Flat Fee Property Management – The Disadvantages

Flat Fee Property Management

As a property investor not only do you want quality property management, you also want value for money. This is why some property investors look for  flat fee property management. In this article we will look at the disadvantages of flat fee property management.  We will also analyse the negative impact it can have for you as an owner. 


How a flat fee property management structure works

There are several property managers in Brisbane offering flat fee property management but this “one size fits all” approach isn’t always cheaper than a percentage based model. A flat fee property management structure can also be problematic, as it removes the ability to tailor property management service to clients’ individual needs. Flat fee means just that, a monthly or weekly fee, that is the same for every property you own.

So how can this end up costing you more? 


Real Estate A is offering  a flat fee of $22 a week. This means that if your weekly rent is $400, then you will receive $378.

Real Estate B offers 5%. This means that you are will receive $380 a week. While the flat fee sounds more appealing you are actually paying more than other packages offered.

If you have a property portfolio that is filled with 1 bed units that are receiving rent of $250 a week the flat fee structure means you are paying a management fee of 8.8%.

Position One Property Management offer tailor made packages to suit our investor’s portfolios. We don’t believe in a one size fits all approach to property management.


Online property management – The new trend!

As a hands on agency that cares about its owners and tenants the scary new trend that has hit the market recently are property management agencies that are completely online; with a flat fee. This means that as an owner or a tenant you don’t actually meet your property manager. All paperwork and maintenance requests are handled via email and or an app. There are several concerns with this process:

  1. You don’t actually know who is managing your property.
  2. Where your property manager is located can be problematic. (Do you know if your property manager is overseas?)
  3. Is your property manager a licensed agent?
  4. How much experience does your property manager have?
  5. Are they keeping up to date with current legislation?
  6. How do they know if the tenant is right for you if they haven’t met them?
  7. How does the property manager know how much to charge if they haven’t seen your property? 

This sector is relatively new to the market and it is recommended that caution is taken before engaging an agency that is completely online. An agency, such as Position One, that has its own in house technical support and online marketing team is your preferred option. 


Are property management fees negotiable?

If you choose to go with a flat fee agency then the answer NO! One of the many benefits of choosing  a property management agency that is percentage based is that they can offer you a competitive rate based on your circumstances and portfolio.


The pitfalls of flat fee property management

As you have seen from the example above you can actually end up paying more for your property management with a flat fee structure than a percentage based structure. The lower cost also means lower profit margins for the management company offering the flat fee structure. This often results in employees becoming overworked as they take on more and more properties to offset their low fees. The biggest impact of this for clients is a property manager who is unable to dedicate enough time to manage  your property and offer you a proactive service with regard to repairs and maintenance. 

There is an old saying “you get what you pay for” and this could not be more prevalent then when it comes to property management. Position One Property Management prioritize excellent service over overloading their property managers. We take care of the A to Z of your property management with our tailored Brisbane Property Management Services.

You’ll enjoy services that are thorough, solutions-focused, and people-driven as we build a lasting and mutually beneficial partnership with you.

In particular, you can expect to benefit from our experience, personal attention, and full-service approach – with no outsourcing.


What should I look out for?

One of the biggest concerns when it comes to flat fee property management is the attention and dedication given to each property by the property manager. Let’s face it…. Money talks and agencies have to make money. Ask what your flat fee includes. Some agencies don’t offer ‘full service property management” this means that they may not advertise on all of the platforms available, follow up maintenance requests or offer a bill paying service.


Partnering with Position One

Below is a description of some of the key benefits you can expect when you choose to entrust your investment property with Position One Property.


 – Keeping You Informed

Communication is key to any relationship – including our relationship with you. Your property manager will keep you updated about any progress or activity relating to your property and tenants.


 – Selecting Your Tenants

Tenant selection is a key step in protecting your investment. We conduct stringent security and reference investigations for every applicant who applies for your property, including checking TICA, Australia’s database of defaulting tenants. We won’t submit applicants’ information for your approval until we’re confident they’ll be suitable tenants.


 – Conducting Regular Inspections

Regular inspections ensure your tenants are meeting the terms of their lease. We conduct regular inspections and provide you with detailed reports that outline any issues that may require your attention. To help maintain the capital growth of your investment, our reports may also include recommended budgeting for future improvements to the property.


 – Reviewing Rents and Payments

Brisbane’s rental market is dynamic and competitive. As part of our commitment to your investment’s success, we constantly review your rents to ensure you’re enjoying a maximum return on your property. Funds are deposited in your account monthly and bi-monthly, and accompanied with prompt electronic statements.


– Protecting Your Investment

Your investment and your peace of mind matter to us. Our stringent tenant selection, regular and thorough inspections, and strict rental procedures reduce the risk of rental arrears and protect your investment. However, because no one can control every circumstance, we still encourage you to consider Landlord Protection Insurance for your investment.


 – Our Fees

We offer a niche and attentive Brisbane property management service. Even so, our fee schedule for letting and managing your property is still comparable to industry standards. And do remember – our fees for service are also tax deductible. Check with your property-wise tax accountant for details.


Flat Fee vs Percentage Structure

At Position One  we encourage you to do your homework and enlist a Property Manager that knows your area.  When you hand over one of your most valued assets you want to know that your property manager will treat your investment like it was one of their own. You and your tenants deserve to be treated with respect. Flat fee agencies are unlikely to offer the ongoing and continued support that is offered by an agency that works on a percentage structure. Make sure that you sit down and do the sums. You need to ensure that you aren’t paying more with a flat fee agency then you would be with a better qualified percentage structured agency. 


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