Real Estate Agents and Property Managers

Brisbane - Gold Coast - Sunshine Coast

What's the Difference?

Real Estate Agents and Property Managers are the experts you engage when you are looking to invest in properties.

The difference between the two can be confusing because many real estate agencies also offer property management services.

Real Estate Agents and Property Managers each have an important role in locating potential residential investment properties and maximising your investment. However, if you're serious about investing in residential property and/or growing a property portfolio, you need to understand the fundamental differences between them and how each can assist you in achieving your investment goals.

Real Estate Agents and Property Managers require similar training and industry certification through a combination of on-the-job training under a licensed real estate agent and through the completion of industry courses and examinations.

Real Estate Agents

The relationship you have with a real estate agent is usually a transactional one that occurs during the sourcing, purchase and settlement of a property. A good real estate agent will listen to your property criteria and research and present a range of suitable properties, using their knowledge and expertise.

They provide relevant sales related and pricing advice on each property so you can make an informed investment decision.

Real estate agents may offer property management as a secondary or supplementary service, while property managers are solely focused on managing your property.

Real estate agents generally work on a commission basis, getting paid a percentage of the properties they sell. So, while a real estate agent may have a ‘property management department', traditionally their primary focus is to gain sales and boost their sales volume.

However, the advantage of buying an investment property through a Real Estate Agent, who you then engage as the property manager, is their intimate knowledge of your criteria and interests in assisting you firstly to secure a suitable property, and therefore their ability to manage and grow your investment in that same property.

Potentially, your relationship begins with the Agent in the lead up to the purchase of your investment property, then the settlement of the property, through to the ongoing management of the property and eventually perhaps the future sale of that investment property.

Property Managers

The relationship with a dedicated 'property manager' usually begins once you've purchased a property and you are ready to rent it. While real estate agents may offer this service, it is not always at a level offered by a professional and dedicated property manager.

Property manager relationships tend to be closer and conducted over a longer period of time with property investors. The relationship can extend into the support and development of a property investment portfolio.

Good property managers undertake all aspects of property management from vetting and selecting tenants; organising property maintenance and inspections; collecting tenant rental payments, arrears and increases; and providing timely, relevant market reports.

These activities can be complex and time consuming for a property owner. A property manager will assist you to build your property portfolio and ensure that each of your properties is managed effectively.

A specialist property manager will ensure your property is well tenanted, maintained and the rental income properly collected. They will also proactively investigate ways to grow the value of your property.

Property Management Fees & Payments

A 'landlord' is the owner of real estate - a rental house; an apartment building; or a leased commercial or industrial property.

In relation to house and apartment rentals, a property manager's fees usually cover the vetting and sourcing of quality tenants and managing the lease on a day-to-day basis. Property managers receive a leasing fee ranging from 50%-100% of one to two month's rent for finding and placing a tenant.

Generally, property management fees are charged as a percentage of the weekly rent. Fees vary between States and depending on where your house is located, you can expect to pay a property manager from 5% to 12% of the weekly rent collected from residential tenants or vacation letting. Holiday apartment rental properties may have a live-in property manager such as is often the case on the Sunshine Coast and Gold Coast, Queensland. Generally, a property manager will not spend money out of their own pocket for repairs and maintenance without first being funded by the landlord. Some managers charge a percentage of repair costs, often 10 percent, to compensate them for the hours spent on inspecting tenanted properties and dealing with quotes, tradies and maintenance and repairs etc.

In strata titled apartment buildings, there is usually a separate monthly 'Body Corporation' fee to cover basic maintenance and care of general use areas, building exteriors and structures that apartment owners must pay, whether they live in the apartment or are landlords renting out the apartment.

Landlords should aim to negotiate the typical property management fees down to just two types of fees: a new leasing fee and the monthly management fee.

Most experts recommend that Landlord's plan for a maintenance budget of anywhere between 10 to 15 percent of the annual property rent collected.

In many cases the agent's service fee and repair and maintenance costs are tax deductable.*

*Negative gearing occurs when the cost of owning a rental property outweighs the income it generates each year. This creates a taxable loss, which can normally be offset against other income including your wage or salary, to provide a tax saving.

source: https://treasury.gov.au/review/tax-white-paper/negative-gearing

The Tenants' Obligations

A property manager is responsible on behalf of the landlord for ensuring that the tenants fulfil their obligations.

Some tenancy obligations include:

• paying rent on time
• taking good care of the property
• tenants are responsible for keeping the property/room clean and in good condition.
• not disturbing the peace, comfort or privacy of neighbours
• speaking with the landlord/agent if there are any concerns with the tenancy, including any changes to who will be living in the property
• keeping all documents about the tenancy (e.g. entry condition report, tenancy agreement, letters, rental bond and other receipts) together in a safe place.

source: https://www.qld.gov.au/housing/renting/tenants-rights-responsibilities

Property Manager Responsibilities

In Queensland, you can appoint a real estate agent, residential letting agent or certified property manager to manage your rental property. Always ask to see an agent's licence before appointing them as your property manager.

Generally, all management fees and charges should be agreed to first and then put in writing.

You can only appoint a real estate agent/property manager by filling in a property agent appointment form (PDF).

A property manager must:

• respond quickly to requests for maintenance or repairs
• act in your best interests, such as when getting quotes
• make sure any repairers (such as builders, carpenters or electricians) have relevant licences
• have a procedure for handling complaints (and comply with it)
• carry out inspection reports and inventories
• guide prospective tenants on their inspections (unless you tell them otherwise in writing)

You do not need to state an 'end date' for a continuing appointment/agreement with a property manager. However, either you or the agent can end an agreement by giving written notice to the other party.

You must give them a minimum notice of:

• 30 days
• shorter than 30 days, but only if both parties agree.

It is possible to enter into a new agreement with a new agent before your previous appointment ends. However, the agent must provide you with a written statement that you may be liable to pay commission under both appointments, or pay damages for breach of contract.

source: https://www.qld.gov.au/law/housing-and-neighbours/renting-and-owning-property/deciding-how-to-manage-your-investment-property/appointing-a-property-agent

Other responsibilities a good Property Manager will undertake include:

• Ensuring the property is compliant with current smoke alarm and swimming pool safety legislation.
• Minimise vacancy of the property (and the subsequent loss of rental income) while attracting and keeping good Tenants.
• Complete rental market analyses, review current and recent rental history, assess market trends.
• Seek landlord instructions on lease renewal rates and terms based on market rent conditions within legislative requirements
• Prepare new Form 18a General Tenancy Agreement and RTA Form 2 Bond Lodgement top-ups (if rent has increased).

Self-Managed Landlords

Some Landlords like to have a greater measure of control over their property investment in relation to finding tenants and collecting rent money. However, a number of the more onerous or time-consuming tasks that are required on an ad-hoc basis can be dealt with by a property manager on for a one-off fee for service.

The best real estate and property managers also offer Self-Managed Landlord services and packages.

For instance, in addition to the traditional property management relationship, Fox's Real Estate – Southport on the Gold Coast, provides the following choice of separate services, each with a one-off fee:

• Leasing only (finding tenant) - including entry condition report
• Entry Condition report only
• Routine regular Inspections – choice of 3 mths, 4mths, 6 mths or 12 mths
• Lease Renewal - negotiations with the Tenants
• Tenant vacating – including exit condition report

Fox's Real Estate also offers a Self-Managed Landlord Bundle for a capped annual fee that includes:

• Leasing (finding tenants); routine inspections; and tenant vacate or lease renewal services.

A 'Self-Managed Landlord' property management bundle may appeal to the more confident or pro-active residential property investor.