Management Fee % vs Fixed Term


(Lia Storer) #1

Hi All,

I run my own business and for the last couple of months I have been toying with the idea of changing from the old trusty % of rent management fee to a fixed amount.

Just wondering how many other agents do this and those that do does your fixed rate take in everything (as in letting fee, routine inspections if applicable) or are they still separate?

Thanks
Lia


(Adam Hooley) #2

Hi Lia, One thing to consider is that the current % format allows for you to get an increase in $ fees as rents increase. Traditionally we have used this increase to offset increases in operating costs. If you had a fixed fee you would be restricted to your flat $ rate. Over a period of years, you will be doing yourself out of quite a bit of money.


(Lia Storer) #3

Hi Adam,
The rents don’t increase much here (I’m in Gippsland, so 2.5 hours South East of Melb). What I was thinking is doing an average and then a round up.
So, our standard rent for a 3 bedroom basic home is $280-$290 per week, then letting fee for me is 1.5 weeks rent plus gst. So one letting fee and a years management fee is about $1800, so round up to $2,000 plus gst for a flat fee.

Another thought is this is for rentals up to $350 per week, anything $350-$500 per week is a higher flat fee. These properties are less common though and for every 30 average properties, you may get 1-2 higher priced. So I don’t think I will be doing myself out of much moving forward. Plus there is nothing to stop me from raising the flat fee every 5-6 years either.