Question on Property Managers

[Laurence Walsh-Hodson]

My current property manager wants to charge one month's rent (plus 10% of all rents) to manage a property newly vacated. This is a duplex and they already have a contract to manage the duplex, but they are saying they need a contract "for each door". They say it is for marketing, but that is a huge budget for marketing. Any helpful thoughts or suggestions?

[Max Ferguson]

Call other PMs in the area and get their rates. Sounds high but everywhere is different, and that just might be the standard. Hopefully someone from the area can chime in but shopping quotes from reputable and well rated or referred PMs will illustrate a better picture for you. Good luck and let us know what you figure out!

[Michael Smythe]

@Laurence Walsh-Hodson not sure of the laws in Indiana, but here in Michigan, we do NOT need a contract for each door. Maybe their MLS is requiring it?

Regarding the one month of rent Placement Fee, this is fairly normal. There are "hot" markets where PMCs can just put a rental on their website and get acceptable activity. These PMCs may only charge 50% of one-month of rent for Placement.

Most markets are slowing down though and putting a rental on the MLS will get more activity. Putting it on the MLS though, requires offering compensation to an agent that brings an acceptable tenant.

Of course, this is all changing due to NAR's settlement, effective August 13, that no longer allows listing agents to offer buyer agents compensation via the seller.

[Adam Bartomeo]

We don't require a contract for each door unless it is set up as a condo. 1 months' rent is a little steep but it will depend on the local commission structure. In some areas 1/2 - 1 months' rent is paid to any agent that brings a qualified tenant. We do a good job with marketing, so we are able to charge 1/2 mon.

[Sarah Rosko]

Hi there! I am a property manager with Brentwood Property Group, and we manage short-term, mid-term, and long-term rentals in the Indianapolis area. For mid-term, once we have a tenant in place, we charge a leasing fee (between 10-50%, dependent upon the lease duration) for the first month along with a management fee of 13% of the monthly rent. The 13% management fee will then be charged each month for the duration of the lease. For long-term rentals, we charge a leasing fee (50% of the first month's rent for a 1 year lease), plus a 10% monthly management fee, when we have a tenant in place. We would love to connect with you! 

[Nathan Gesner]

It is increasingly common for a PM to charge a "leasing fee" which covers all the costs of marketing, showing, screening, placing tenant under contract, collecting deposit and rent, setting up utilities, getting the tenant placed, etc.

If the PM can't justify the cost, then they shouldn't be charging it. If they say "it's to cover marketing" then I would argue they probably aren't professional and just charge it because they can.

The leasing fee is charged per door, meaning you will pay it every time they place a tenant in one of your rentals.