Of the approximately 2 million Australian property investors, it is estimated that 75% will work with a property manager to ensure that their investment goes smoothly. There is no ‘one-size-fits-all’ approach to deciding to use a property manager or not, so this week we explore the pros and cons of such a decision.
A property manager will typically charge anywhere from 5 – 12% of the rental income received to look after your investment. Sydney and Melbourne are on average at the low end of this range, while Perth and Adelaide are at the higher end. Here is a look at how each state compares when it comes to property management fees:
- Sydney: 5 – 8%
- Brisbane: Average of 9%
- Melbourne: Average of 6%
- Adelaide: 9 – 11%
- Perth: 8.5 – 11%
- Canberra: 6 – 8%
- Hobart: 5 – 10%
Let’s explore the pros and cons of a property manager:
- Tenant Evaluation: Your property manager will analyse and assess all new applications for tenants. This can often include reference checks, employment checks, and reviewing whether they will be suitable for your investment property. You can also work with your property manager to build a criteria for the types of tenants that you wish to have in your property.
- Tenant Database: A good property manager with a strong presence in your local area will typically have a large database as well as advertising network to ensure that you can minimise your vacancy rate and avoid lost rental income as much as possible.
- Bill Management: Your property manager will receive and pay your council and water rates for you, and will send you a copy of the notices if you require it. This can be quite a time saver for you.
- Local Rental Knowledge: A good property manager will be able to assess the current rental market for you, and advise on when you should look to increase or decrease your rent.
- Routine Inspections: Your property manager will conduct regular inspections of your property for you and provide you with a report outlining the current state of the property, as well as any required repairs or maintenance.
- Tradespeople Database: Your property manager will have access to a wide range of local tradespeople should you require one.
- Evictions and Late Payments: If your tenants miss rental payments, or in the event that they need to be evicted, your property manager will look after this for you. This can save you a great deal of time of stress.
- Costs: As we’ve already outlined, working with a property manager is not free and will cost you a percentage of your rental income received.
- Less Control: Some property investors don’t like to hand over control of their investment to a third party, so this is something that you’ll need to consider.
As we’ve already outlined, the key downside to working with a property manager is the costs involved, which is something that you’ll need to budget for if you decide to proceed down this path. If you’re unsure of which property manager to work with, speak with your mortgage broker as they will generally have experience with a wide range of options for you to consider.
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