Every Landlord Should Hire a Leasing Agent: Here’s Why

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Every landlord has a lot of tough questions to answer. One question that each landlord will face will be whether or not to manage their rentals themselves or to hire a property manager. Some landlords will begin managing their rentals themselves and then transition to a property manager. Others manage their rentals themselves and end up hiring people to help manage their properties. Or some hire a property manager right from the beginning. You have to assess all the pros and cons for all of these strategies and make the right decision that fits with your real estate goals.

Hi, all! Liz back this week to share some recent success we are having with hiring a leasing agent for our rentals. I wanted to share what has been working with the hopes this might get your wheels turning as well!

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Background

Before I get on my soapbox to tell you why I think you need to hire a leasing agent as soon as possible, I want to share some background. If you go the route of hiring a property management company to manage your rentals, you probably will not need to hire a leasing agent. However, we decided early on to “self-manage” so that is the perspective I am coming from.

Over the last 10 years, we have built our portfolio to about 115 units located in a 30 minute radius of our office in New Jersey. These units consist of some single family homes, multi-family properties, retail store fronts and small office space. Our property management team consists of a full time maintenance person, tenant relations manager (this person deals with all the tenant issues, maintenance requests, renewals, etc.), office manager/bookkeeper, and both myself and my husband. My husband runs the property management team and fills in on the team in various aspects. I also have a few different responsibilities on the team, one of which has been getting our new leasing agent “up to speed.”

For the first several years, we were managing about 20 units. My husband and I managed these properties ourselves. We were doing everything from the bookkeeping to showing properties (and everything in between). We only hired people for maintenance on our properties. As we grew, we hired a part time bookkeeper and then we hired a tenant relations manager.

Related: 2 Unexpected (But Invaluable) People to Add to Your Real Estate Team

The last few years these have been the two key roles that have been “managing” our portfolio, along with both of us, of course. The tenant relations manager has a lot on their plate. They do everything that involves the tenant – processing rental applications, lease signing and on-boarding, delinquency, evictions when necessary, tenant maintenance issues, work order processing, renewals and pretty much all communications back and forth with the tenants.

Transition

Over the years, we have tried to use various third party companies, typically real estate agents, to help us lease our units. The results have been fairly good. However, since we manage our own properties, we have never liked the fact that these leasing agents were not part of our “team.” There were some tenants that these companies brought to us as potential candidates for our properties who we did not meet until lease signing. This was unacceptable, and we felt like we were losing control of evaluating tenants (which is incredibly important)!

So, about a year ago, we asked our tenant relations manager to help with the leasing of our units. We would pay her an additional commission to list the properties, schedule the open houses and close potential tenants. This strategy also worked pretty well. The biggest challenge with having our tenant relations person (TRM) focus on leasing is TIME. There is only so much time in the day to do everything. As we added more units, we found that our TRM needed to focus on her core role and didn’t have time for showings and open houses anymore. This did not hit on me until I stepped in over the last few months to help lease some of our multi-family units. I have been taking all the calls and scheduling all the open houses. I realized that this is a role that needs a lot of focus and should be carved out for a new team member.

The other reason we really needed to hire someone who ONLY focused on leasing our units is that we are in the growth mode. We bought over 30 units last year and plan to continue to grow and expand. With managing over 100 units, there will always be some transition of tenants and units. Our goal is to minimize vacancy.

So, after talking it over with my husband, we decided to move forward and search for a leasing agent. The first thing we did (and I highly recommend that you do) is write a job ad. You need to get clear on what expectations you have for this person.

Here is a sample of our job ad we posted on Craigslist:

Sales & Leasing Consultant – Bilingual (Spanish/English) NEEDED

Are you the following…
• Naturally persuasive
• Achievement oriented
• Like building relationships and delivering top notch customer service
• Positive, high energy, dedicated and trustworthy

If so, the DeRosa Group is actively seeking a part time Sales & Leasing Consultant who is bilingual (Spanish/English)! We are looking for a highly motivated individual with a strong marketing, sales and customer service background.

Responsibilities include:

• Executes on-line and off-line marketing and advertising efforts for all available residential and commercial space
• Responds to phone inquiries; provides complete information on the apartment, the property, and area information
• Presents the property, vacant unit, and amenities to prospects in a professional and knowledgeable manner
• Provides prospects with brochure, rental application, and all collateral material
• Follows-up with a phone call and thank you email within 24 hours of property tour
• Hands over all rental applications for approval; verifies all pertinent information and submit to tenant relations manager for approval

Finding the Right Person

After posting the ad on Craigslist, we received only two applicants, both of which never followed up with us after we reached out to them. We put the word out to our local network that we were looking for someone. Then one day my husband was chatting with one of the real estate agents on our team, and Matt mentioned that we were looking for a leasing agent. He said that it just so happened he did have someone to recommend to us. This person was looking to get into real estate.

