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The Real Cost of Low Management Fees

By Michael McMahon

If you want to cut costs, don’t start by cutting the price of the person managing your costs. Cut that cost and you will no doubt pay a higher price.

Some companies are charging just 5% to manage your property. At an average weekly rent of $450, that’s just $22.50 per week. The real question is, ‘What does that low cost actually buy you?’

More and more we are seeing property managers reduce their fees to win new business. Although this may seem like a good deal for the client at the time, these low-fees can prove to be quite costly in the long-run.

A good property manager is worth their weight in gold. They work with their landlords and tenants to build strong, long-lasting relationships; they are well-trained, responsive, and offer personal service and regular communication; they have a balanced portfolio of properties they manage which enables them to give each and every client the same high level of care; they make sure rent is paid on time; they are proactive in renewing leases; and they take care of your asset and investment.

If you are looking for ways to cut costs, an experienced property manager will be able to work with you to find ways to minimise your property costs, and maximise your property value.

In so many cases, you get what you pay for. Low cost usually means high risk.

  • How much care and attention will your property receive?
  • Does your property manager know the true rental level of your property?
  • Is your property manger recommending a tenant they have fully checked out? Or are they leasing your property to the first tenant that comes along?
  • Is your property manager being paid a fair and reasonable salary? Ask the question, you may be surprised at the answer.

If a property manager is charging low fees, be sure to find out:

  • How often will your property manager be in touch?
  • How many properties are in their portfolio?
  • Does your property manager “actually” go to your property on a routine basis?
  • How long have they been working in their role? Does the company have high staff turnover?
  • What are their typical response times?
  • Do they have good relationships with their landlords and their tenants?

Losing a tenant, or not being aware that a tenant is not renewing their lease until the last minute, are high-cost risks. If you are considering using a low cost property manager, be aware of the risk and potential costs involved.

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