An article by Bob Walters
As an alternative to charging individual fees for specific services, many property management businesses have elected to have an all-inclusive fee of X% (plus GST) charged on a monthly basis covering all the services they provide for their clients.
The table below shows a few of the fees we can charge as an example of how an all-inclusive fee can make us money (see the returns on the longer tenancy periods, compared to that of 12 months).
Most fees are charged upfront when the lease is initially signed and many fees are never charged...do you go to the Tribunal for every property, for every tenancy? By showing the client the charges for the initial tenancy to actual management fee reflects quite high by comparison.
Some offices offer a couple of packages – different fees (packages) for different services i.e. Clients chose what they want and only pay for what they need.
Work out what the average tenancy period is for your properties (not the lease term) and see what numbers you can make work for you.
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Basic Example: |
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Rent (12 months) |
$350pw |
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24 months |
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36 months |
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Management Fee |
7% |
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7% |
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7% |
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Letting Fee |
3% |
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3% |
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3% |
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Lease Renewal Fee |
1.50% |
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1.50% |
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1.50% |
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Marketing Fee |
$100 |
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$100 |
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$100 |
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Administration |
$60 |
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$120 |
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$180 |
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Tribunal Attendance |
$150 |
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$150 |
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$150 |
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Total Annual Fees |
$2,409 |
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$4,020 |
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$5,631 |
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Actual |
13.20% |
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11% |
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10.29% |
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Alternative |
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Alternative |
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Alternative |
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All Inclusive Fee |
12% |
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12% |
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12% |
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Total Annual Fee |
$2,190 |
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$4,380 |
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$6,570 |
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Show how much your competition is really charging with all their “hidden” fees and how you can actually “save” the owner money by offering them a 12% deal.
The 12% deal actually makes the business more money, the longer the tenancy!
Benefits of an “All Inclusive” Package
- Profitability - input the percentage into your system and you only have to ensure rents are kept maximised. No need to keep reviewing other fees!
- Fee Charging - No fees missed, not charged ‘accidentally’ and no free services given out by the property manager without your knowledge.
- Rent Roll Value - Your rent roll is largely based on management fee income, and ‘other fees’ affect the value of the multiplier to a lesser extent.