Owning an investment property is a great way to build a nest egg for the future. But you don’t want to see that egg swallowed up by the many and varied fees it can cost you to manage your property. Understanding your management fees can make a big difference to your future returns.

Property management fees are the costs your property manager charges you for the service they provide. Fees are usually charged as a percentage of rent collected, and will vary depending on your property manager. On average you can expect to pay 7% of rent.

On top of the management fee, you might also be charged a range of other common fees. These can be charged as a flat fee or based on the rent collected. Average common fees you can expect to pay include:

• Letting Fees – 1.5 weeks rent
• Internet Marketing Fees – $300
• Lease Renewal Fees – 1 weeks rent
• Lease Preparation Fees – $55
• Monthly Admin Fees – $11.50
• Annual Statement Fees – $55
• Professional Photos – $150
• Signboard – $99
• NCAT Fees – $110 per hour/$260 flat fee plus costs.

The real cost of management fees

Let’s look at the fees in real terms. Based on an average rent of $550 per week for a Sydney apartment, and a management of 7%, a traditional property management agency will charge $167.29 per month. Add to that all the other fees and charges and, based on the property being leased out to new tenants once during that year, you’re looking at $4,439.50 in fees during that year. That’s over 8 weeks’ worth of rental income you’ll never see.

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