How much does it cost to use a property manager?

That’s a great question and an important one, too.

Because the #1 complaint I’ve heard from investors over the last 5 years working in property management is: “But I didn’t know about that cost!”

So, in this article, I’m going to explain all the costs of using a property manager.

That includes the 5 hidden costs to get your property Rent Ready.

Now, to be clear – you’ll pay some of these costs whether or not you use a property manager.

But, your property manager will likely pay these costs then on charge them to you. So, it’s worth pointing out these hidden costs.

#1 – Property Manager Fees

Cost: 8% – 10% of the rent (+GST)
When you pay: Monthly

There are typically three fees you’ll pay your property manager:

• Management Fee: A percentage of rent collected
• Tenant Sourcing Fee
• Additional Charges

First is the management fee. This is typically 8% – 10% + GST of the rent collected.

For example, if your property rents for $550 per week, you can expect to pay $50 to $63 per week in management fees. That’s to look after the property, collect the rent and pay you the money.

Here, at Opes, we charge at the lower end of this range. Our standard price is 7.99% (+GST).

The tenant sourcing fee is charged when you need to find a new tenant. This is usually one week’s rent (+ GST).

Then you have additional charges. These change based on your company. For instance, here at Opes Property Management, we don’t charge any of these:

• Routine inspection charges: Usually $40-$100
• Maintenance surcharges: 4% or more of the total maintenance invoice
• Tenant/credit checks: Around $25 each
• Annual account and admin fees: Varies
• Debt collection charges: Varies, depending on tenancy agreement provisions

#2 – Healthy Homes compliance

Cost: $175 - $287 + GST
When do I pay: Once, at settlement.

All rental properties in New Zealand must comply with the Healthy Homes Standards.

While New Build developers often build to Healthy Homes standards, property owners still need to show that they comply with the rules.

This often means paying for an assessor to complete the Healthy Homes Certificate.

If you don’t do this, you could be fined up to $7,200 each time!

The cost of a Healthy Homes certificate varies by location.

It’s around $175 (+GST) in Christchurch and up to $287 (+GST) in Auckland.

More from Opes:

• Do I really need to use a property manager (Article)
• The 5 Healthy Homes Standards (Article)
• How long does it take to find a tenant? (Article)

#3 – Smoke alarm and heat pump service

Cost: Around $151 + GST
When do I pay: Annually (after the first 12 months)

Smoke alarms and heat pumps need to be serviced annually after the first 12 months.

Some, like property managers (like us here at Opes), combine the cost of smoke alarms and heat pump service.

For the combined service, our provider charges $151 (+ GST). To be clear, that’s not us charging you. But we’ll organise this for you.

But generally, a standalone annual smoke alarm service costs $99-$130 (+ GST). A heat pump service costs between $100-180 (+ GST)

#4 – Meth testing

Cost: Around $204 (+ GST) depending on location
When do I pay: At the start of a new tenancy

Recent reports suggest that meth testing isn't necessary.

However, many property investors still worry about potential meth contamination in rental properties.

So, testing can still give you peace of mind. And you might need for your insurance cover to hold your tenants liable.

#5 – Marketing photos

Cost: Varies, but often included in tenant sourcing fees
When do I pay: At the start of the first tenancy and as required for future tenancies

High-quality marketing photos are a must when selling a property. But the same standard isn’t necessary for rentals.

Many property managers, including Opes, include standard marketing photos in the tenant sourcing fee.

But, some companies offer premium photo packages for an extra $150+. That may include digital staging.

Bonus #6 – Getting the house ready (power, water meter, keys etc)

Cost: Variable, case by case

There can also be extra costs to get a property ready for new tenants. Common costs include:

1) Gardening and lawn mowing

If your property has been vacant for a while, you may need to pay for gardening and lawn mowing. You’ll do this before a tenant moves in. And it usually costs around $100-$400, depending on the property.

2) Power

You'll need to cover power while the property is vacant.

After settlement, you may use a holding account for power. You’ll pay this until the tenant connects their own power.

Reconnection fees can range from $75-$150, depending on the city and property.

3) Covering the water meter charges before a tenant moves in

If the property has been vacant, you may need to cover any accrued water charges.

4) An extra key if needed

You may need to pay for an extra key/s depending on how many were originally supplied and the number of tenants.

There can be other costs, too

This list doesn’t cover all the costs of renting your property.

There can be other surprises, too.

Things like paying for rubbish bins if your New Build doesn’t have one.

But this list should give you a good idea of all the times a property manager will charge you and what you get for it.

It’s important to emphasize that these fees don’t all go to the property manager.

But sometimes they’ll pay for these costs and then on-charge you. So it’s worth being ready for them.

Otherwise, outsourcing to a property manager can save you the headache of dealing with day-to-day tenant issues.