Most real estate investors use a property manager to make sure tenants maintain the property and continue to pay rent.
They assign the problems of managing property to another party to avoid the stress of chasing rent, arranging repairs and quotes, and staying up to date with changes to the Residential Tenancies Act.
Read more to find out why you should use a property manager.
What a real estate property manager does
At Bourkes, we are real estate property managers for a range of clients with investment properties. It’s an interesting and challenging role that involves initiating emergency repairs, dealing with tradespeople and managing tenants throughout their lease period.
There are five main stages to our property management process.
Stage 1: Meet with you
To begin, we meet with you to appraise your property‘s condition and rent potential. We also recommend any repairs or improvements the property may need before we show it to prospective tenants.
At this meeting, we outline our fees and services, which we also send you in writing.
If you’re happy to proceed, we record our agreement using a standard REIWA document.
Stage 2: Present the property
Before offering the property to prospective tenants, we organise any necessary tradespeople for:
- carpet cleaning
- renovation or maintenance
- general cleaning
- professional photos
- other repairs.
Once the property is repaired, clean and ready for advertising, we upload property photos and text to the major real estate portals, such as:
We also prepare a property condition report, which details the exact condition of every room in the property when it is handed over to a new tenant.
We recommend that you get landlord protection insurance to cover you if tenants default on their rent or maliciously damage the property. We also advise local authorities to send rates notices to our office.
Stage 3: Show the property
We advertise open homes and viewings using the above web portals and Inspect Real Estate software.
We also answer all phone and email queries about the property, and our Leasing Department opens up the property for prospective tenants to view.
Stage 4: Organise the lease
After inspecting the property, prospective tenants complete application forms with all their details.
We check their work and personal references, and references from previous rental agencies. We also check whether they’re on any national or state database that records previous tenancy indiscretions.
If we’re happy to recommend the tenant, we call you and ask for your approval. If you agree, we produce the standard REIWA lease agreement with our annexures to protect you.
We collect four weeks rent as bond and two weeks rent in advance, and lodge all bonds with the WA Government Bond Administrator.
Stage 5: Manage the property
Throughout the lease period, the property manager receives all rents fortnightly or monthly and arranges any maintenance required on your behalf.
We use the rent money to pay strata company levies, council rates and water rates (if instructed), and pay the remaining funds to you at the end of each month.
We arrange quarterly inspections to ensure the tenants are maintaining the property, and conduct rental reviews every six months to tell you whether the rent could be adjusted.
At the end of the tenancy, we arrange for the tenant to vacate and leave the property in good condition. Sometimes we have to terminate a tenant’s lease, perhaps if they’re not paying rent or maintaining the property.
If necessary, we can also attend the Magistrates Court on your behalf to ensure the tenant repays any outstanding rent or repair costs out of their bond.
Stage 6: Organise a tenant vacate
If a tenant notifies us that they intend to vacate the property, we give them a vacating checklist.
We conduct a final inspection, where we take photos of the property and compare them with the original property condition report. The tenant must fix any new damage or issues, or we deduct the cost of the work from the bond.
We also arrange any repairs, maintenance or cleaning needed to bring the property up to the original standard.
Once we’re satisfied with the property’s condition, we return the bond to the tenant and find a new tenant for the property.
Cost of real estate property management
As with all professionals and contractors, there is no scale of fees for property management (as there was in the past). All companies have slightly different fees.
What management fees cover
Our management fees are based on a percentage of the rent we collect to cover all the tasks involved in managing a property.
If we don’t collect any rent, the agency doesn’t get paid. This is an incentive for property managers to be strict on tenants too!
The fees generally cover:
- rent collection and remittance
- rent reviews
- arrears management
- property maintenance
- correspondence and communication
- breaches and notices to tenants
- bond lodgement and disbursements.
Fees can be quoted as a ‘gross fee’ on rent collected or a ‘management fee plus other costs’.
Gross fees can be 10–15% of the rent. This fee type might be better if the property has continual tenant turnover.
Management fees are usually 7–9% of the rent, plus other costs. This fee type is best if you have a long-term tenant, as you may not need to pay the other management costs, such as:
- property condition report (about $200-300)
- leasing fee to find and document a new tenant (usually two weeks rent)
- lease renewal fee to review the rent, make recommendations and produce a new lease (usually one weeks rent)
- quarterly inspections ($77–99 each)
- outgoing inspection ($200–300).
Remember: the property agent with the lowest fee isn’t necessarily your best option. You should look at other factors, like how many properties they manage. The lower the number, the more attention you’ll get. The industry standard is about 100–120 properties per property manager.
What a lease fee covers
We charge lease fees to cover the tasks involved in finding a new tenant for a property. The fee is a percentage of the weekly rent.
These tasks include:
- getting the property ready
- getting professional photography
- creating advertising copy
- conducting open homes
- conducting private viewings
- collecting and processing application forms
- checking references and tenancy databases
- getting owner approval
- producing the lease agreement
- lodging bond.
Are property management fees tax deductable?
The good news is that you can deduct these fees from your income and pay income tax on the net figure (if appropriate). So, in a way, the ATO is helping to pay for your property manager!
Do you have more questions about property management or need assistance with your property? Contact Alan Bourke or anyone from Bourkes on (08) 9474 2000.