What is the charge for?:
The Tenant Placement Fee is used basically to cover the costs of showing the property... time, gas, wear and tear on the car etc. We guarantee the tenant up to 1/2 of their lease term. What this means is that if they were to sign a years lease and stay only 3 months, then we would put in a new tenant without charging an additional Tenant Placement Fee. Of course, there could be an additional Referral Fee because this is paid to outside agents not affiliated with our office. If the tenant were to stay 9 months of a 12 month lease, then we would charge the Tenant Placement fee again when a new tenant was found. We figure that if the tenant only stayed a couple of months of a year term, then they probably were evicted, and possibly it was something we could have foreseen. On the flip side, things happen, and if they are in the property for at least 6 months, their departure was probably something that nobody could have forseen, and that's just part of the land lording business.
When is it paid?
This is probably the most confusing "accounting" issue that new owners have. Usually, the biggest reason for the confusion is because owners forget that there is going to be a one time initial charge for getting them the tenant. The payment for this comes out of the tenants initial rent money and shouldn't be confused with a "Referral Fee" which is money paid to an outside broker that brings us a qualified tenant that is accepted.