I know what you’re thinking, “16.5%, are you kidding!? I know property managers who will look after a property for half of that!”. Yes, that may be the case. However, if you care to do a proper comparison, you might be surprised to learn that a traditional property manager may end up costing you just as much, if not more, than DHA. Even though the property manager’s fee seems much lower.
How can that be? Ok, let’s take a closer look.
Say you were planning a holiday, going on a cruise for example; you would want to know what’s included in the package. Are the meals included, day trips on shore, bicycle hire and so forth? Cruise 1 with everything included will at first glance appear more expensive than Cruise 2 that only offers the bare basics. Only when you know what’s included with each cruise can you make an informed decision about the value of the overall packages.
Doing a comparison between DHA and a property manager should be no different. Let’s take a look at what you get with DHA and what you get with a traditional property manager.
Defence Housing Australia (DHA)
Fees – All of the below services are covered by the one fee at 16.5% (lower for units, usually 13%).
What’s included –
• property management
• maintenance and repairs service
• rent guarantees
• make good at end of lease (re-painting and re-carpeting)
Property Manager/Real Estate Agent
Fees – Generally the base fee is around 7% (6 – 10%) plus other costs such as a monthly administration fee, re-letting fees and advertising costs. Service levels will vary between property managers.
What’s (typically) included –
• property management (rent collection, re-letting, assistance with repairs, tenant liaison etc.)
Where DHA makes up the difference between 16.5% and 7%
Cost of repairs and maintenance – The cost of general repairs and maintenance (appliances, carpentry, plumbing, electrical, cleaning, gardens, lawns etc.) plus the cost of re-painting and re-carpeting at the end of lease is covered by DHA. This would of course not be covered by a traditional property manager. During a vacancy, the lawn needs mowing and the gardens weeding or the oven dies and needs replacing or taps are leaking and they need new washers – DHA will cover it.
Rent guarantees – Rent is another area where DHA offers an advantage. Besides in exceptional circumstances, DHA investors are paid 52 weeks of rent each and every year. Even with a great property manager, it’s prudent to factor into your budget an average of 2 weeks vacancy per year plus a re-letting fee – often another weeks week’s rent, making it 3 weeks in total (at $500p/w or course that’s $1500 you’re out of pocket). With DHA you also get an annual rent reviews, so the rent keeps pace with the market.
Starting to get the picture?
DHA’s fees may initially sound a lot higher BUT it includes a lot more. Many of the typical additional fees/charges/costs are included in the package with DHA. When you consider it’s virtually hands-off with many of the hassles and worries normally associated with a property investment taken care of, the DHA option starts to make more and more sense.
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Have a question? Contact us today for an obligation free chat. Drop me a line at email@example.com or call 0421 040 082.
Let’s chat/catch up soon!
Jonathan Irwin – Director
Capital Defence Homes
0421 040 082