Tenant placement fee/property management

General Landlording & Rental Properties
13yFollow

Tenant placement fee/property management

Mathew Wray
Real Estate Agent · Portland, OR · Member since 2013 · 412 posts · 219 votes

Hello all,

I've tried searching the forums with no luck for answer to my question.

I have a potential owner who is moving out of state and is looking to rent out her house. They don't want a traditional property manager as they have a lot of local connections and contractors and are confident of their ability to get a problem fixed quickly even from out of state. What they are looking for, and what I'm proposing to help with, is to get help finding and placing tenants. They'd like to let me advertise, find, screen, sign binding leases, and conduct move in/out for them while they're away. It seems like a pretty reasonable deal to me and both parties should be happy. The property is great and in a good neighborhood so finding quality tenants shouldn't be super difficult.

What should I charge? I was thinking somewhere in the $250 range sounds reasonable. Is that way low or does anyone have a set up with their PM company where they do the same thing?

Thanks for any help!

0Reply
113 views

Most Popular Reply

Jon Holdman
Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
13y

In my area, half a month's rent is typical.

In most states, however, you have to have a real estate license to provide this service.

2Reply
See this reply in the discussion

15 Replies

Jump to latestLatest
  • Jon Holdman
    Rental Property Investor · Mercer Island, WA · Member since 2008 · 22k+ posts · 14k+ votes
    13y

    In my area, half a month's rent is typical.

    In most states, however, you have to have a real estate license to provide this service.

    2Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    13y

    Normally in my investment area PMs charge 1/2 months rent for tenant placement and 10%/mo for their fee.

    0Reply
  • George Paiva
    Investor · Milford, CT · Member since 2012 · 592 posts · 285 votes
    13y

    for just tenant placement up here its one months rent as fee.

    0Reply
  • Account Closed
    Earth · Member since 2012 · 20 posts · 0 votes
    13y

    Be very careful! As Jon Holdman mentioned above, you may need a license to provide this type of service (in most states). If you did it for yourself it wouldn't be a problem. But because you are doing it for somebody else, you need to follow your state's rules.

    0Reply
  • Matt Devincenzo
    Investor · Clairemont, CA · Member since 2011 · 3k+ posts · 2k+ votes
    13y

    His profile says he is a licensed PM so he should be ok legally speaking.

    0Reply
  • Kelly N.
    Investor · SE, MI · Member since 2013 · 1k+ posts · 461 votes
    13y

    The going rate is half a month's rent here.

    Depending on what the PM fees are, they may want to consider just using you as a PM. Here, it's 8%, roughly one month's rent out of 12, so I'm not sure it makes sense to pay a half month's rent (~4%) to then have to manage the property from a distance. The other thing to think about (from their prospective) is that the PM may place a less than ideal candidate in their house knowing they won't be the one to handle it. I know it's not your decision, but that's my 2c.

    Another thing to consider, is what if the tenant doesn't work out? Will you place a new tenant for free, or for a reduced fee?

    Kelly

    0Reply
  • Mathew Wray
    OP
    Real Estate Agent · Portland, OR · Member since 2013 · 412 posts · 219 votes
    13y

    Thanks for the feedback everyone...

    As mentioned, I do have my PM license in Oregon so I'm legal. I work a full time job and am slowly practicing PM on the side. I'm using this time to learn, in practice vs. theory, the day to day running of a PM company so that when I make the jump to full time I've got policies and procedures in place and wont have to ask as many questions like this. For the record, I'm very upfront with my clients that I'm new and that I have a full time job "on the side". So far everyone has appreciated my honesty ad forthrightness

    8-12% is pretty standard here in Portland from what I've seen with 12% being the owner with one SFR and 8% being condos and multiple units under contract.

    Kelly N.

    We talked about finding another tenant if the first one didn't work out and that I'd be charging another fee to help them place another tenant. I think they're more concerned with having a buffer in place (with me) to screen and make sure that all of Oregon's laws (of which there are a ton!) regarding renters are followed to get them in. And to let me be the one to turn less than ideal tenants away.

    I'll definitely pencil out the math with a long term contract vs. a hybrid/placement-only model and see what their costs could be. I'm trying to help them get what they need...

