The Cost of Managing a Property

Interesting thing happened last weekend - I got a text from my hairdresser to advise that due to costs - the cost of haircuts are going up

What has this got to do with Property Management I hear you say…

Well - lots really

When was the last time you increased your fees in Property Management? Do you know how much it costs to manage each property - ie your break-even point?

Why are we so scared in Property Management to raise our fees? What would happen if as an industry as a whole - we all started to raise our fees? They would become the new norm I think.

And just a last say on the haircut - as a woman - the cost to maintain my locks in a year probably equals what is costs to manage an average investment property a year - and with the current prices in Australia - most investment properties are worth $500k or more - and what I am thinking is it takes a lot more skills to manage an investment than to cut and colour someone’s hair

Food for thought

As an industry - lets start and raise our fees to meet the value of tasks required to manage an investment


Well said Louise, When I work with clients I run an exercise of above the line & below the line for their entire portfolio, and the results are staggering. The first component is to establish “Average Cost of Managing each Property” - then creating a profit buffer - this then becomes the benchmark - extract the portfolio to run an above / below the line exercise to see how many properties are 1./ Below the Avg Cost, 2./ Then those that are above the Avg Cost, but below the benchmark (not making enough profit), 3./ and those that are above the benchmark - this is a really good way of grouping the portfolio - it is then easy to identify the properties that are not profitable and may be sold to a competitor for cashflow injection as a small parcel, may be then the target for your sales team to try and convert those properties into quick cashflow by was of sales commission, or a targeted list to increase the fees - The staggering part about this process, is that so few Business Owners have ever done this!! But what is more staggering would be the number of business owners that may read this post & reply, think “now that is a good idea”, but will still not do it. The flow on effect of this, is that when I do this with my consulting clients, it justifies the Fee Maximisation process that we undertake for their existing managements, but it then also creates a new minimum expectation for any NEW Business brought on from the team or BDM’s and the impact to the Rent Roll Value is staggering - if someone reads this and does the exercise - I would be very much open to hearing from them to hear what they found, and whether the rent roll metrics were as they thought - each time I do this with clients - the response is the same from the Business Owners - “I never knew we had so many properties in the portfolio that were not profitable”"!!


Fantastic Michael

We all should know our benchmark

I have just completed this exercise on 3 rent rolls and it certainly has opened some eyes

If everyone did it, then our fees would look somewhat different

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We have also run a water level exercise to set a level for onboarding properties, and check existing properties. Particularly after rent reductions in the aftermath of Covid lockdown, it is slightly horrifying to see the increase in properties just on and below the level, but a great exercise to work through where improvements can be made. Also an opportunity to check for “A,B and C clients” based on a number of other factors (is the owner good at authorising repairs & maintenance, is the property at a good standard, is the client good to deal with?).


Hi everyone. We went through this exercise in forensic detail! We had properties on a wide range of fees, for all sorts of legacy reasons. Some managements werent profitable and were being propped up by others. In additon to that, we were now taking on a lot more responsibility and providing more value than the business was when the previous management fees were agreed.

We did two things:

  • raised our rack rate for new managements
  • sent an email to all LLs telling them that the new rack rate was X% but because they are existing and loyal customers we would be increasing them to Y%. That kept our customers happy - softening the news of a fee increase.

Out of 700 landlords, only 2 replied questioning the rise and after a phone call to explain our reasons they were happy to pay the small increase.