Property Leasing

In addition to collecting rent and paying bills, property management companies are also responsible for leasing vacant units to their customers. A lease is an agreement by the owner of a property or piece of equipment to grant use of it to someone else in return for some money. Typical components of a lease generally 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

As a fee for the services provided, property management companies tend to charge a fee or commissions which is typically negotiated to a percentage of the total amount of the lease. It is strongly advised therefore that this fee is negotiated and is settled well in advance and that it is well documented in the contract. The fee can be anywhere from five percent to eight percent of the total rent paid by the tenant in a lease. As a general rule, 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 along with a secondary tenant.

One of the typical activities performed by the property management companies tend to include advertising and marketing vacancies at current market rents whenever a unit is vacated or when it becomes available. A good property management company will perform due diligence and will be very aware of the market rates for comparable properties. At times, the property management company might also have to offer some promotions or discounts in order to secure a tenant. Under such circumstances, it is highly recommended that the property management company co-ordinates with the owner of the property in order to make sure that the promotions are accepted by the owners as they directly impact the net income and the value of the property if the owner is trying to sell the property.

The property management company is also responsible for performing credit check of a potential tenant, showing the tenant the property and addressing any concerns or questions that they may have. Once the tenant agrees to rent a unit, the property management company prepares the lease agreement and other documents, collects the security fee and will hand over the key of the apartment to the tenant.

The property management companies are also responsible for keeping the relationship with the tenants as they are the end customers of the owners of the property. While there are several examples where the tenants have reported horror stories about the manner in which their requests or complaints were treated by the property management companies, it is extremely critical that the property management company takes good care of its tenants. This not only ensures a good renewal of a lease but also increases the chances of existing tenants spreading good words about the property and the property management company which can assist them in securing new leases.

Article Source: http://www.realestatepropertyarticles.com.

About the Author:
Derek Greenfield is a contributing real estate editor at http://www.realestatepropertyarticles.com/. This article may be reproduced provided that its complete content, links and author byline are kept intact and unchanged. No additional links permitted. Hyperlinks and/or URLs must remain both human clickable and search engine spiderable.