fees varies, so you need to be sure what is part of the fee you are quoted.
What property management fees will I be paying in Sydney?
The two most common property management fees that apply are:
- Management fee (in Sydney this can range anywhere between 5% all the way up to 12% in suburbia. Closer to the CBD, it sits at around 5.5%)
- Letting fee (typically 1 – 4 week’s rent)
Depending on your agency, other property management fees you may need to pay include:
- Internet marketing fee ($0 – $200)
- Lease renewal fee (typically 1 week rent plus GST)
- Monthly administration fee ($5 to $10 per month)
- Court or tribunal attendance (billed per hour)
- Photographers fee ($75 – $150)
- Tenancy database check ($10 – $12 per person)
- Property condition report ($100)
- Routine inspection fee ($10 – $30)
- Annual statement fee ($25 to $50)
- Lease transfer fee ($0 to $500)
Flat-fee property management model
Flat-fee is the new kid on the block in the world of property management. Here the management fee is not determined by the rental price. Instead a single fee replaces all individual fees. It doesn’t matter what size your property is, or how much weekly rent you take – all landlords are charged the same percentage rate.
The fee varies by location and some agencies do have other charges in addition to the flat fee or percentage – so you do need to read the small print.
Here is a sample of flat-fee property management providers and what they charge:
- NSW-based ‘Once’ charges an annual flat-fee of $1,100 incl GST per annum
- Queensland’s Pure Rentals charges $1,249 + GST per annum.
- Sydney-based Leasi has an all-inclusive management fee of 5.5% of your weekly rent including GST, with no other charges. If you’re interested, you can take a look at our FAQs page or submit an enquiry to find out more.
What does a property manager do and what should you expect?
Many first time investors underestimate the role of a property manager and opt to go it alone. They soon find out that there is a lot to know and do. This is when having a professional to act on your behalf makes sense. So what can you expect a property manager to do for you?
A managing agent’s responsibilities include:
- Sourcing the right tenants
- Ensuring the tenancy agreement is completed and signed
- Collecting rent and ensuring you receive this
- Lodging the rental bond
- Liaising with tenants and coordinating repairs to the property
- Conducting regular property inspections
- Handling disputes with tenants, including attending court and tribunals
- Paying rates and bills on your behalf
What questions should you ask a prospective property manager?
Wondering what to look for in a property manager? All property managers are not equal, so make sure you ask the right questions up front.
Here are some to get you started:
- How long have they been a property manager?
- How many properties do your currently manage?
- Does your business also handle sales?
- How do you handle requests for repairs from tenants?
- Do you check and monitor repairs to my property?
- How do you find and screen tenants?
- How do you handle a tenant who is late with rent payments?
- What are your fees and how are they structured?
- What is included/excluded in your fees?
Professional property management services should give you an itemised list of their standard commission and additional fees. In many cases, the commission is negotiable and you may be able to make arrangements for issues such as emergency repairs and other extraordinary expenses incurred.
Signing a management agency agreement
When you agree to use a particular agent you will need to sign a written contract with them to formalise your relationship. This is called a management agency agreement. This sets out the terms of their service and what they are responsible for, as well as your obligations.
You need to list everything you want them to take care of. It needs to be comprehensive so everyone is on the same page.
Look to include the following in your agreement:
- A detailed breakdown of all the fees and charges that apply
- How often inspections take place
- The procedure for rental repairs and maintenance being undertaken
- The notice period for terminating the agreement, typically 30 to 60 days written notice
Property managers are also not allowed to change or adjust their fees once you have signed this agreement. Any new charges or fees need to be covered by a new agreement.
Switching to a new property manager
You are entitled to switch to another property manager if you feel the current agent is not providing an efficient service or value for money. It is as simple as informing your new company, filling out a transfer management form with all your details and they will handle the rest.
You will typically have to inform your existing agent in writing and after a notice period of 30/60 days be free to engage the new company.