Hints and tips to guide you through your property management journey
Have you just purchased an investment property in Geelong? Purchasing real estate is an incredible achievement for many property investors. The property purchase process can be quite stressful, by having to submit multiple offers to agents, signing paperwork and organising finance. The stressful process is all worth it when you have collected the property keys and have felt the feeling of achievement.
However, the property journey has just started and now you will likely need to consider hiring a professional property manager. Managing your own investment property can seem like a great idea for many, but the management process can quickly become very overwhelming. That’s why many successful property investors choose to hire a professional property manager who can perform all of the property management services for you.
The average property management fee in Geelong is 6-7% of the rental income collected, plus GST. The management fee is a regular fee which is collected by the agent every month. As a savvy property investor, it is a good idea to compare fees between a few agencies.
Find out more about property management fees and what to look for below.
The property management fees offered by agencies vary for a few reasons. The first reason agencies will take into account before providing their management fees, is the location of the property and the other reason is the number of competing agencies in the area.
Generally, properties located within a 10-20 km radius of the Geelong CBD attract lower fees because they are centrally located and easy to access for most agencies. Suburbs further from the CBD such as Armstrong Creek, Charlemont and Lara will attract higher fees because of the extra distance the agency would have to travel to manage the property.
The property management commission generally range from 5-6% for inner city properties and up to 8% for properties located in the outer suburbs. However, most agencies will be willing to negotiate fees and terms of the agreement, so it is also important to ask.
There are many agencies looking to offer a large discount, but you need to consider the overall fee package offered. Seeing a management fee of 5% may look really attractive on the surface, however be aware of hidden fees or other fees such as an ‘administration fee’. These hidden fees can cost you more in the long run, so it is important to do the numbers and compare the overall fee package offered.
How do Geelong property managers charge their management services? There are two main fee structures which you will likely come across, which are ‘commission or percentage based fees’ and ‘fixed rate fees’.
Traditionally, property managers charge a commission based fee for their services. It can get very confusing when comparing one agency who offers a fixed fee to two or three other agencies who all offer percentage based fees.
Therefore, it is very important to request a schedule of fees outlining all fees charged, including leasing and advertising costs. Once you have all the information at your disposal, it is a good idea to compare the fees as an overall package.
The type of fees a property management agency in Geelong charge, can be broken up into 4 main categories.
The management fee is the cost to have your property managed by a professional and licensed agent. Most agencies will include the same or similar services in their overall property management service, but it is important to consider the quality of the services. Selecting the cheapest agency may save you in the short term, but will likely cost you more in the long run. Your role as a savvy property investor is to maximise your investment returns over a long period of time, and therefore it is important to consider the agencies track record and online reputation.
The leasing fee is the cost for the agency to secure a new tenant for your property. These services are crucial to the overall success of your investment property, so it is very important to request an overview of the leasing process.
Advertising and marketing costs are charged by the agency when looking for a new tenant to occupy your property. The main costs to consider are the photography fee and online listing fee.
Other fees which property managers may charge include:
Once you have decided on the property manager who you would like to manage your investment property in Geelong, it is now time to sign the written management agreement. The official document which you will need to sign to hire your selected property manager is called the ‘exclusive management authority’. Before signing the agreement, it is always important to read over the form to make sure nothing has been left out and that you understand what you are agreeing to.
The following items should be listed in the agreement:
Once you have signed the agreement forms, the property manager will now have authority to begin managing your investment property and start to organise the marketing campaign if you are seeking a new tenant.
It is unrealistic to think that all property managers are able to perform consistently and ensure your property is begin well managed. The property management industry has a very high turnover of staff, typically 8-12% of property managers change jobs after just 12 months.
If your property is not performing, it may be time to make a switch. Fortunately, it’s easy to start a fresh with a new agency and a new property manager. Once you find a new property management agency and have signed the management agreement forms, you will simply need to provide notice to your current agency and your new agency will take care of the rest for you.