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Behind the Numbers: Perth Property Management Fees Explained.

Posted by Justine Valender on 08/09/2023
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Investing in real estate can be a exciting venture, opening doors to the possibility of financial growth and security. Yet, this exciting journey is not without its hurdles. One challenge even for the savviest of investors and landlords is the balancing of cashflow and rental income stream. Managed correctly, the rental income will assist in paying towards property-related costs – from mortgage repayments to maintenance, shire rates, water rates, and more.

Property management companies offer a range of services to lighten the load for landlords,  not only managing  the property but also helping landlords manage the rental cash flow; by disbursing and holding rent to cover maintenance, shire rates, insurance, strata rates, and other associated expenses.

Understanding Property Management Fees

Most Property manager fees operate on a straightforward principle: they set a % fee which is then calculated based on the rent collected from tenants. Whether tenants pays on a weekly, fortnightly, or monthly basis, the property management fee is charged once the rental money reaches the trust account.

Fee = Property Management Fee (%) × Rent Fee = 9% × $400 Fee = 0.09 × $400 Fee = $36

So, the agency’s fee for managing a property with a weekly rent of $400 at a 9% property management fee would be $36 per week.

Let’s consider the scenario where the rent increases to $450 per week. If the property management fee remains at 9%, we can calculate the new agency fee as follows:

Fee = Property Management Fee (%) × New Rent Fee = 9% × $450 Fee = 0.09 × $450 Fee = $40.50

In this case, if the rent increases to $450 per week, the agency’s fee would be $40.50 per week. As the rent amount goes up, the property management fee also increases accordingly, maintaining the 9% rate applied to the new rent.

This process is automated, with the remainder of the funds being disbursed to the landlords or if instructed by the landlords, towards property-related expenses. While many agencies tend to disburse landlord payments monthly, at Centurion Real Estate, we go the extra mile. We believe in empowering our landlords with prompt and consistent cash flow.

Hence, we “pay out” to landlords every Friday. This approach ensures that landlords have access to their funds in a more timely manner, enhancing their financial convenience and streamlining their investment experience.

Centurion Real Estate’s Tailored Approach

Centurion Real Estate we understand that no only do landlords need frequent cash flow that no two landlords are alike, and their needs can evolve over time. To address these requirements, we offer our landlords two packages: the “Investor Assist” and the “Elite” package. Each of these options is designed to cater to specific scenarios.

1. Investor Assist: The Pay-As-You-Go Option

The “Investor Assist” package is designed for landlords who prefer a more flexible payment structure and want to pay only for the services they use. This approach is especially suitable for landlords who have a long standing tenant, or family member in place.

Key features of this package include:

  • Customization: With the pay-as-you-go model, landlords have the freedom to select specific services as needed. This option allows for tailoring the management approach to the unique circumstances of the property.
  • Cost Control: Landlords can exercise control over their expenses by opting for only the services that align with their immediate needs. This makes it an attractive choice for those who want to manage their cash flow more closely.

2. Elite: The All-Inclusive Option + Letting Fee.

The “Elite” package is geared toward landlords seeking a comprehensive and hands-off property management experience. This package includes a suite of services that cover virtually every aspect of property management.

Notable features of the “Elite” package are:

  • Simplicity: With a single, all-inclusive fee, (after the tenant has been placed and letting fee deducted) landlords enjoy the convenience of having every property management aspect covered. This eliminates the guessing game.
  • Easier Cash Flow: The predictable  fee of the “Elite” package simplifies financial planning for landlords. This stable cash flow can be particularly beneficial for those who prefer a hassle-free investment journey.

Tailoring Services to Unique Scenarios

Centurion Real Estate’s real strength lies in its ability to adapt to unique circumstances. We understand that life is unpredictable and that landlord situations can change. For instance, if a family member moves into the property, the services can be tailored to accommodate this change. In such cases, the “Investor Assist” package might be a better fit due to its flexibility.

Don’t Base Your Choice Solely on Fees: The True Value of an Exceptional Real Estate Agent

While agencies fees vary, and some may charge less example 8% this might initially appear more cost-effective, the marginal difference of about 1% equates to only around $0.57 less per day. However, it’s crucial to recognise that the potential expenses of ‘bad property management’ far surpass this. When you break down the costs on a day-to-day basis, it barely amounts to the cost of a cup of coffee.

It’s advised to speak to multiple agencies and see how they structure their property management department, to ensure they will protect your property whilst delivering a high level of service. It’s worth speaking to each agency and spending the time upfront, interviewing them, so you can see what you are getting for your money.

In comparison, you will most likely find those managers that are cheaper or willing to heavily discount their fees, usually can’t win a landlord over on service and experience alone. If you choose an agent due to their cheap fees, it may end up costing you much more down the line with long vacancy periods, tenant damage, or unpaid rent, to mention a few.

Conclusion

What sets Centurion Real Estate apart isn’t just our expertise; it’s our dedication to your success. Whether you’re an investor seeking a customised approach or someone looking for a comprehensive solution, Centurion Real Estate’s package options offer the flexibility and services needed to navigate the complexities of property management with confidence.

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