Realtors make money on rentals through several key avenues:
1. Commission on Leasing: Realtors typically earn a commission when they help property owners find tenants. This commission is often a percentage of the annual rent, commonly ranging from one month’s rent to 10% of the total lease value, depending on the market and the agreement with the landlord.
2. Property Management Fees: Many realtors also offer property management services for landlords who prefer to outsource the day-to-day operations of their rental properties. Realtors charge management fees, which can be a flat rate or a percentage of the monthly rent collected, usually between 5% to 10%.
3. Lease Renewal Fees: When a tenant renews their lease, realtors may charge a fee for negotiating the renewal and preparing the necessary paperwork. This fee can be a flat amount or a percentage of the rental rate.
4. Advertising and Marketing Fees: Realtors often charge landlords for advertising their rental properties. This can include costs associated with listing on multiple platforms, professional photography, virtual tours, and other marketing efforts.
5. Consultation Fees: Some realtors may charge a consultation fee for providing advice on rental pricing, property improvements, and market trends.
6. Referral Fees: If a realtor refers clients to other service providers, such as maintenance professionals or contractors, they may receive referral fees for these connections.
By leveraging these various income streams, realtors can build a profitable business in the rental market.
