In our previous 2 posts, we talked about How Long Does It Take to Rent Out My Unit in the Bay Area and How To Avoid Getting Sued in the Leasing Process. Today, we will take a look at exactly How Much Property Management Companies charge to rent out your property in the Bay Area.
Common Leasing Fee Structure
The two common leasing fee structures are:
- a high percentage of one month’s rent, such as 75% or 100%
- a flat fee, usually a few hundred dollars.
We follow the first structure.
Why do you charge 75% or even 1 month of leasing fee while other charges a flat rate?
Flat rate leasing companies almost all offer lock-box only showing. The company will install a lockbox at your property with the key inside and give a code to the tenant upon entrance to check out the unit by themselves. There are two common companies that offer such service: ZipRent charges $950 and Zenplace charges $599 flat rate for leasing.
It’s only fair for property owners to wonder what they will miss out by going with lockbox-only companies. Here are the things websites won’t tell you:
That costs more in reality
Each property has its own selling points, leasing without an in-person agent is like selling a piece of art in a supermarket. It may eventually sell, but it may take months or maybe even longer. Each week of vacancy is about 25% of one month’s rent. If we rent out your unit 3 weeks faster than the competitor, we’re already paid for. Then, you don’t have to deal with finding a tenant to fill the space.
Their method works in theory, but not in practice
Often times, we have units for rent in the same condo community as these companies. Believe it or not, their prospective tenants who can’t figure out how to open their lockbox or how to enter the building, they end up seeing our signs can calling us for access to their units. Well, we were sorry we couldn’t help them, but we told the we had another unit in the same community that our agent could show. Despite our asking rent is higher, we were actually able to show THEIR tenants to OUR units and eventually rent out OUR units at our higher rent price. Effectively, those companies are sacrificing their landlord’s interest to benefit our landlords.
Higher maintenance
When dozens of renters trample over your unit over months of time, you not only lose on vacancy, you may also pay for an additional cleaning before the real tenant moves in. That’s another $200-350 that you will pay, but these companies won’t tell you upfront.
Liability
If your unit is located in a condo complex, using such on-demand no-agent showing service actually poses huge liability to the property owner. Now you are letting complete strangers in a secured community with no agent or owner escorting them. Any theft, vandalism or property damage in the community can be directed to you, the condo owner. Because of security issues, HOAs generally love our company and despise those on-demand showing companies. They refer tenant leads to us instead of them. That’s another reason traditional full-service leasing companies can rent out your unit faster than the lockbox-only companies.
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