So, we met with her and interviewed her for the role. The other key part of our hiring process is having potential candidates complete a “personality type” assessment. I highly suggest that you use some type of assessment to help you assess the role you are trying to fill as well as the prospective team member’s strengths. In summary, here were some of the key characteristics we were looking for:

  • Self-motivated, self-driven, assertive (you will need someone who is able to direct themselves – once they are trained!)
  • Relationship and people oriented (able to relate and build quick rapport with prospective tenants)
  • Sense of urgency (your leasing agent will need to be effective at juggling multiple tasks and able to shift gears quickly)
  • Moderate amount of attention to detail (this person needs to be detail oriented enough, but flexible as well)
  • High energy (it will be helpful that they have a lot of stamina to manage all the leads and moving parts to the role)

Good news – the person who was referred to us by the real estate agent met all of these characteristics! So, we brought her onto the team. Her main responsibility is to bring completed applications to the office to be processed. This person will receive a half of a month’s rent as commission. Both my husband and I trained her on how to put our listings on the online outlets such as vFlyer and Craigslist. We attended some open houses with her as well. Since she speaks Spanish and English, she put our listings in both languages on Craigslist!

First Month’s Results

We decided to start her off small and not give her all of our vacancies. Therefore, we gave her two buildings to focus on. One building was a 4 unit multi-family, and the other was a 10 unit multi-family. The 4 unit multi-family was recently purchased and rehabbed. Our team was able to land two tenants, but there were still two left. The other building (the 10 unit) had one vacancy of an apartment that was recently renovated after a tenant moved out.

Related: The Ultimate Guide to Adding Systems & Outsourcing to Work Less in Real Estate

After three weeks of working as our new leasing agent, she has been able to bring in three completed applications (one for the 10 unit and two for the 4 unit multi-family), all of which have been approved for move in. She is doing a phenomenal job. One of her strengths — and a “must” for a leasing agent — is her amazing follow up and follow through. She is also terrific at building rapport and trust with prospective tenants!

Conclusion

I am meeting again with her this week to expand her responsibility to leasing all of our vacancies (which include commercial and residential). We will continue to train her and keep communication lines open. The key is to coach and mentor a new person, not throw them out to the wolves to “figure it out” themselves.

We are glad to give up a half of month’s rent to ensure that our units get rented quickly. Whether you are managing 2 units or 50 units, you can’t do everything yourself. And quite honestly, you don’t want to do everything yourself. You are the business owner, and your responsibility is to build and maintain a thriving and profitable business. Leasing units takes a lot of energy and time, and you really need someone (besides yourself) who can focus their energy on this responsibility.

I would love to hear your feedback!

Are there any landlords still not convinced that you should hire a leasing agent?

Let me know with a comment!

About Author

Matt Faircloth

In 2005, Matt founded The DeRosa Group along with his wife, Elizabeth. At the time, the two person company owned and managed two assets – a single family home and a duplex. Over the last nine years, they have grown the company to a 12 person team owning and managing over five million dollars in residential and commercial assets throughout the central NJ and Philadelphia area. One of DeRosa’s mantras is “to make money while making a difference.”

29 Comments

  1. Larry S.

    We agree with your growth management needing additional help after 20 units. . My wife and I decided years ago that 20 rental houses were the maximum we could handle without a property manager and lease agent. We did have a portfolio of trusted contractors. Our decision was to stop at 20 and not develop into a larger company. Anyone deciding to grow bigger will be well advised to study your great advice given here.

    • Elizabeth Faircloth

      Thanks Larry for commenting and reading! You raise such an excellent point – every investor needs to make the important decision re: how many units they want to own (and potentially manage). Most investors want to own huge apartment buildings but have not really thought out the ramifications of this!!
      Thanks again!
      Liz

  2. Charles Williams

    Liz great article. I fully agreement with you about getting help. We have 20 units now and currently have a 16 unit apt complex under contract. We will be needing help in the very near future. My question to you is this. You mentioned you pay your new leasing agent 1/2 month rent when she fills a vacancy. Once she fills all the vacancies is she compensated for any other duties? Thanks, Charlie-VA

    • Elizabeth Faircloth

      Charles,
      Congrats to you that you have a 16 unit apartment complex under contract!! Awesome news! Great question by the way. We have not set up any other commission plan with her yet re: additional responsibilities. We have an in-house “property manager” (we call the role Tenant Relations Manager) who takes care of the maintenance issues, renewals, and everything that occurs with tenants. We also have a full time office manager/bookkeeper who handles rents, etc. As we continue to work with our leasing agent, I can see expanding her role. However, on the other hand, we really want her to focus on marketing and getting completed applications into the office. That is all we really want her to focus on now. As we buy more property, she will have more and more to do. And she is only part time with us now.
      Hope this helps! Let me know!
      Liz

  3. Julian Starks

    Great article! When I first read that you give half a months rent as commission it seemed like a lot to me but then your follow up point that it puts a fire under the lease agent to get the units rented quicker makes a lot of sense!

