Increasing your fees
A Form 6/20A gives you the right to state your fees and you are free to negotiate these within legislation. Of course there are industry standards which need to be reflected however as you are not a Real Estate Agent you simply cannot say “oh well we didn’t get that one, we will try for the next”. Most of you can only obtain managements from within your complex. When you miss out on one ….it hits you hard.
In saying that you need to believe in yourself and your ability and not undersell yourself. Inflation is a term that we are simply used to hearing along with the GFC. “The pair of jeans I bought last year just isn’t on sale this year due to inflation”……..”We have not had a price increase in 5 years and therefore due to inflation we have had to increase our cost.” Sound familiar….
Why can’t you do that too? Surely you have purchased new booking software, PABX system, procedural system, stationary something that makes your service compliment your fee structure.
Below is an extract letter from our Manage It Right system that you can use if you wish to increase your fee.
RE: INCREASED FEE – (address)
Firstly everything is going well with your investment property. The tenants are paying rent in advance and we have had no complaints.
We value you as a landlord and would like to thank you for choosing us to manage your property.
We pride ourselves on offering a superior level of service and have made the decision that due to this we have reassessed our current fee structure to compliment the service that we offer you.
Our fees have not been reviewed in quite some time, they have slipped below industry standards and you will find a new management agreement with these fees outlined on (PAGE number)
Please sign where indicated and return the new agreement to me at your earliest convenience.
If you have any further concerns please do not hesitate to contact me on (email/phone number).
This leads me to industry standard…..
MANAGEMENT FEE: QLD & NSW Permanent rentals can drop to as low as 6.6% however industry standard is still 7.50% Adelaide is about 8.8% and WA is around 9.35% (all plus GST), Holiday QLD is still approximately 12%.
Please keep in mind this fee is property negotiable – If the property requires a lot of maintenance, the owner needs to keep the rent low or the owner is simply difficult….more stress and work for you = get paid for it!
LETTING FEE: QLD is one week’s rent plus GST other states can and will charge up to 2 weeks plus GST. If it means gaining a new management try and negotiate to half a week’s rent plus GST.
LEASE RENEWAL FEE: This is the most undercharged fee of all…and easiest to obtain. Almost as much work goes into a lease renewal than a new tenancy. How long will you spend on administration, getting smoke alarms checked, liaising with owners on rent increases?
Industry standard is anywhere from $55 to a full week’s rent in some states. Personally I feel a full week is too much as you have not had to do the application process for a new tenant however half a week’s rent I believe is fair considering the amount of hours it would take and you need to cover a wage to perform the task.
Many of you will not be charging this. Based on $150 per property, if you have 30 properties under your management and each tenant renews every 6 months – you have given away $9000 per year.
ADMIN FEE: $5.50 minimum as great as $12.00 per month
ROUTINE INSPECTIONS: These are not commonly charged in Management Rights due to “you don’t have to go far shouldn’t it be covered under your management fee”. I tend to agree…however there would be nothing wrong with you charging a small administration cost for the report…i.e. $11.00
TRIBUNAL, REFURBISHMENT & INSURANCE FEE: Industry standard remains at $55 per hour.
Remember to ‘sell’ and believe in your ability. I guarantee when you roll out these fees that you will get phone calls from disgruntled owners, however if you can justify the reasons you will surprise yourself.
If you would like any more information or just want to discuss possible outcomes please don’t hesitate to give me a call.
Lauren Kropp – Director – Real Strategix.