Helpful Tips

Fixed or Flat Fee Property Management services?

Aaron Athorn
Director & Business Owner
Phone:  (07) 3622 6436
Email: hello@collinsgregory.com.au

As a property investor, not only do you want quality property management but you also want value for money. This is why some investors look for flat fee property management services. In this article we will look at our view of flat fee property management.

How a flat fee property management structure works

There are several property management providers through Ipswich and Brisbane that offer flat fee property management structures. However, this “one size fits all” approach isn’t always cheaper than a percentage-based model for property management fees.

A flat / fixed fee property management model may also present some challenges, as it can often remove the ability for a Property Manager to tailor property management service to landlord’s individual needs, along with the specific requirements that would be best suited to a particular property or suburb. Flat / fixed fee generally means just that – a monthly or weekly fee that is the same for every property you own.

Our concerns with flat/fixed fee property management.

From our perspective, lower cost also means much slimmer profit margins for an agency offering a flat fee-type arrangement. This can often results in Property Managers becoming overworked as they take on more and more properties to offset their low fees.

The biggest impact for landlords, in our opinion, is that a Property Manager may therefore be unable to dedicate enough time to manage your property and cannot provide a proactive approach in regards to repairs and maintenance.

This is evident in Property Managers with portfolios of more than 130 properties. How could they possibly provide each property with the attention that they each require?

In our view, this approach may end up costing a landlord more in the long term.

  • more in maintenance costs because maintenance is reactive, rather than proactive.
  • more in lost revenue through longer vacancy periods. Remember that 1 week of vacancy can account for almost ~2% of your annualised return.
  • poorer quality tenants, due to being overworked. Property Managers may not have time to adequately check and background review good quality tenants……poorer quality tenants are easier to find!

We prioritize exceptional service over overloading our team. We are able to offer a full property management service at a reasonable (and value adding) price point. We know that over the long term, this is a better outcome for landlords.

What should you look out for?

We speak with prospective landlords all the time, and it is common to hear about the issues experienced elsewhere by our competitors. If you are reading this, you have probably received this type of service as well:

  • not returning calls or replying to emails;
  • not attending to urgent repairs;
  • poor tenant selection practices; and
  • not conducting REAL inspections.

In situations such as these, there are reasons why people look elsewhere for better quality. Landlords become upset with the poor service and in some cases, only after another agent costs them thousands of dollars with a bad tenant and also not doing inspections.

Eventually after a period of time (and pain!) and landlord will come to us where they will find that the small amount extra in fees is worth it to get what they were really after in the first place – peace of mind.

Do you have a question about your investment property? Get in touch and see how Collins Gregory Real Estate can help.

Call Aaron on (07) 3622 6436 to discuss your helps today.