A common practice we have declined to adopt
The standard structure in South Florida property management is a monthly fee — usually 8 to 12 percent of collected rent — plus a separate leasing fee charged each time a unit is leased to a new tenant or renewed by an existing one. The leasing fee is typically half a month's rent on a new lease and a flat sum, often $300 to $500, on a renewal.
For a Brickell unit at $5,000 per month, that structure can mean an additional $2,500 every twelve to eighteen months on top of the monthly fee. For an owner with three units, the leasing-fee line can run into five figures annually. It is, for many firms, a meaningful share of total revenue.
We do not charge it.
Why not
The argument for leasing fees is that the work of placing a tenant is concentrated in a short window — listing, photography, showings, screening, lease preparation — and the fee compensates the firm for that concentrated effort. The argument is not unreasonable on its face. Where it breaks down is the renewal fee, which is charged for work that, in our view, is meaningfully smaller in scope: a renewal letter, a brief negotiation, an updated lease document.
More fundamentally, leasing fees create an alignment problem. A firm that earns half a month's rent each time a unit turns has a quiet incentive to allow turnover. We have seen, in firms we are not part of, the consequences: residents whose maintenance requests are slow-walked in their final lease year; renewal terms offered at rents calibrated to push the renter to leave rather than renew; the same unit re-leased every twelve months at a fee.
We do not believe owners benefit from any of this. The economics of long renewals — a resident who stays three years, four years, six years — are dramatically better than the economics of frequent turnover, even at modestly higher rents. Our renewal rate is 91 percent. We attribute that figure, in significant part, to the absence of a financial incentive on our side to engineer it lower.
What our pricing looks like instead
A flat ten percent of collected rent. No leasing fee on new tenancies. No leasing fee on renewals. No setup fee. No vendor markup; Bay Coast Trades invoices forward at cost. The structure is unusual in this market and it occasionally costs us a conversation with a prospective owner who has decided, on the basis of a comparison with another firm, that ten percent is high. We understand. The math, once it is laid out across a five-year horizon and adjusted for renewal rates, generally favors us — but it requires an owner willing to look at the math.
A note on the conversation we want to have
If you are an owner currently working with a firm that charges leasing fees on renewals, the most useful exercise is to add up what you have paid in renewal fees over the past three years and compare it to a flat-percentage alternative. The number is often surprising. We are happy to do the calculation alongside you on a discovery call, with no obligation. The conversation begins through a complimentary rental analysis.