Understanding Management Fee Calculation Methods

Overview

Management fees can be calculated and charged using various methods depending on the lease structure and property setup. This article explains the different calculation methods and example scenarios when these methods may apply.

1. Nil Management Fee

Used when no management fee is to be charged for a property or lease.

Example Scenarios:

• Owner-managed properties
• Promotional or goodwill arrangements
• Internal or related-party leases

See also: Nil Management Fee Setup

2. Fixed Management Fee

A set dollar amount charged per period, regardless of income received. The monthly amount to enter in Property Summary should be the GST exclusive amount.

The calculation formula for this is:

Net Fixed Amount to be charged per month = Net Management Fee

Cirrus8 then adds GST onto the Net Management Fee to get the management fee charged

Example Scenario:

• A property is to always be charged a flat rate of $500 per month.
• A property is to be charged management fees of $3,000 + GST per annum.

3. Percentage of Total Receipts

A percentage applied to all income received for the property, including rent, recoverables and other charges. 

The calculation formula for this is:

Net Total Receipts x Management Fee % = Net Management Fee

Cirrus8 then adds GST onto the Net Management Fee to get the management fee charged

Example Scenario:

• A property is to be charged management fees on a percentage basis on gross collections.

4. Percentage by Account Ranges

A percentage applied to all income received to predefined account code ranges only.

The calculation formula for this is: 

Net Receipts of Selected Account Ranges x Management Fee % = Net Management Fee

Cirrus8 then adds GST onto the Net Management Fee to get the management fee charged

Example Scenario:

• A property is to be charged management fees on rent collections only, calculated with a percentage. This management fee method will then be used selecting only rent income codes only. 
• A property is to be charged a percent of management fees on selected account codes only.

5. Percentage of Total Receipts (Lease)

Allows different leases within the same property to have different management fee percentage rates.

The calculation formula for this is: 

Net Total Receipts x Management Fee % Per Lease = Net Management Fee

Cirrus8 then adds GST onto the Net Management Fee to get the management fee charged

Example Scenario:

• A property has 4 tenants. 3 leases are charged management fees at 5%, 1 lease is charged 2%.