The fees real estate agencies charge for property management services vary depending on where you live and the agency you choose. As a general rule, you can expect to pay a commission of between 7% and 10% of your weekly rent plus GST, but the agencies we spoke to for this article quoted commissions as low as 4% in some areas and as high as 15% in others.Hiring a property manager vs DIY
Julie Harrington has been a property investor for about two decades. Based on Sydney’s North Shore, she bought her family’s home in regional NSW from her father after her mother passed away, and decided to rent the property out following her father’s passing.
Going on a recommendation from a family friend, Julie chose a local real estate agency to manage the property for 8 years.
“When the last lot of tenants moved out I was left with a filthy property,” Julie explains. “Carpets uncleaned, a whole wall of tiles off the laundry wall, filthy hand prints all over every door and cupboard, mould-covered walls and curtains in a house that was never known to be mouldy – so the tenants must have had it shut up and heated like a furnace.
“I had to replace all the curtains, they stole my garden furniture and left me rubbish everywhere and an overgrown, weed-filled garden to sort out on a 1,075sqm block.
“It also came to my attention that if the tenants wanted something fixed, they called the plumber or whoever themselves and got the bill sent to the agent for me to pay. I was rarely advised of any repairs being done and knew nothing about it until I got my monthly statement from which they had deducted costs. This was despite asking the property manager on many occasions to advise me of repairs being done to the house beforehand.”
Julie was left thousands of dollars out of pocket and with a house that was “unrentable” until repairs were completed. “They had managed the property for 8 years and I really did not know what I was paying them for. Rent collecting was about all they did,” Julie says.
Going down the DIY management path
After such a negative experience, Julie made the decision to manage the property herself, and found her own tenant on Gumtree.
“You can get a Lease Pack from the newsagent’s for $15 or so, do the property condition report which you and the tenant agree to, lodge the bond with the bond board and that’s about it. As a condition on the lease I have the rent paid into my account by direct deposit to avoid late payments and chasing money. I do three-monthly inspections on the property and he emails me if there is anything he wants me to know.”
So far so good for this DIY property manager, who admits that if she ever employed an agent to manage a property again she would be interviewing them to find out exactly what they offer for their commission.
However, Julie also says that employing an agent is useful if you do not live anywhere near your investment property.
“You do need eyes on the ground and local knowledge for tradesmen,” she says.
“My advice would be to choose an agent who provides you with quarterly inspection reports and who has a property management team who are qualified and trained. Make them earn their commission. I enquired with another national name local agency and was told that they did do this. Their commission was higher than I was paying but I think it is worth it if you get your property looked after correctly.”