  4. Angie Swader

    I agree with the article. I have been an on-site manager for 14 years. Originally at a 354 unit property and the last six years at a 25 unit property. I’ve recently taken on seven houses as a property management advisor for a family of investors. I see the difference a leasing agent makes, as one of the houses had been vacant almost six months and once I was marketing it, I had it rented and occupied within three weeks. Sometimes it’s about using someone for their specialty. You don’t ask your plumber to paint. So why expect your administrative person who is excellent at filing and organizing your paperwork to lease your units? It is a different skill set.

  5. Trent Honea

    I manage our three (hopefully 4 soon – made an offer yesterday) SFH rentals and have done so for about 5 years now. One of the most important members of my team is the Realtor I use as a leasing agent. He pre-screens the prospects to my requirements while making sure all paperwork is covered.

    I have yet to decline a prospect he presented. He also handles all the lease signatures, provides electronic signature portal, handles the credit and background check (I get the raw data with his comments / analysis / suggestions), shows the units, lists them in the MLS, and meets the new resident with the keys when needed. He charges 75% of one month’s rent as a marketing expense and I find it money very well spent!

  6. Erik Nowacki

    Thanks Liz!

    Great and timely information for me. I am working on a 150+ unit rehab project and just closed on a 75 unit complex that is almost fully rented. I’ve been relying solely on the onsite property managers to get the vacant units filled; and it’s not always as quickly as I would like.

    I think I will “borrow” your model. I also appreciate the bilingual aspect as I haven’t been able to tap into that market.

    Thanks again for sharing and getting my brain spinning in a new direction.

    Erik

    • Elizabeth Faircloth

      Hi Erik,
      Wow – good for you!! I would love to hear more about these projects! We are changing up our business plan/focus to begin investing in much larger apartment complexes as well! I would love to hear your feedback on the positives and negatives of what the onsite property managers bring to the table and their effectiveness.
      Glad to hear you are going to borrow the model! Hope it helps you!!
      Looking forward to connecting and thanks for getting my wheels turning!
      Liz

  7. Jerome Kaidor

    This is excellent. And pertinent to my own business. Right now, I’m at 81 units, about to close on 13 more. At each of my complexes, on-site staff shows apartments and gets the applications. I do *all* the off-site telephone work. People call me, I give them the blurb. When applications come in, I call everybody on the app. It’s all VERY time consuming.

    Am wondering – is your leasing agent an employee or a contractor? If an employee ( and I believe he/she would be considered an employee by IRS ), how do you verify compliance
    with minimum wage laws?

    I would *love* to pay someone a half months rent to get a unit rented.

    • Elizabeth Faircloth

      Jerome,
      Awesome to hear! I completely agree that off site telephone work takes up a lot of time. We reviewed the IRS “common law rules” (employee vs independent contractor considerations) and this person is an independent contractor for us. These common law rules include evaluating the situation based on three areas – behavioral, financial, and and type of relationship. There is a lot of info on the IRS website that is super helpful.
      Good luck and let me know if I can help further!
      Liz

  8. Paul A.

    Good article. Just went through something similar as I got rid of my PM, and have just added a realtor to help with the leasing and marketing. Allows me to keep my full time job and focus on that and also protects against the silent income killer: Vacancy.

    Good luck with your expansion!

  9. Terri Bedore

    Great article – and very timely for us. I’m going back to work (a good thing), and won’t be able to answer phones & follow up on interested applicants during the middle of the day. I never would have thought to hire on for just a portion of the work & the idea of a property management company does not work with our niche market. A leasing agent would fit right in with our model – thanks so much for the idea!

    You mentioned a percent based commission, but we only deal in SFRs – are you paying the same percentage for your SFRs as for multiplex properties?

    Appreciate it!

  10. Elizabeth Faircloth

    Hi Terri,
    You are so welcome! Yes, we are paying the same commission on all types of properties. We have mostly multiplex properties. However, we have a single family home that will be available soon and our leasing agent will receive the same commission on that!
    Great question and all the best to you!!
    Liz

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