How to choose a property manager: the questions, fees and red flags a former agent looks for

Knowing how to choose a property manager comes down to one thing most landlords never ask about: the person, not the agency. The brand on the window matters far less than who will pick up the phone when your tenant reports a burst hot water system, how many other properties that person is juggling, and what the agreement you sign actually lets them charge. Management fees are not set by law and state regulators say they are negotiable, so the agreement is where the real comparison happens.

Before managing our own properties, one of our team spent years as a property manager, and this guide is built on what that looks like from the other side of the desk. Good property managers are worth their fee. The aim here is to help you find one, and to know what you are paying for.

What a property manager actually does all day

A property manager's job looks simple from the outside: collect the rent, find tenants, fix things. In practice the day is a stream of interruptions. Repair requests, tenant questions, open homes, routine inspections, entry notices, bond paperwork, arrears follow-ups, owner phone calls, tradesperson quotes, tribunal preparation and the monthly trust account run all compete for the same hours.

Much of the work is reactive. When a manager has too many properties, the urgent crowds out the important, and the things that protect your investment (thorough inspections, careful screening, timely rent reviews) are the first to slip. So the most useful question is how many properties the person managing yours will look after.

Why portfolio size matters more than the brand

There is no official benchmark for how many properties one property manager should handle, and the right number depends on how the agency is set up. A manager with a leasing agent, an assistant and good software can handle far more properties well than one who does every open home, inspection and phone call alone. New apartments in one suburb are also a lighter load than older houses spread across a region.

So ask two questions together: how many properties does the person who will manage yours currently look after, and what help do they have? NSW Fair Trading's own list of questions for landlords includes both how many properties the manager handles and how long they have been with the agency.

Staff turnover is the other half of the picture. In MRI Software's Voice of the Property Manager 2021 research, reported by the REIQ in March 2022, almost one in four property managers (23%) said they intended to leave the industry, twice the number recorded in 2018. A manager who leaves takes the knowledge of your property and tenant with them. When you interview, ask how long the manager has been at the agency and what happens to your property if they leave.

In our experience, a big number on its own is not the warning sign. Worry when it comes with vague answers about support, a manager who has been in the seat for a few months, and an agency that cannot tell you who would take over.

How to build a shortlist

Start with agencies that actively manage rentals in your suburb, not just sell there. Look at the rental listings on the major portals: which agencies have the most listings nearby, how quickly do they lease, and how good are the photos and descriptions? A tired listing with three dark photos is a preview of how your property will be marketed.

Then narrow to three or four agencies:

• Check the licence with your state regulator. NSW, for example, lets you do a licence check online or by calling 13 32 20.
• Read landlord and tenant reviews. An agency that treats tenants badly tends to have higher turnover, and vacancies cost you money.
• Look at who you would deal with. Some agencies give each owner one property manager. Others split leasing, inspections and maintenance into teams. Neither is wrong, but know which you are buying.
• Ask for the agreement and fee schedule upfront. A good agency will send them before any meeting.

How to choose a property manager you can work with

You will deal with this person for years, often about money and problems. You want someone who explains things plainly, gives you a straight answer when the news is bad and does what they say they will do.

Test responsiveness before you sign. Call the rental line and send an email with a couple of specific questions, and note how long a proper reply takes. The response you get while they are trying to win your business is the best case you will ever see. Ask directly what their policy is for returning calls and emails. "Within one business day, and my colleague covers when I'm away" is an answer. "We're pretty quick" is not.

The questions to ask at interview

Insist on meeting the person who will actually manage your property. The business development manager who signs you up is often excellent at the pitch but will not be answering your calls.

About the person

1. How many properties do you manage, and do you have an assistant or leasing support?
2. How long have you been a property manager, and how long at this agency?
3. Who covers your portfolio when you are sick or on leave, and who takes over if you leave?

About leasing and tenants

4. What is your average days on market for properties like mine in this area?
5. How do you set the advertised rent, and what evidence will you show me?
6. How do you screen applicants, and what do you check? (Ask them to walk you through their last rejection.)

About the day-to-day work

7. How often do you do routine inspections, and can I see a recent example report with photos?
8. How do you handle repair requests? What is your default approval limit and how do you choose tradespeople?
9. Do you check repairs once they are done?
10. Does the agency or anyone in it receive a commission, rebate or discount from any tradesperson or supplier? (In NSW, residential agency agreements must disclose the source and estimated amount of rebates, discounts and commissions.)
11. What is your arrears process, day by day, from the first missed payment?

About money and paperwork

12. When is rent paid out to me, and what do the monthly and annual statements look like?
13. How many tribunal applications have you made in the last year, and how did they go?
14. What does every line in your fee schedule cover, and which ones will I actually pay in a typical year?

Several of these appear on NSW Fair Trading's own list for landlords. A strong manager will enjoy this interview. A weak one will get defensive.

Ask for references, then actually call them

Most landlords ask for references and never ring them. Ask for two or three current landlord clients with similar properties, including one who has been with the agency for more than two years, and ask things that are hard to fudge:

• How long have you been with them, and has your property manager changed in that time?
• How long was your property vacant the last time it changed tenants?
• Has a tenant fallen behind on rent? What happened, and how quickly did you hear about it?
• When you email your property manager, how long until you get a real reply?
• Have they ever arranged a repair you thought was unnecessary or overpriced?
• Did anything on your end of financial year statement surprise you?
• Would you move a second property to them?

The agency chose these people, so treat any hesitation as a strong signal.

Reading the management agreement

The management agreement goes by different names in different states, but it sets out what the agency will do, what it can charge and how either side can end it. The Queensland Government's guidance, for example, is that all management fees and charges should be agreed first, then put in writing. Check your state regulator for what the agreement must contain where your property is.