    0Reply
  • Kelly N.
    Investor · SE, MI · Member since 2013 · 1k+ posts · 461 votes
    13y

    Mathew Wray- Just wanted to help you think of everything- I find the best arrangements are the ones that are well thought out where everything is covered. I remembered reading somewhere on here about someone who used a placement service to fill a vacancy, then ended up evicting the tenant, and had to pay again for the service. That's part of the risk we take with any new tenant, but nothing had been agreed upon beforehand.

    I considered using a PM to place my tenants since I am new to this, but am comfortable managing everything else myself. For me, if I am going to pay 4% just to place a tenant, I might as well pay 8% and not deal with the middle of the night phone calls :) I plan to use a PM in the future, when I have more units and/ or less time to handle them.

    Kelly

    0Reply
  • Timothy W.
    Attorney · Raleigh, NC · Member since 2008 · 4k+ posts · 1k+ votes
    13y

    Matt,
    This is something that is utterly dependent upon your local market. In Indiana, we pay property managers to place tenants (1 month or a half month if we negotiate it), in Boston when I got an apartment there, I as the tenant paid a placement fee of one month's rent to get in. You really need to find out from other Portland people what is customary in Portlandia (I never miss an opportunity to use "Portlandia" in a sentence. :-) ).

    Tim

    0Reply
  • David Beard
    Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    13y

    To just provide tenant placement a la carte, I think you should charge 75-100% of one months rent, with an absolute minimum of $500. It's quite a lot of hours of work and you need to value your time appropriately. To me, it's a matter of the economics rather than simply saying it's "area dependent". If you can't earn at least this much in the PM business in your area (presumably due to oversupply of PMs relative to rental inventory), then I'd find another more profitable business to engage in.

    0Reply
  • Steve Babiak
    Real Estate Investor · Audubon, PA · Member since 2009 · 13k+ posts · 8k+ votes
    13y
    Originally posted by Mathew Wray:
    ...

    We talked about finding another tenant if the first one didn't work out and that I'd be charging another fee to help them place another tenant. ...

    Some managers offer a "tenant guarantee", so that property owners don't simply conclude that the churning of bad tenants is a method for collecting lots of placement fees.

    1Reply
  • Seth WilliamsPro Member
    Specialist · Grand Rapids, MI · Member since 2012 · 582 posts · 353 votes
    13y
    Originally posted by Jon Holdman:
    In my area, half a month's rent is typical.

    In most states, however, you have to have a real estate license to provide this service.

    This is exactly what my property manager charges for placing tenants as well, and the same rules apply here - where a real estate license is necessary in order to perform this service.

    Podcast Guest on Show #39
    0Reply
  • Krista Lance
    Investor · Santa Barbara, CA · Member since 2020 · 20 posts · 12 votes
    2y

    Old thread, but new modern-day problem & question related to this! If my state requires a Real Estate License to be a "property manager" - what about finding & placing "medium-term" tenants (30 days for more)? I have a client who wants to rent out some bedrooms in his house part time, but preferably for 30 days or more (not short-term Airbnb style). Thanks for the help!

    0Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    Typical is half to one month of rent.

    Why the difference?

    Well, it goes back to how broker offices split sales commissions. Typically, they split any seller contractual commissions 50/50 - 50% for listing broker, 50% for selling broker.

    Same is expected with leasing/placement fees. Leasing agent (not rental listing agent) is expecting 50% of one month of rent,

    So, how can a listing PMC only charge an owner 50% of one month of rent and afford to pay the leasing broker their 50%?

    Logical Property Management4.9453 Reviews
    WebsiteView Page
    0Reply
  • Colleen F.Pro Member
    Investor · Narragansett, RI · Member since 2013 · 8k+ posts · 4k+ votes
    2y

    @Krista Lance  in our area where there are 10 month leases due to the student population,  placement was rolled in to the management charge and they charged a higher percentage of rent. The problem with midterm is if you charge per placement  shorter placements benefit you more.  2 months placement, another placement fee. I would be hesitant to agree to that as a client.  Also depends on how you work are you  doing live showings? video tours? posting and waiting for people to call or actively marketing?  what kind of work do you have to put into it?

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free