Leasing a Unit
A lease is an agreement by the owner of a property to allow someone else to use it in return for money. Instead of trying to find someone to lease your property yourself you can enlist the help of a property management company for a fee. The fee or commission is typically a percentage of the total amount of the lease. The fee can be anywhere from five percent to eight percent of the total rent paid by the tenant in a lease.
As a rule of thumb, the commission or fee should be one month’s rent for a renewal of a lease with an existing tenant and a maximum of three months rent if it is a new lease with a secondary tenant. It is strongly advised that this fee is negotiated and is settled well in advance and is documented in the contract.
The typical components of a lease include:
- Name of the property owner
- Address of the property
- Site being leased
- Name of the tenant
- Length of the lease
- Monthly rent to be paid
- Terms of lease including the rights and responsibilities of both the tenant and the landlord
- Any additional clauses if applicable
- Date of signing the lease
A property management company will advertise and market vacancies at current market rents whenever a unit is vacated or becomes available. A good property management company will perform due diligence and will be aware of the market rates for comparable properties.
The property management company is also responsible for performing credit check of a potential tenant, showing the tenant the property and addressing any of their concerns or questions. Once the tenant agrees to rent a unit, the property management company prepares the lease agreement and other documents, collects the security fee and hands over the key of the unit to the tenant.
The property management companies are also responsible for maintaining relationship with the tenants as they are the end customers of the owners of the property. It is also extremely critical that the property management company takes care of its tenants as this improves the prospect of a renewal of a lease and the chances of existing tenants spreading good word about the property and the property management company.