One full month’s rent for tenant placement??

Question

Would you (self managing owners) pay a reasonable fee for a service to market your rental property and screen applicants? One full months rent seems steep to have  a traditional property manager place a tenant.

Nathan Gesner · Answer

This is not an easy answer.

Some DIY Landlords laugh and say, "I want to know who's living in my rental!" and so they do their own screening and save money. I hope that works out for them.

I screen over 600 applications a year. With 350 rentals in a town of 9,500 people, I know the market better than any private Landlord. I market to 40 different websites, I respond to emails/texts/calls immediately and seven days a week. Private Landlords that think they can do it better than me will eventually learn their lesson.

If you think hiring a professional is expensive, try hiring an amateur.

At the same time, there are some "professional" property managers that charge fees just because they can and the value doesn't measure up to the cost. If a PM is charging a month of rent as the leasing fee, I would want to know what my money is buying. And why does it cost them $1,500 to rent a single-family home but only $800 for an apartment? Aren't their expenses pretty much the same? I've never liked that model.

My point is that you need to shop around. Cheaper isn't always better and may actually cost you more in the long run.

Bill B. · Answer

I’d say no way. Not unless they’re throwing in free management fir the year.

On an $1800 rental in Vegas I pay $300 commission to get the tennant and 8% per month of collected rent in management fees. So $300 + 144 x 12 - $2028 for placement and a year’s worth of management. I suppose a self manager might pay 1/3rd of a month if they didn’t have to pay the $300 realtor commission? Maybe. I used to prefer to self screen and manage but it just wasn’t worth it when I could earn more doing other tasks and I could avoid a real or made up fair housing complaint.

Lynn McGeein · Answer

I agree 1 month's rent is steep, and frankly I don't understand why anyone is actually paying it.  The management we found for our out-of-state property charges 8% of rents for management plus a $150 annual fee for up to 10 properties, and that includes tenant placement.  Their goal is aligned with ours, to find and keep long-term tenants, and we've been happy with the arrangement.  They actually got me to like 2-year leases, and I prefer doing it now on the one I self-manage locally as well.

Chris London · Answer

As a residential property manager in North Carolina, I charge 1 mo. rent for tenant placement.

My average rent is $1500. I don't have a lot of clients use this service vs. tenant placement and traditional monthly management. For this 1 month's rent I take professional photographs of the property, market the property on 35 websites, field and qualify on average 20-50 inquiries. Show the property anywhere from 1-5+ times, run a credit & background check, fully execute a lease along with any necessary addendums (pet, lead paint, maintenance, etc). I collect and turn over a security deposit. I do all of this with experience.

I absolutely understand why many experienced investors on this site would not want to pay me 1 month's rent for this service they can do themselves. Please know for those that do want to use me for this service it is a fair amount of time. Feel free to ask any me any questions including best practices to do it yourself, I'm happy to share my knowledge in this forum.

Account Closed · Answer

@Daniel Riley

I typically pay someone to rent my units. It's roughly $500 and pretty much guarantees the tenant will stay for a year. If something happens, and the tenant moves before then, I usually get a discount on the next tenant they place for me.

Bjorn Ahlblad · Answer

@Daniel Riley we manage our own properties and know how important the tenant selection process is. So no I would not assign that duty to someone else. It is not a matter of price nor is it all that hard. You just have to stick with it and not compromise.

Luke Sass · Answer

@Daniel Riley

Yes I’ve seen PM’s tackle this a variety of ways.  One company charges 10% of gross rent, with a 50% releasing fee but doesn’t charge anything for service calls or maintenance.

Another charges 5% gross rent with no releasing fee but charges by the hour for repairs and maintenance so they end up Nickle & Diming you to death.

I think one months rent is too steep.  You can do better.

Best of luck

Luke

Patricia Steiner · Answer

Self-manage?  All day long.  Without hesitation.

Having said that, I have a vetted process in place with all the pieces, all the resources that I personally use with my properties and share with my clients.  It works very well, the cost is low, and all is well.

If you don't have a proven process in place from start to finish, you'll regret it.  If you pay for the service and you get someone who is in it for the one month rent payment, you'll regret it.

This is as important - maybe more - than buying the right property at the right valuation in the right location.  Invest your time and attention to it.  You'll be glad you did.

Account Closed · Answer

@Chris London

I had over 50 responses/ inquiries to a single unit just yesterday. Posting that ad took about 3 minutes on 2 platforms Friday afternoon. Responding with Pre-screening took me zero minutes, automatically happens. Sorting out the losers took about 10 total minutes. Likely less. Booking the 6 showings with pre-screened parties took less than 5 minutes. Credit check form took me 0 minutes (they fill it out & return). Forwarding that to the credit check Corp likely took me 90 seconds and $12. After that it was a 5 min phone convo to get some additional docs to avoid waiting until Tuesday for the employment verification. Verifying reference phone numbers and previous /present addresses etc took 10 minutes, this is normal in most cases. Lease signing is virtual and 1hr from now. Likely take me 5 minutes to receive and sign my side of the docs once deposit arrives electronically. Booking cleaner for a wipe down (fresh purchase just finishing the renovation so won’t need a deep clean) 2 minutes and the last one cost me $30.

1 day, 1 hour on my end (less but I’m too lazy to add up the minutes above), often 30 minutes or less of my VA’s time (if I’ve got too many listing at once I don’t post them myself), 2 hrs of my on-site guys time for the single set of grouped showings @ $30/hr.

Total inputs: right around $100 with cleaning and ~1hr time. 1yr lease @ $1,250 with tenant paying utilities.

Account Closed · Answer

@Daniel Riley

No. I would not.

One full month’s rent for tenant placement??

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