A placement fee (also known as a leasing fee or finder's fee) is a commission charged by a property management company (PMC) to the property owner for the service of finding, screening, and securing a new tenant for a vacant rental unit. In short, it's the cost of filling a vacancy.
The average placement fee (or leasing fee) in the Canadian property management industry is typically structured as a percentage of the first month's rent
The most common range for a residential tenant placement fee is:
50-100% of the first months rent.
How Should I Handle Tenant Placement Fees in Propra?
Managing tenant placement fees in Propra involves specific steps to ensure accurate billing and record-keeping. This article provides a detailed explanation of when and how to set up tenant placement fees for property owners and addresses common questions about the process.
Overview of Tenant Placement Fees
Tenant placement fees are one-time charges typically added when setting up a lease for a property. They should not be entered as recurring management fees in the owner’s financial tab, as recurring fees are designed for ongoing management services rather than one-time transactions.
Steps to Add a Tenant Placement Fee During Lease Creation
To set up a tenant placement fee:
Begin the lease creation process in Propra.
At the final step of creating the lease, look for the prompt to enter the tenant placement fee amount. This will create a payable bill for the property to pay your management company.
Only select to create a revenue for your property management company if you are doing your admin accounting in Propra as this action will create an invoice for your company.
Complete the lease setup. Doing so will automatically generate a bill for the property owner to pay the tenant placement fee.
Important Note:
Avoid adding tenant placement fees as ongoing management fees in the owner’s Financial tab. Since these are one-time charges, they should only be entered during the lease setup process.
When Should You Apply the Tenant Placement Fee?
Tenant placement fees should only be added when you are ready to charge the property owner. If the fee isn’t being collected immediately, do not add it as a one-time charge yet. Instead, wait until the lease creation process begins, where you’ll have the option to include the placement fee. By carefully timing the addition of charges, you can avoid unnecessary adjustments or errors in the billing process.
Common Mistakes to Avoid
Adding the Fee Prematurely: Only input the tenant placement fee when you’re ready to collect it. Adding it too early can lead to confusion or inaccurate records.
Setting the Fee as a Recurring Charge: Ensure the tenant placement fee is entered as a one-time charge during lease creation to reflect its singular nature.
Conclusion
Proper management of tenant placement fees in Propra ensures accurate billing and avoids common mistakes. Add the fee during lease creation and only when you’re ready to collect it. Following these guidelines will streamline the process and maintain clear financial records for both you and the property owner.