19 Apr The Rental Property Leasing Process and Fees Explained
Throughout the last decade, the Austin property management landscape continues to grow. But whether you’re a landlord planning to manage rental properties on your own or an investor planning to hire a professional property manager, you should be aware of the rental property leasing process and fees.
Yes, the lease fee can differ in structure and type. But there are several costs that are quite common for landlords. Whether it’s monthly or annually, if you find the structure or terms of the fees too complicated, you can leave the task to your property management partner.
In this blog post, you will see a breakdown of the rental leasing process and associated fees:
Rental Property Leasing Fees
In a traditional rental leasing fee, you get the coverage for work involved in receiving the lease for the property. Remember that whether you manage the property or a property management company does, the rental leasing fee is essentially the cost a property management company charges in order to lease the property.
The parameters of the fee can include screening applicants, showing the property, choosing a reliable tenant, and approving the tenant based on select criteria. After that, the property manager drafts the legally binding paperwork for the rental lease and initiates the move-in process for the rental property.
Once a tenant signs the lease, the burden of responsibilities will shift to back to the self-managing owner or by your property management partner for continuous management of the rental property. Most property management companies that offer this service also charge a specific percentage on the 1st month’s rent.
In some cases, however, the leasing fee can be included in the comprehensive property management service agreement if you choose to hire a professional property management company to manage your investment.
Rental Property Leasing Process
Choose a Property Management Partner
The first step of rental property leasing starts with choosing a professional property manager. Subsequently, you can move on to the Exclusive Leasing and Authority agreement. It is a legal contract that allows your property management partner to market and lease the rental property on your behalf.
Think of the agreement as collective duties and responsibilities of your property manager. You will just need to provide your bank information to your property management partner so that rent gets paid directly into your account.
Get the Insurance
As a rental owner, one of your responsibilities will be to acquire property insurance (or Renter’s Liability Insurance). You can contact your insurance provider and ask for the certification. Although getting landlord protective insurance is not always required by your property management partner, it is crucial. It safeguards the interests of the landlord when tenancy runs into various issues.
Market Your Rental Property
The next step in the rental lease process involves coordinating with your property manager to roll out various marketing campaigns. Or, if you sign onto a comprehensive service agreement, you will grant complete freedom to your property management partner to carry out marketing campaigns on your behalf.
For the most part, property managers showcase the rental property through beautiful images. You can also curate unique video content to garner the interest of more suitable tenants. Many rental owners roll out 360-degree marketing tour campaigns of the rental properties to maximize their market value.
At 1836PM specifically, we prepare professional marketing photos and videos (if applicable) to make your rental property competitive while it is professionally marketed on the Austin MLS, over 50 top rental websites around the world, as well as, to the clients that our partner brokerages represent.
Choose a Reliable Tenant
Well, this part can turn into the most tumultuous or the most straightforward step. Your property management partner will have to exercise utmost patience, caution, and due diligence to review tenant applications. In short, your property manager will establish criteria to choose a tenant based on employment history, previous tenancies, credit score, relevant references, visa checks, etc.
Terms and Conditions
After approving the tenant for your property, you can then draft and enter into the agreement with that tenant. And if you’ve hired a property management partner, you can leave it to them to take care of the intricate details of the Tenancy Agreement. You’ll want to ensure that the correct documentation is used during this process, as it will serve as your legally binding agreement for all parties involved.
The common elements of the Tenancy Agreement include the tenant’s name, address, property owner, and property manager; agreement key dates; standard terms; special terms; length of the tenancy; required bond amount; and additional rules and conditions. Focus on special terms such as the number of pets allowed in the rental property and cleaning of carpets, etc.
Since it is a legal document and covers a wide range of conditions that serve in the interest of landlord and tenant, make sure to thoroughly review it before signing. Ordinarily, lease terms are no more than 12 months (although this can range) and consist of fixed agreed terms by both parties.
And before you finalize the lease, make sure to review the details of the agreement. Landlords often get blindsided by a specific clause that creates issues later on. So, take your time to understand the details and ask your property management partner relevant questions to get a full grasp of the lease agreement.
Conduct Routine Inspections
Once you get the condition report from your property manager, you will want to ensure that certain routine maintenance and inspections are made going forward. Remember, the conditions report sets the course for a routine inspection. So, make sure the condition report of the rental premises is comprehensive to conduct relevant checks.
For instance, if the condition report highlights issues with floors, walls, or window coverings, prioritize the inspection on these specific elements. You can conduct routine inspections every 3 or 6 months. If you want to maintain the property and ensure high standards, it would be ideal to conduct inspections every three months. Last but not least, always answer maintenance requests and make urgent or emergency repairs.
What about the Renewal of the Rental Lease?
After the fixed period of the rental lease agreement expires, the landlord and the tenant can extend the rental agreement on mutual terms and conditions. In rental lease renewal, you just need to revise the terms in the tenancy agreement.
The Bottom Line
As a rental owner or real estate investor, seeking the expertise of a property management partner always makes sense. Besides, real estate investing has become more complex than rental owners realize. If you want to ensure successful real estate investing, hire an experienced rental property management partner and conduct your own research to learn the basics.
Typically, you can find the leasing fees in the Property Management Contract or Agreement. When it comes to property management, you should be familiar with the leasing process and associated costs right from the start.
Feel free to reach out to us any time. We’re ready to answer any and all of your questions. Swift response and a focus on quality client service is one of our hallmarks to creating a long and successful property management partnership.
By: Kayla Gonzales, 1836PM Marketing Manager