Hi All, I'm Yong-Long (most people just call me Yong), I'm a good mate of Tien and we've known each other for almost 20 years. Since Tien has started Box Property Management he has been looking for new ways to help landlords and tenants alike.
Here's where I come in. Tien recently asked me to share some of my experiences from my 15 years of investing in the Perth property market. He knew I used to blog about this stuff and like sharing and teaching people so it worked in his favour.
Basically I've purchased and owned multiple properties in Perth. I've subdivided, I've done a couple of property development, a simple divide and build and a demolish and build. I've even tried to buy a commercial property and tried to develop a 8 unit site which didn't quite work out. i.e. hopefully you can learn from what I've done, my mistakes and improve your portfolio
I'll share more over the weeks, months, maybe even years if you guys like what I'm sharing. That's it for the self intro.
Today I'm writing about Property Management Fees in Perth, WA. Yes I had to make that clear because I noticed Perth Management Fees in Perth is different to the east coast. It's just more expensive here. it's just like coffee cost $4.5 In Perth and $3.5 in Melbourne or Sydney.
Property Management Fee Structure
I've used 4 property managers in Perth in the past and they all have a very similar fee structures for the fees that always occurs.
Property Management Fee (~9% + GST)
Leasing Fee (2 weeks + GST)
Lease Renewal Fee ($100-200 + GST or 1 week + GST)
Quarterly Routine Inspection Fee (~$50-100 + GST / inspection)
Bond Inspection Fee ($100-200 + GST)
Admin/Sundry Fee ($5-10 + GST / month)
Annual Tax Statement Fee (~$50 + GST)
It's crazy Property Managers charge all these fees! It's good for the Property Manager, but very bad for landlords! One thing investors need to look out for is property managers sometimes charge fees that they shouldn't charge to you! I know that has happened to me and I'm sure it's happened to you. (This is why a simple flat rate fee eliminate overcharging)
Property Management Fees Example
I have a property right now that is having some issues so I can't quite move it over to Box Property Management, but here's the numbers on it
Rental Income of $360 per week (pw)
Property Management Fee ($35.64/week)
Leasing Fee ($792)
Lease Renewal Fee ($165)
Quarterly Routine Inspection Fee ($99)
Bond Inspection Fee ($220)
Admin/Sundry Fee ($6.6)
Annual Tax Statement Fee ($44)
My Example
This property was leased in Dec 2017 and was recently renew this year. So lets have a look at the numbers from an investment point of view.
Income:
Rental $18,720 ($360pw x 52)
Expenses:
Property Management Fee ($1,853.28)
Leasing Fee ($792)
Quarterly Routine Inspection Fee ($396)
Bond Inspection Fee ($220) <= I did have to pay this because the previous tenant vacated
Admin/Sundry Fee ($79.2)
Annual Tax Statement Fee ($44)
My Returns:
Net Rental Income for 12m = $15,335.52 ($18,720 - $1,853.28 - $792 - $396 - $220 - $79.2 - $44)
Now here is where Box Property Management simple fee structure comes in.
Yes I am promoting Tien's business, but what are friends for and if the numbers stacks up from an investment point of view, I don't see why you might shouldn't increase your returns too.
Box Property Management Fee structure
Rental: $18,720 ($360pw x 52)
Property Management Fee: $2,059.2 (18,720 x 11%)
Advertising Fee: $110 <= Yes Tien does charge this and Yes I did ask Tien about whether this can be included in the 11% that he charges and he said No. He said its because he actually has to pay to get the property listed. I actually did some research and Googled it to make sure he wasn't pulling my leg and it actually does cost around $99 so I thought this was reasonable, but you can be the judge.
My Returns with Box Property Management
Net Rental Income for 12m = $16,550.8 ($2,059.2 - $110)
Conclusion
Property Management Fees in Perth, WA is crazy expensive!
In my scenario I would save $1,215.28 by switching to Box Property Management.
I hope there's a comment field below, if so let me know what you'll like me to write about next.
Update 28 Feb 2019: Just to let you know, I have moved this property over to Box Property Management to manage now.