Property Management Leasing Fee

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In our post titled Rental Property Management Fees, we looked at fees from a somewhat high level perspective. Below we dive a little deeper into a specific fee associated with rental property management, the Property Management Leasing Fee.

What Are Property Management Leasing Fee

The simplest explanation is that it is the fee charged by a property management company to lease a property to a tenant. This fee compensates the property management company for the time and cost they took to fill your property.

How Much is a Typical Leasing Fee

The cost of the rental fee will depend upon where your property is located, the services the property manager provides in regards to filling the property, and if it is a residential or commercial property. It also depends upon if the costs are paid as a one time fee or as an ongoing percentage of the monthly rent.

For a residential lease where you pay a one-time fee, you can expect to pay from 25% to 100% of the first month's rent. If we’re talking about a commercial property then it depends upon the type of property. Is it an industrial, office or retail space? Plus what is the term of the lease and the amount of scheduled net rents.

Commercial leasing fees are negotiable and somewhat tied to the market, but somewhere in the neighborhood of 5-7%, with a declining percentage schedule over a multi-year term.

What Are Some Services Covered Under Leasing Fees

The following services may or may not be covered under leasing fees. Some may be covered under other fees like the management fee. You will need to look at the leasing and management fees to determine which are covered and where they are covered in your unique situation. That being said, here are some services that are often covered under the leasing fee:

  • Determining the market rental rate
  • Advertising the property
  • Showing the property to prospective tenants
  • Screening prospective tenants and conducting background checks
  • Executing the lease documents
  • Collecting the security deposit and first month's rent at the lease signing
  • Conducting a move-in inspection

If there are additional services you want handled under the leasing fee then you want to negotiate that with your property manager.

Wrap Up

Most property managers do not view the Leasing Fee as their primary revenue source. But it is still an important service and the property manager deserves to be fairly compensated for their time and effort. Also remember some property managers will not charge a leasing fee, but rather roll those costs into the management fee. You need to always breakdown and itemize all fees to be able to compare apples to apples.

GSR Property Managers assists property owners and investors in maximizing revenue potential while minimizing the hassles in marketing and managing their properties. We recognize that there are a lot of factors that go into making a property a successful investment and put our experience and knowledge to work for you. Call us at 404-254-4502 or complete our Fast Form to learn more about our services.