I have been struggling with this question for a while now and am not sure what the best course of action is. There are pros and cons of both.
Pro of using a realtor:
In NYC the landlords generally doesn't pay the realtor
Saves time answering calls/emails and showing the apartments
There is a $125-$199 fee per 2 weeks to list on streeteasy/zillow/trulia/hotpads.
Cons:
They charge a fee to the tenants. From what I've seen its 1 month to 15%. For a $2,500 a month apartment that can be $2,500-$4,500. Potential tenants will most likely not want to pay this and opt to look at no fee listing only.
At the end of the day the potential tenants are looking at total costs. If they can save a couple thousand upfront they might even opt to rent a place that's slightly more expensive just because its no fee.
Am I missing anything? Do the pros outweigh the cons? I would definitely go with a realtor if everyone else were also using realtors but there are a couple rental buildings in my area that lease internally so there are several no fee apartments in the area.
@Bin Chen. Ill just add my two cents as a investor who self manages in NYC.
I run an architecture firm full time and self manage, maintain, and list all my properties. Screening tenants myself is important enough that I find time in my schedule to do it.
My response is from the point of a small landlord less than 20 units. If you are one of the big boys and have a bunch more properties or items on your plate, then this doesn't really apply to you in my mind.
I find that if you want something done right you have to do it yourself. The only person who is looking out for your best interests is you. That is not to say Brokers aren't hard working individuals, but in the end it's your property and once the lease is signed their job is done. You however, are linked to the newly acquired tenants for a year minimum.
I personally would rather spend my time screening the tenants. As most landlords will tell you, a bad tenant can really try your nerves and/or bank acct. Trust me I know, and I will do just about anything to avoid bad tenants. In NYC evictions can take 6 months min easily.
With a broker, you are not screening the tenants the way you would really want to. I.E. Phone screenings, screening them in person during the showing, screening all their documents personally, etc. etc. We all have different processes set up for screening tenants. It's multi step and a good solid screening process is paramount. With a broker, the screening pretty much starts and ends with the credit/background and documents. I have had plenty of potential tenants come view properties who had amazing credit and income, but horrible personality traits which would make them nightmare tenants. As a self managing landlord, my job is to spot the bad eggs in the very limited amount of interaction time I have. People can look great on paper, reality can be quite the opposite.
I have tried using a broker twice over the last few years because it is taxing time wise to fill apartments. My experiences were less than stellar. In the end with both, I ended up finding qualified tenants to fill the vacancies instead of the broker.
Good luck.
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Hello Bin,
Below is my opinion as a real estate agent in NYC who deals with rentals often. Ill do my best to stay objective.
Deciding to work with a broker to list depends on how involved you would like to be. While brokers do charge a fee, their services can be valuable and many pay happily. Some renters need the help to navigate the often maze-like NYC market. Landlords also benefit from (good) agents who can reduce the turn around time for their vacancies. The rental buildings that do leasing internally must either hire staff or give up their time to handle advertising, showings, reviewing applications and signing leases. It depends if you have the time or resources to handle this on your own.
You can also offer to pay a broker to list and show your apartments- standard is 1 month owner paid commission. In the summer when the rental market is most active, landlords tend not to pay broker fees. However in the slower season, these incentives are more common.
Pros:
-Brokers who are active in the area will have a large active client book. When you are marketing 100's of rentals rather than a few, you will tend to acquire a larger list of renters in need of a home.
-Tenants are willing to pay for a home they can see themselves staying in for a few years. In my experience people do not like moving! Tenants who are willing to shell out a broker fee want to stay. This stability is an obvious benefit for a landlord.
-They have mastered the process and can often be more effective (responding to leads, following up, showing, closing)
-Quicker turn over and less vacancy (depending on how effective the broker is obviously)
Cons:
-Not all brokers will filter out bad tenants because at the end of the day they get paid when a lease is signed.
-They may cost you 1 month of rent if you pay the commission
-Some tenants do steer away from apartments with a broker fee
@Bin Chen. Ill just add my two cents as a investor who self manages in NYC.
I run an architecture firm full time and self manage, maintain, and list all my properties. Screening tenants myself is important enough that I find time in my schedule to do it.
My response is from the point of a small landlord less than 20 units. If you are one of the big boys and have a bunch more properties or items on your plate, then this doesn't really apply to you in my mind.
I find that if you want something done right you have to do it yourself. The only person who is looking out for your best interests is you. That is not to say Brokers aren't hard working individuals, but in the end it's your property and once the lease is signed their job is done. You however, are linked to the newly acquired tenants for a year minimum.
I personally would rather spend my time screening the tenants. As most landlords will tell you, a bad tenant can really try your nerves and/or bank acct. Trust me I know, and I will do just about anything to avoid bad tenants. In NYC evictions can take 6 months min easily.
With a broker, you are not screening the tenants the way you would really want to. I.E. Phone screenings, screening them in person during the showing, screening all their documents personally, etc. etc. We all have different processes set up for screening tenants. It's multi step and a good solid screening process is paramount. With a broker, the screening pretty much starts and ends with the credit/background and documents. I have had plenty of potential tenants come view properties who had amazing credit and income, but horrible personality traits which would make them nightmare tenants. As a self managing landlord, my job is to spot the bad eggs in the very limited amount of interaction time I have. People can look great on paper, reality can be quite the opposite.
I have tried using a broker twice over the last few years because it is taxing time wise to fill apartments. My experiences were less than stellar. In the end with both, I ended up finding qualified tenants to fill the vacancies instead of the broker.
Good luck.
If you live in the property do it yourself as these arent just your tenants they are your neighbors. If youre a hands off owner or have a large portfolio then get an agent
Hello,
My opinion on this question comes from been a real estate agent in New York as well as been a owner of rental units. I lean towards using a real estate agent and I will explain below.
Pros:
-The Real estate agent generally charges the tenant so there is little or no cost to you.
-You save your self from answering so many calls and talking to so many different people. Some applicants will call at all different hours of the day and night which can get annoying.
- In most cases you will get the place rented quicker.
Cons
- Not all agents/brokers have your interest at hand. So I urge all owners to have agents submit application, income and credit paperwork for interested tenants to you for review. Once you have identified a client(s) that you feel are qualified based on what you are looking, ask to meet with them prior to accepting.
So just to give an update on what happened with my property. I had 3 units which were completed a week before Christmas (horrible timing I know). I decided to go with 2 different agents i figured this could potentially increase my reach. So they listed the units at the end of December. The winter market is slow so we didn't get as many people as we would like. I went on vacation until the last week on January. By the time i got back we still did not fill any of the units so I decided just to list one of the unit and have the realtors each list one. I ended up renting the unit I listed within 2 weeks. At this point I spoke to the realtors again and we agreed to list the remaining units simultaneously. I ended up filling all 3 units on my own within the span of 3 weeks.
Now I'm not entirely sure if its because I had my listings active that people called me instead of the realtors because mine showed up as no fee or if it's the market picking at the end of January. Or if a huge population of people just search no fee apartments only. It could have been many factors but from the last week of December to around Feb 15, the realtors didn't fill one unit.
I did get a lot of phone calls and emails at all hours. I also had to spend a decent amount of time calling employers/property managers when screening tenants. I also had to pay around 1k in streeteasy fees. I think in the end it was worth it though. I can't say for certain but imagine if I did nothing and the realtors couldn't fill it still, that would be a nightmare.