Read these parts line by line.

The fee schedule

This is where agencies with the same headline percentage turn out to cost very different amounts. Not every agency charges all of the fees below, and some bundle them into a higher management percentage.

For a sense of scale, research by BIS Oxford Economics published by Defence Housing Australia in May 2023 found management fees ranged from about 6.1% to 10.3% of gross rent across the cities it looked at (2022 data), with letting fees generally one to two weeks of gross rent plus GST and monthly administration fees of about $5.50 to $6.60. Treat those as a rough guide, not a price list: the data is from 2022, fees vary between metro and regional areas, and DHA sells its own leasing product, so it has an interest in the comparison.

The same research shows how much the typical rate moved between capital cities (Hobart was not included).

View data · Source: Defence Housing Australia, May 2023, citing BIS Oxford Economics 2022 data

City	Management fee
Sydney	6.1
Melbourne	6.6
Canberra	7.7
Brisbane	8.0
Darwin	9.4
Adelaide	9.7
Perth	10.3

The better test is to cost out a realistic year for each agency. Take the management fee on 52 weeks of rent, then add a letting fee, advertising, the inspections you will pay for, admin fees and the EOFY statement. The agency with the lowest headline rate is often not the cheapest on this test.

Repairs, inspections and reporting

The agreement should set a dollar limit the property manager can spend on repairs without asking you. NSW Government guidance for landlords, for example, suggests deciding whether you want to be contacted about all repairs or only those above a nominated amount, and how often you want the property inspected. Too low a limit and every small job waits on you. Too high and you lose visibility. Also check how often rent is paid out and what statements you will receive.

Term, notice and termination

This is the clause landlords most often skim and most often regret. Look at:

• The term. Is it a fixed period or continuing with no end date?
• Notice to end it. Notice rules depend on your state and your agreement. In Queensland, for example, you must give at least 30 days' written notice to end a continuing appointment unless both sides agree to less. Check your state regulator and the clause itself.
• Break fees or "liquidated damages". Some agreements charge a fee, sometimes calculated as a share of the management fees for the rest of the term, if you end early. Like other fees, this is negotiable before you sign.
• What happens to the tenancy if you leave. Some agreements try to charge a fee if the tenant the agency found stays on after you switch. Ask for that to be removed.

Negotiating management and letting fees

Fees are negotiable. State regulators say so directly: Consumer Affairs Victoria, for example, says you can negotiate all fees and expenses except those fixed by law. Check your own state regulator's guidance.

Some fees are easier for an agency to give up than others:

• Easy to give: lease renewal fees, admin and statement fees, the EOFY statement fee, inspection fees beyond a set number, and break fees. These are small for the agency and matter to you.
• Harder but possible: a lower letting fee (for example one week instead of two), or a reduced letting fee if the same tenant re-signs.
• Hardest: the headline management percentage. Agencies protect it because it drives the value of their rent roll. You are more likely to win a small reduction if you bring more than one property, a well-presented property in high demand, or a long-term tenant already in place.

How to ask: get written fee schedules from at least three agencies, pick the one you actually want, then tell them what the others quoted and which specific fees you would like removed or reduced. Ask for an "all-inclusive" option where inspections, statements and renewals are bundled into the management percentage. Bundles make the annual cost easier to predict, but check the maths against the itemised version.

Do not chase the cheapest fee at any cost. A manager who charges 1% more but leases a week faster, screens tenants properly and keeps a good tenant for years will usually leave you better off. On a $650 a week property, 1% of the rent is about $338 a year. One extra week of vacancy costs $650.

Management fees are also deductible. The ATO lets you claim fees and commissions paid to a property agent for managing, inspecting or collecting rent, and the cost of advertising for tenants. Read our guide to rental property tax deductions for the detail.

Red flags

Some warning signs are worth walking away over:

• You cannot meet the person who would manage your property before signing.
• The agency will not give you the agreement and fee schedule in writing before a meeting.
• A very low headline fee paired with a long list of extra charges.
• No clear answer on portfolio size, support or who covers leave.
• Pressure to sign on the spot.
• A long fixed term with a large break fee and no way out for poor service.
• Vague answers about tradesperson commissions or rebates.
• Sample inspection reports with few photos and a few lines of text.
• An unlicensed person offering to "look after it on the side".

Switching property managers

Switching is usually less painful than landlords fear. The tenant, the lease and the bond all stay put. What moves is the paperwork.

1. Choose the new agency first and ask it to handle the transfer.
2. Check your current agreement's termination clause for the notice period and any fees, then give dated written notice.
3. Make sure records transfer. NSW guidance, for example, says bond records need to be updated when management changes, and that your termination notice should ask the outgoing agency to confirm how tenancy records and keys will be transferred to the new agency. Ask for keys, the lease, condition and inspection reports, compliance certificates, the tenant ledger and any open maintenance jobs.
4. Tell the tenant in writing who the new property manager is and how to pay rent. The new agency will usually do this.
5. Reconcile the final statement, including any money still held in trust.

It is worth a direct conversation before you leave. Many problems come down to an overloaded manager or unclear expectations, and a good agency will fix them. Our companion guide on how to keep your property manager accountable sets out what to expect, what to check each month and when to leave.

What this means for landlords

Choosing a property manager is a hiring decision. Get three agreements and fee schedules, meet the actual manager, call two references, cost out a full year of fees including a tenant change, negotiate the small fees and the break clause before you sign, and check the licence with your state regulator.

If you are weighing up whether to use a property manager at all, our self-managing guide covers what doing it yourself involves, and our new landlord guide covers the basics of owning a rental.