It’s time for my lease renewal and my PM is charging $350 which I expected for a renewals. However, they are telling me with all lease renewals included is a “Tenant Benefit Package” where the tenant has to put an extra $20/month and they partner with “credit hub” which is a credit bureau which will “incentivize on time rent payments and help my tenant improve their credit score”. I’ve never heard of anything like this, but this is my first property. I did plan on raising rents, and am concerned that they will be adding $20 to the tenant in addition to me raising the rent. Also, my tenant already pays on time consistently, and “improving her credit score” would only make it more likely that she actually gets a house at some point rather than continue renting from me. I could see if this was optional for tenants, but they are presenting as being mandatory. What are y’all’s thoughts, and how would you handle this?
@Steve J. I have never heard of such a package but it may be very PM specific. I assume this was written into the lease language and the tenant knew about this and agreed to it by signing the lease so I doubt it's a big deal to them. $20 is not very much these days; most people spend that easily in a week at Starbucks. It was also was most likely written into your management agreement so I doubt there is anything you can do about it other than find a new PM once the agreement expires.
Thank you, I plan on interviewing some PMs
@Steve J. I'm a property manager and can speak to this. The Tenant Benefit Package is becoming more common because it helps offset some of our costs as managers and it usually provides some benefits to the owner and tenant. For example, it helps me pay for free online payments (normally $1 each), enrolls my tenants in renters insurance ($11 per lease, which is cheaper than what they can buy through a private insurer), one time late rent forgiveness, 24/7 maintenance hotline, and more.
The credit reporting may seem unnecessary for a good tenant, but what if your next tenant isn't as good? As a property manager, I can't wait until they start paying rent late and then decide to enroll them in a credit reporting program. it's all or nothing, so I opt to do it immediately. A good tenant can see a 20-point bump in their credit score. A bad tenant will see a hit and it may be enough to incentivize them to get back on track.
Will it encourage your renter to buy a home? Maybe, but it's unlikely. Besides, tenants can leave for many reasons and only a small percentage go on to be home owners.
Thank you, very insightful.
Dont PMs already charge a percentage of rent? Why would they need to sneakily charge more and have the tenant pay? This may seem nice, but its a hard cost to tenant and it may very well sour them and they may move.
I would push back on the PM and see what they say.