Percentage vs Flat Fee Property Management

houseMore properties are rented now than ever before and there is demand for affordable high quality professional property management services. In the early days of property investment investors naturally managed their own rental properties and they pretty much did so without much external influence.

The RTA (Residential Tenancies Act) was their guiding force – and as long as they adhered to it that was the extent of their obligation. However with more people renting the bar has been raised. Rental properties are of a higher standard and the property management role has matured.

Property Management companies have risen out of nowhere and while they are not yet regulated in the same way Real Estate Agents are under the REAA (Real Estate Agents Authority) Property Management companies do have their own have code of conduct under independent Property Management groups such as the IPMA (Independent Property Management’s Association).

Property management companies either charge a percentage of the rental rate (usually around 8 percent) or a flat monthly fee. Discussion on PropertyTalk recently on the variances between flat fee and percentage fees suggested investors were really none the wiser as to which was preferred or which offered a higher standard of service.

Stake Property Rentals have opted for a flat fee. They offer $99 per calendar month. Shaun Thompson says their service is in hot demand and there’s no compromise on the service – quite the opposite is true; they go the extra mile for all their clients’ properties.

Your property manager should inject 100% into your rental property (regardless of) whether it’s returning $300pw or $700pw – end of story!

Their flat fee of $99 per month is attractive to investors with high-end properties. The savings per month can be substantial and Shaun offers this example:

In the higher rental income bracket, for example a rent of $500 per week , (the property management fee on a percentage basis) would cost approx. $162.50 with the average 7.5% fee. The flat fee would save $762.00 per year.

Most property management firms have opted for the percentage based fee and it’s likely this has derived from Real Estate Agents setting up property management services and using the commission based reward remuneration similar to their property sales business.

There is no correlation between service and fee type, you will still need to do your due diligence when electing a property management company to manage your rental property.

Written by Mobilize Mail for Stake Property Rentals

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