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Hi all, I am relocating to the west coast for 2 years and thinking of renting my tribeca condo out when I am away. First, if I hire an agent to lease out my apartment, what is the standard leasing commission? Second, I am thinking of having the same agent manage my condo/the tenant so I don't have to do anything but collect the rent. What is the standard management fee? Thanks in advance for any insights!
It's a condo so you really want to pay a broker to manage an apt that you are paying a monthly maintenance fee for. All you need to do is tell your tenant to call front desk if there is a problem. Why would d you even use a broker since Tribeca has the lowest vacancy rate in Manhattan? Do you really want your apt to linger on the market because that's what's gong to happen since very few renters are willing to paying a brokers fee of 15%.
Perhaps you could put your ad up here on Streeteasy to get a tenant? I believe the good folks at Streeteasy would help you do this for a fee that is much lower than a broker fee!
That is what I would say. In addition, just tip the super a few hundred so that all the stuff is in the apartment is taken care of including a little spying on the condition of the apartment, wild parties etc (make sure that the super is allowed to enter as per the rental agreement every month or two to ensure everything is in the working order). I would offer no fee rental but two months deposit plus first month rent so that you get more solid tenant. The rent can be easily wired to your account by the tenant or a check can be mailed.
Standard leasing commission is 15% of the first year's rent, paid by the renter, so it doesn't come out of your pocket. What you would pay are fees to the condo board for the sublet, which are probably in the range of $500-$750. Of course you are liable for these if you go the no-broker route too.
As far as taking care of the tenant, most agents who take a listing, including me, will do a little oversight of the tenant the first year, just to make sure you're happy.
If you need property management above and beyond that -- and few people in NYC do -- property management firms charge 10% of rent. Some agents do this also -- I am not one of them but you could ask around. The agent who specializes in your building might.
DG Neary Realty
I love it when brokers say that the leasing commission does not come out of the owner's pocket. Yes, it is true, the tenant usually writes the commission check, but of course, unless you are dealing with someone who doesnt give a damn about their money - THAT 15% COMES INTO PLAY WHEN A TENANT DECIDES HOW MUCH THEY ARE WILLING TO RENT YOUR APARTMENT FOR.
So, in truth, by using a broker, you as the landlord lose profit - 15% of your annual rent I would say.
You can post an ad on streeteasy for a pittance as a NO FEE listing. Your condo probably requires an application process, credit check, etc which you can perform. You don't need to overpay a broker for something that modern technology lets you do yourself.
I always wonder why someone would use a broker for both of these tasks rather than a management company, as most management companies can also act as a brokers and are likely much more proficient at managing your asset, which is really the more important part...
contact management companies, they will gladly also lease it for you....
So you want to rent your 2 bedroom. You want $6000.00 per month because that is the going rate for a no fee 2 bedroom in your condo. Here comes Jim the broker and tells you "hey I can list your apt for free". "Free I tell you so why not use me". $6000 per month comes out to about $9000 in commission fees the renter will have to cough up. Once he tells the renter it's going to cost him $9,000 extra for the privilege of renting your apt the renter will probably look elsewhere. By listing with the broker he now has caused your rental pool to shrink to just those who are very happy to pay $9,000 in commission fees. He eliminated all those renters looking for a no fee apt which make up the majority of renters. The $6000 per month is really 6,750 per month to the would be renter because the $9,000 fee gets divided by 12 months in the renters mind. So when the apt lingers for some sucker willing to pay $9000 in commission fees your stuck losing several months of the $6,000 bucks . What the broker will then have to do to make the apt rent quickly is drop the rent to 5300 per month so the renter can absorb the commission fee. By listing it with a broker your basically dropping your rent to below fair market or losing the monthly rent because very few renters are in the market to also pay a commission fee to the broker.
Question how many renters out there are willing to pay a fee to a Broker?
If I had to guess the pool of renters who are not willing to pay a commission fee to brokers represents about 85% of all those in the market to rent. Hence the majority of the market
Therefore if only 15% of all renters are willing to pay a commission fee to a broker you are marketing your apt to a very small niche market. Probably, that's the reason why most for fee apartments linger on the market for a longer period of time.
There goes the argument that the it cost nothing to the owner to list their apt for rent with a broker.
No renter joey - maybe 85% don't WANT to, but for market rate units, over say the past ten years about half DO, because so many rentals are fee-only.
"What the broker will then have to do to make the apt rent quickly is drop the rent to 5300 per month so the renter can absorb the commission fee."
At this point, even though your rent is comparable to the no-fee listing, it'll still linger. People have been conditioned to have an uneconomical aversion to paying broker fees. So after a month or two of lingering at $5300, that's where I come in. I put up a bid at $4500. You are unhappy, you take it personally. But on the other hand, you've now gone hungry for a few months and are getting desparate. So, we go back-and-forth and get it done at $4800. How the hell did it get from $6000 to $4800? But the fee didn't come out of your pocket.
My suggestion to you is to have it listed as no-fee and pay your broker a fee of 1 month's rent. You'll net significantly more money.
FP: "so it doesn't come out of your pocket"
Do you really believe that in any way beyond the literal sense?
I think paying the broker's fee as an out of town LL is the thing to do, at least when you first buy the place. If you make the tenant pay the fee, then net them out by giving them two months free on a two year lease.
Having just gone through process of renting an apartment in New York, I am fascinated by this subject. At the outset I note that I believe brokers perform a valuable function and were I a landlord, I would use one. My only question is why a landlord thinks it is in their best interest to have the tenant pay the broker's fee? As a tenant who just paid a broker's fee, I was actually fine with it and felt that in the long run, it was in our interest to pay the broker's fee to get lower base rent because we plan on renting for a number of years, if not indefinitely. I am a firm believer in market efficiency, and I would expect any market in New York to be the paradigm of market efficiency, but I am still confused by this one. I would love to hear from a landlord out there why they think it is in their interest to have the tenant pay the broker fee? Why not just pay the fee yourself and recoup it from tenant in higher base rent? The benefit of this approach increases if tenant stays beyond a year.
as a landlord, it was in my best interest to ask for a fair market rent and to handle the renting myself with no fee. done. period the end. everyone is happy.
except the brokers I guess.
"For one, you have to be the one that manages all the inquiries, credit checks, and scheduling showings"
Lol put listing in streeteasy and schedule a showing for one day. A place like Tribeca will rent probably the same day you show apt.and you can get a higher rent than using a broker because the tenant does not have to pay a big fee.
As far a a credit check the condo sends that info out to a tenant check agency so that's what a broker does he gives it to the condo board with the lease agreement and they send it out to a tenant check agency.
Now if you have an apt in a crappy location than by all means use a broker but Tribeca give me a break
My company would love to have your listing, and it won't cost you a penny. My company, Rent-Direct.com (http://www.Rent-Direct.com) specializes in no fee apartments for rent. If you list with us, in addition to any other listing venue you use, you will start to get calls directly from renters who are looking to save the 15% brokerage fee. That means that you will be able to get a bit more on your rental - or perhaps an additional month of security, which will give you greater piece of mind. Feel free to call us: 212-807-1414. Thank you.