Leasing Agency - Fees?

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fdaniels

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Hey guys,

So my wife and I are looking to get a leasing agency to handle one of our properties for us. We self managed for the past few years, but found it a little frustrating having to deal with tenants. We used Rentmaster, who charged us 4.56% to collect the rent. They also ran credit checks for prospective tenants. We otherwise liased with the tenants ourselves.

We are now looking for a more hands off solution. We contacted Re/max who quoted as 14% for management, AND an additional 14% if we want them to find tenants for us. I was also told that this is not negotiable. This is for the Table View area in Cape Town.

Is this the typical rate? It is hard enough to break even, considering the need to set aside money for rates, capEX, maintenance, repairs, insurance, vacancy, agency fees, etc. Feels like they are trying their luck with me. That is quite a lot of money on a rent of R17,000. Feels like it would make more sense to just hire someone to be bi-annual inspections and handle everything else myself. Are there businesses that specialize in inspections?

Any advice would be greatly appreciated. :D
 
28% seems very excessive, particularly as you could get potential tenants by waving a hand drawn sign out your window.

This is Cape Town; people are deperate. Fire the agent. Advertise personally (take the risk, but obviously check credit rating and references etc)

I've had amazing tenants (and in turn years ago I was an amazing tenant) - just be careful; check every reference; go with your gut feeling. And always try pop the rent up by R1000
 
We haven't signed any paperwork with RE/max yet, and I am assuming that the additional 14% for finding tenants is a event based fee and not a recurring monthly event, but I will try and get clarity on that. If that is the case, then it is not too bad, but it is the recurring 14% that I am taking exception to. Something around 9% to 10% is more palatable.

We self managed the property since 2014 but had a rough time with tenants that were not only super demanding and aggressive, but also left our place looking like a trash. We just spent R300,000 remodeling the place and want to protect our investment by having someone do regular inspections (which we didn't / couldn't do as we no longer live in Cape Town). So our main desire is to have someone make sure that the tenants don't trash the place, and that we have help if they decide to squat.
 
When I took my flat in January in Johannesburg, the landlord paid 1 month rental to the agent for finding me, so 8.3%.

Almost half of what Re Max is asking you...
 
Tell remax to get knotted. They will charge a management fee but never inspect or do anything
 
Thanks for the feedback guys. Yeah I was real surprised when they told me 14% and that it is not negotiable. Right now I am leaning towards just paying someone to do bi-annual inspections, and for finding tenants (letting them in, doing pre-move-in inspection, collecting signed documents, etc.)
 
When I was doing software for the industry I found places like Just Property group in Sandton were charging roughly 50% with all the fees etc. It's ridiculous and on top of that they do a really ****ty job. Definitely think there's a market for a leasing company that charges low rates and gives great service. They have fallen into the trap that many companies fall into, increasing fees and giving worse service year on year, just to keep up with pay increases.
 
If at that rate the agent accepts the risk when things go wrong then it's reasonable.

But most agents run away when things go wrong.
 
28% eish that's robbery. I'm busy with the same process but refuse to use an agent. They cannot do anything more for you than you can do yourself. I've heard that R400 at checkers gets you a full credit check provided you have a letter from the potential tenant. The one biggie that agents cannot do is force a non paying tenant to pay. So there is an "underground" service where you pay a few Nigerians to pop around and remove the door to the house and hangout in the lounge all day. Nigerians are super loud so I can only imagine having loud strangers in your lounge will create some kind of disruption.
 
Try Rawson. Their usual fee in Gauteng is 15%. 8% of contract value for the placement and 7% of monthly rent for management portion. As always, you can try negotiate management down to a flat monthly fee.
 
f2wohf said:
When I took my flat in January in Johannesburg, the landlord paid 1 month rental to the agent for finding me, so 8.3%.

Almost half of what Re Max is asking you...
Click to expand...

I forgot to mention that it was with Etchells & Young in case you want to see their prices.
 
fdaniels said:
Hey guys,

So my wife and I are looking to get a leasing agency to handle one of our properties for us. We self managed for the past few years, but found it a little frustrating having to deal with tenants. We used Rentmaster, who charged us 4.56% to collect the rent. They also ran credit checks for prospective tenants. We otherwise liased with the tenants ourselves.

We are now looking for a more hands off solution. We contacted Re/max who quoted as 14% for management, AND an additional 14% if we want them to find tenants for us. I was also told that this is not negotiable. This is for the Table View area in Cape Town.

Is this the typical rate? It is hard enough to break even, considering the need to set aside money for rates, capEX, maintenance, repairs, insurance, vacancy, agency fees, etc. Feels like they are trying their luck with me. That is quite a lot of money on a rent of R17,000. Feels like it would make more sense to just hire someone to be bi-annual inspections and handle everything else myself. Are there businesses that specialize in inspections?

Any advice would be greatly appreciated. :D
Click to expand...

Dealt with these guys before, A+ service:

https://www.facebook.com/pages/Cilltec-Home-Inspections/1149112958432560?fref=mentions
 
Gazbal said:
Try Rawson. Their usual fee in Gauteng is 15%. 8% of contract value for the placement and 7% of monthly rent for management portion. As always, you can try negotiate management down to a flat monthly fee.
Click to expand...

I won't pay an agent anything if they don't accept some sort of risk.
 
How does organisations like Rentshield work? Can you not deal with them directly?

I think hey do all relevant checks of the tenant, they take 10% rental monthly and basically insure that you get your rental on time, and insure you against damages to your property.
 
5% excl Vat with Just Letting but I have multiple properties with them, incl 2 in Tableview

With any agency, its the agent you deal with that makes the difference
 
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