I am a landlord with questions about management fees in regards to new leases
I am working with a management company and they are charging the standard 5% for that service. They are also charging 5% for bringing in new tenants. My question is, i have found two new tenants myself (8,000 sq ft) and made the introduction to the management company for on boarding and they are still charging me the 5%. Is this standard? Would it be out of line to ask for a reduction in this fee if I find the tenant?
[{"id": "hk6usw5", "text": "What area are you in? Is this in regards to leasing commissions?\n\nI have typically seen 6%, if no outside broker. It really most likely depends on your agreement. However, I would make the argument you deserve a reduction if you are introducing a tenant. In my mind, this is half the work. Commissions can certainly be negotiated.", "replies": [{"id": "hk6wnu5", "text": "I mean it should be in the management contract. If it isn\u2019t then it needs to be amended. I can see an argument on their end that they earned a fee if you just introduced them and they then did all of the work on getting them to sign a lease.  \n\nThat said if you have a multi tenant retail space don\u2019t piss off your management company / leasing brokers, remember they don\u2019t act exclusively for you and can steer tenants to other sites.", "replies": [{"id": "hk77aem", "text": "This is the best advice", "replies": [], "depth": 3}], "depth": 2}, {"id": "hkb8vw3", "text": "I strongly disagree. Liability and negotiating is where all the work is at. Finding a lead is easy, closing the deal and covering your ass for litigation is why ppl ask for commission. There shouldn\u2019t be any discounts.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hk6uwqq", "text": "It wouldn't be out of line had you stated that when you dropped the tenants in their lap.\n\nAfter the fact, you can ask.", "replies": [{"id": "hk7boll", "text": "Yeah. Those tough talks need to be quick and upfront.", "replies": [], "depth": 2}], "depth": 1}, {"id": "hk74it4", "text": "Is their 5% commission on new leases or renewals an exclusive right to lease? If so, they get paid regardless. I'm on both sides of the business as LL and broker. We just accept the fees as the cost of doing business. Leverage your relationship with the management and leasing company to see if they can bring you new opportunities for things to buy that you'll give them to manage and lease, if you're looking to expand", "replies": [], "depth": 1}, {"id": "hk7ai9u", "text": "5% was the going rate decades ago.  I have seen lower rates without sacrifying service.  Finding tenants is the hardest part.  I suggest you shop around or add a clause they do not charge you say one month or two if you find your own tenants.", "replies": [], "depth": 1}, {"id": "hk7ddbp", "text": "Agreed with 6% on new deals; 3% on renewals.\n\nAlways pay for good advice!", "replies": [], "depth": 1}, {"id": "hlbvf81", "text": "Why don\u2019t you just let them do their job?", "replies": [{"id": "hlbyhxc", "text": "Because I\u2019m not a jackass and if I have an opportunity to get another 175k per year under lease to a reputable tenant for five years when I have units sitting vacant I\u2019m going to jump on it. You would just sit back and wait and pass up on 15k per month?", "replies": [{"id": "hldqi4h", "text": "I would hire a competent team and let them do their job.", "replies": [{"id": "hle3evq", "text": "Right so I shouldn\u2019t be proactive in trying to occupy empty space when something falls in my lap. when someone in my network says \u201cHey do you have any space coming available in your building?\u201d the prudent thing to do is say I don\u2019t know that\u2019s my management companies job. People like you ruin useful forums like this for gathering useful information.", "replies": [{"id": "hle40mf", "text": "Not really. It just seems like you\u2019re in different spot than I am. If you own 1-2 assets you might involve yourself in management. If you own many assets you should build and trust a team who does that for you. It seems like your not quite to the asset manager role, and that\u2019s ok.\n\nMy whole point is that commercial owners should focus on growth and let their team focus on the details. If you did that the commission you paid your team wouldn\u2019t matter. You asked a question, I answered. No reason to be offended.\n\nYou sound like a smaller owner. If you don\u2019t take care of your team they aren\u2019t going to take care of you. Pay them their money.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}]