Lease Renewal Fees

[Timothy Wenzel]

I am hoping to learn what others pay property managers for lease renewal fees?

My townhouses (I own 2) are in the Minneapolis/St. Paul area and I have a management company take care of them for me as I don't live in the area full time. My finder's fee is one month's rent, which honestly does seem fair to me based on the amount of work that I know goes in. Then I pay 100$/month on top of that. Those fees seem fair to me, but the cost that I am struggling accepting is the lease renewal fee, which is now 5% of the aggregate rent. When I started working with this management company at the beginning of 2022 the lease renewal fee was 250$. Then it went up to 5% of the aggregate rent for the year. Now, I just realized, it has gone to 5% of the aggregate rent for however long the lease is. I just offered my tenants a 2 year lease renewal, thinking I would save myself next year's lease renewal fee and reward my good tenants by not raising their rent for 3 years. With 1,850$/month rent I would have paid 1,110$ for a year long lease renewal but was just charged 2,220$ for a 2 year lease renewal fee, which seems outrageous to me. Can someone please chime in and see if that lines up with industry standards these days? Am I being entitled here or is this excessive? I know everything is more expensive in 2025, but that just seems like an egregious fee for something that is way less work than finding new tenants. Is there more work that goes into this than I may realize? Thoughts? Thanks!!!

[Drew Sygit]

@Timothy Wenzel here's what everyone's missed covering - what are the other fees you are being charged?

Property Management Companies (PMC) mostly charge the same types of fees, but "slice & dice" those fees to differentiate themselves from competitors. 

So, your Lease Renewal Fee may be justified, if your PMC is charging a lot less on other fees, or not charging some other common PMC fees.

Can say that the 5% of total lease payments is uncommon for the residential property business, but very common in the commercial property business.