We often get asked…
How much are Property Management Fees? or
How Much are Leasing Fees? or
What Percentage do Real Estate Agents charge in Melbourne?
Rental Property Management Fees are negotiable so asking “how much does a property manager cost” is not a great place to start when selecting the best agent for you. But it’s an important one, so here are the answers and some other things to consider.
Price is not always a great indication of quality (but it has some correlation) so it is important to understand the experience and quality of service you will receive. Real estate agent’s property management and leasing fees vary between cities, suburbs, or towns, as well as between different types of property. Larger cities like Melbourne tend to have lower fees, while higher service agencies for shorter stay or older properties (more maintenance) may incur a slightly higher fee.
Some agents provide an all-encompassing fixed dollar fee while others break it down with a percentage for specific fees of each property management and leasing function. Melbourne real estate agents tend to provide a specific fee for each main function of managing and leasing your property. The separated fees ensure you are only paying for what you get. For example, if a tenant remains in a property for many years there is no need for leasing so you shouldn’t be paying for it.
Quality advice from the agent through your ownership is generally free (included in the fees) but it is one of the most valuable parts of Property Management services and can save you thousands of dollars and lots of troubles so don’t undervalue it.
The main components of property management and leasing fees and the services are as follows.
How much are Property Management Fees in Melbourne?
The Property Management fee is the main part of all the costs associated with managing a property. The services include;
- Collecting and disbursing rent
- Attending to all maintenance issues
- Regular property inspections
- Servicing the renters and owners needs
- Dealing with lease transfers and renewals
- Reviewing the market rent and issuing increases
- Facilitating safety checks for gas, electrical and smoke detectors
- Working with the owners corporation on building issues
The fee for these services is charged as a percentage of the rent paid (so obviously while your property is vacant there are no fees charged)
In Melbourne, property management fees range from 5% to 8% of the rent.
How much are Leasing Fees?
Finding and keeping great renters is one of the most important functions for investment owners as well as property managers. It starts from when your apartment is first being prepared for lease, right through to the renters induction to your apartment. Some of the specific functions include.
- Preparing the apartment’s presentation including any works required.
- Assessment of the market rent
- Creating an online presence with great photos and social media
- Promotion of your apartment to the agent’s renter database.
- Interactions and casual interviews with renters at open for inspections
- Following up potential preferred renters and encouraging an application
- Processing all rental applications with reference and financial checks.
- Obtaining the owners approval for the selected renter
- Recording and documenting the apartment condition at the lease commencement.
- Documenting and executing the lease
- Collecting the Bond and first month’s rent.
- Logging out keys and completing the renter induction to the apartment
The specific real estate agents fee for this service is calculated as a multiple of the weeks rent. For example, if the fee is 1.5 weeks, and the rent is $500 per week, the fee will be 1.5x$500=$750.
In Melbourne, leasing fees range from between 1 weeks rent to 3 weeks rent.
The higher end of the range being for a lease only service.
How much to pay for Advertising and Marketing?
These costs generally relate to the cost of engaging and coordinating services outside of the real estate agency.
The specific cost will vary significantly depending on the quality and level of exposure of the marketing. For example, social and internet advertising can be free if it is just posted on the agents own platforms but cost more if the social media is paid ads and internet marketing is the top profile listing on realestate.com.au or domain.
Professional photography – $100 to $200
Floorplan – $100 to $150
Internet advertising – $150 to $500
Social media / Google ads – $25 to $150
Video walk-throughs – free to $200
What are the other costs and fees?
From time to time there can be other costs incurred and the services depending on many things, but the specific items may include.
- Processing and payment of accounts such as rates, OC fees and bills.
- Cutting keys and ordering electronic fobs.
- Tribunal (eg VCAT) applications, preparation and appearance fees.
- Owner insurance premiums.
- Gas, electrical safety checks and smoke detector servicing.
- Lease renewal fee (documenting a new lease for an existing renter).
- Preparing an ingoing condition report.
Other considerations
Always match the fees with the quality of service, advice, experience, systems, people and support offered so you are not paying too little and getting poor quality or paying to much when you don’t need to.
