Cutting Through the Fine Print of Management Fees

Why are property investors losing money on archaic fees when technology can do the same work for a fraction of the cost?" 

Join me, Samantha Eason, as I pull back the curtain on a practice that’s siphoning off investor returns—excessive property management fees for simple bill entry. We'll uncover how some agencies justify charging up to 10% of an invoice for a task that modern software like PropertyMe and Console Cloud can handle in mere seconds. 

In this episode of Talking Property Management, I emphasise the critical need for accountability and value-driven services in the property management sector. With technology advancing rapidly, agencies should be embracing tools that streamline processes—not using them as an excuse to impose exorbitant fees. 

We'll discuss the broader implications of these practices on investor returns and the importance of holding agencies to a higher standard. By raising awareness, sharing experiences, and demanding fair management, we can collectively advocate for change. Empower yourself with the knowledge to protect your investments from exploitative tactics. 

Thank you for tuning in to this critical conversation.

If you have any questions or scenarios you would like us to discuss on an upcoming episode, please email samantha.eason@exclusivelymanaged.com.au or visit https://www.exclusivelymanaged.com.au/

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Chapters

• 0:34 Excessive Property Management Fees Explored
• 8:44 Value and Accountability in Property Management

Transcript

Speaker 1: 0:34

Hi, it's Samantha Eason here with another episode on Talking Property Management, and today I wanted to pull back the curtain on an issue that's been quietly draining the wallets of property investors Exorbitant fees charged by property management agencies for something as simple as entering bills into their system. And yes, you heard that right. Some agencies are charging investors up to 10% of the cost of an invoice, and it's only to input the bill into their software. And why this is so frustrating for me. In today's world of automation, where tasks like these can be handled in under a minute, sometimes even 30 seconds, by the software that property management agencies use, this is not just outdated, it's exploitive. So let's break this down and explore what's really going on here.

Speaker 1: 1:46

If you've ever dealt with a property management agency, you know that keeping the property running smoothly involves a lot of moving parts. Maintenance, repairs, utilities and other services all generate bills and someone has to manage those payments. Now, traditionally, agents would charge a fee for this service. It made sense back in the day when someone physically had to handle the paperwork, write checks and keep track of everything manually. But I'm going to be very honest, we're no longer in that world. But I'm going to be very honest. We're no longer in that world. So we have numerous software platforms specially designed to handle property management tasks. Propertyme, for example, can upload and process bills in seconds. It's virtually automating the entire process the same with console, cloud and other systems out there and it includes minimal human intervention. Basically, you just need someone to check it. It is actually something your property manager can now do.

Speaker 1: 2:56

But I'm going to be realistic with this. Assuming that your agency is large, they will have someone in accounts because that's what they do. So even with that, why are there so many agencies still charging up to 10% of the invoice total for this task? And I'll put it into perspective. Say, a plumbing repair for your rental property costs a thousand dollars. An agency charging 10% for entering that bill would tack on an extra $100 for literally a few seconds of work, and that work is easily done by the software. And that work is easily done by the software. Now, $100 may not seem like a huge amount for a single repair, but imagine that this is happening across multiple properties and dozens of invoices each month and it adds up Over time. This can significantly cut into an investor's returns, and it's not just one investor, it's the whole range of investors that that agency is looking after. But here's the kicker the programs that actually handle this work. They often include it as part of the property management software suite that agencies are already using.

Speaker 1: 4:18

You know that $7, $8, $6 administration fee that you get charged on the month. That's what it's there for. The infrastructure is already in place. You're already being charged for the administration fees. The high fees are purely a profit strategy, a way to squeeze more money out of investors without adding real value. Now some of you might be wondering is it even legal? And the answer is yes, because you signed on your management agreement that you allow these fees.

Speaker 1: 4:54

There aren't many regulations that govern what property management agencies can charge for, especially when it comes down to administrative services, and they're often able to slip these fees into their management documents under the radar, and many investors simply don't question them. They look at an agency who's doing really well on the sales side of things and they're screaming because they think the property management team within that agency is going to do even better and then they'll use that agency when it comes time to sell their property. And unfortunately, it's not always the case and it doesn't seem right. In fact. I'm going to be very honest. It's a perfect example of how some property managers and agencies are taking advantage of outdated systems and practices to just assist their bottom line. They count on investors being too busy to notice or question these fees. And the worst part is, if you're an investor who owns multiple properties or uses different agencies, these hidden costs can dramatically, from one agency to another, change your whole profit margin with your properties. It's difficult to compare unless you're looking into the fine print, but I'm going to be realistic. You don't need to have this on.

Speaker 1: 6:26

It's not the best agency charges this fee. It's very similar to charging for routine inspections. It's included in the management and we have agencies that are out there that will tell us you know you should be charging more or you should be charging for this. Their job is to help business owners and real estate agents increase their profits. I couldn't care less. I'm going to be completely honest there. It's not something that should be charged.

Speaker 1: 7:00

So, as an investor, if you're in this situation, what can you do to protect yourself? First and foremost, read your management agreement. Look for terms like invoice entry fees or administrative processing fees. If you see something like a 10% 5% charge for an invoice management. Don't be afraid to ask the questions. Challenge the fees for an invoice management. Don't be afraid to ask the questions. Challenge the fees, especially if the agency is using modern, updated property management software, and we have various like property tree, property me, console, cloud. There's a lot, so it's not like it's difficult software to get your hands on.

Speaker 1: 7:40

Secondly, consider switching to a more transparent, focused agency or even managing your bills yourself. You don't need to be a tech expert to use those sorts of programs that will be able to assist you with your cash flow, because I know that we all rely on the end of financial year statements, but there are programs out there that you can keep a record on even as simple as just Google Docs of those bills that you've paid that year yourself. You know this can save you hundreds of dollars a year, but thousands over the long term. Talk to other property investors, share your experiences and get feedback on what other people are paying for a similar service. The more you actually make noise and make this issue known, the harder it becomes for agencies to get away with these kinds of hidden charges.

Speaker 1: 8:44

But at the end of the day, property management should be about adding value to your investment, not sneaking in unnecessary fees, and I will be the first to admit, technology evolving faster than ever, there's no excuse for agencies to charge for services that can be done in seconds by a computer, and we should be holding more people accountable in situations like this. Thank you very much for listening to this short episode on talking property management. I hope that you've taken something away from it. It would be very frustrating if you found out that you were being charged this you know unnecessary fee, and I'm happy to look into more unnecessary tactics that some agencies use. That just does not help the investor at the end of the day. Thanks, and I'll see you on the next step.