The rental market in Northern Virginia is booming right now, and as a landlord, you’re likely asking yourself how to maximize profits without losing tenants. One way? Leasing fees. Leasing fees are meant to offset your expenses when screening, finding, and securing tenants.
If you set them too high and scare tenants off, that defeats the purpose. Set them too low and you eat into your profit margin as a landlord. Then there’s the other fees to consider as well, including application fees, pet fees, late fees, and so on.
Read this guide as we will lay out how leasing fees work, which other fees you have to be aware of, and what you can charge while still remaining competitive while protecting your investment.
What is a Leasing Fee and How Does It Work?
A leasing fee covers the time-consuming process of getting a tenant into your property. You can think of it like a finder's fee for all the work that goes in behind the scenes of getting a tenant placed: advertising the rental property, screening applicants, conducting background checks, and lease paperwork.
Some landlords charge a flat fee (for example, $300), while others charge a percentage of the rent for the first month (for example, 50-100%). But who pays for it? This is where it gets interesting.
In some markets, tenants pay it as part of move-in costs, especially if you make your property high-value and modern. In other markets, landlords handle it as a cost of doing business (especially if the market is competitive). There is no set rule, even though local custom is important.
For example, when rental properties are in high demand, you may be able to pass the fee off to a tenant anywhere in Northern Virginia, but in slower markets, pushing those fees off on your potential tenants is risky.
A few things to keep in mind:
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Be Transparent: Everyone hates hidden costs. Be clear about any charges in every listing and every lease agreement.
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Provide Value: Tenants may be less vocal about the cost if they see what the fee includes (e.g, thorough screening = better neighbors).
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Know the Law: Several states have laws around fees for leasing. Some place a cap on them, some require them to itemize the fee, and Virginia does not have regulations regarding leasing fees under law (not yet!), but check regularly.
At the end of the day, these fees aren’t merely covering costs but setting the tone for your landlord-tenant relationship. Landlords should also clearly outline the leasing fee in the rental agreement to avoid any misunderstandings.
Common Rental Fees Landlords Should Know
Apart from rent fees, landlords utilize other fees as protection for their investment. However, not all fees are created equal. Here is a summary of the common fees and how to fairly impose them.
1. Application Fee ($30–$50)
The application fee is related to a landlord's cost of screening tenants (credit checks, background reports, and sometimes income verification). This fee is normally non-refundable. If a landlord charges too much for the application fee, they risk deterring good applicants.
Virginia laws do not have a limit on application fees, however the charging fees reasonable to the actual costs is the best course of action.
2. Security Deposit (1–2 Months’ Rent)
The security deposit is basically a safeguard for damage to property or unpaid rent. A deposit is refundable once the tenant fulfills lease obligations. Virginia law limits the amount a landlord may charge as a deposit to no more than two months’ rent and requires landlords to return deposits within 45 days from the tenant's move-out date, subject to valid deductions.
3. Pet Fee ($200–$500) or Monthly Pet Rent ($25–$50)
Pet ownership creates additional wear and tear to a property, so these fees are designed to somewhat offset risk. A pet fee is a one-time fee that is akin to a fee for deep cleaning after, while pet rent is an ongoing fee.
Make sure you clearly define the differences in the lease. Tenants are often discouraged when owners assume a "pet fee" was included in the rent, which often leads to disputes.
4. Late Rent Fee (3–10% of Monthly Rent)
This fee is meant to help encourage tenants to pay rent on time, but you want to make sure it is reasonable. Charging 10% could feel punitive, while 3% or 5% is much more common. The state of Virginia requires a late fee to be written down in the lease, so tenants cannot be surprised with added fees.
5. Early Lease Termination Fee (1–2 Months’ Rent)
Life happens, and sometimes tenants will need to end a lease. Instead of locking the tenant into a contract (or incurring lost income), this fee allows a tenant to break the lease while covering the cost needed to re-rent the property.
Virginia allows for Early Lease Termination fees as long as they are stated in the lease, as well as being based on covering damages, instead of being a penalty. A common practice is charging two months' rent, which is meant to allow time for Landlords to find a new tenant. Be detailed in the lease agreement so that vague legal language does not cause concern for both parties.
The goal of any of those fees is to protect your property, and not penalize your tenants. Clear explanations in your listings and leases will prevent misunderstandings. If in doubt, ask yourself, "Would I be upset to pay this amount if I were the one renting?" Reasonable fees help keep good tenants.
How to Set a Competitive Leasing Fee Without Losing Profit?
Finding the right leasing fee is like balancing on a tightrope; charge too high and they walk away, charge too low and you lose out. Here's how to strike that balance.
1. Research Local Market Rates
Begin by checking what similar properties charge. On a comparative basis, leasing fees in Northern Virginia generally range from 50-100% of one month's rent. Look at similar units in your area; are there move-in specials offered? Amenities? This simply helps you charge a comparable fee while accounting for your property's intrinsic value.
2. Consider Your Costs
Figure out your true costs, which include:
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Marketing (photography, listings, ads)
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Tenant screening (background checks, references, credit reports)
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Administrative work (preparing a lease, showings)
Let's say these all add up to $800, and you are only charging half a month's rent ($1200) - you are still making a profit. But if the costs start to climb, you should evaluate your fee.
3. Factor in Demand
In a hot rental market, you can probably get away with charging high fees. If your property has been sitting vacant for a while, you may want to consider a reduced fee or offering to split the fee with the tenant on a temporary basis. Some landlords do tough it out and waive the fee altogether as a move-in incentive when the real estate market is slow.
4. Be Transparent
Clearly describe what the fee includes in your listings. Tenants are generally more accommodating when they recognize that they’re paying for in-depth screening (which also translates to better neighbors) and accessibility to a professional.
The ultimate leasing fee covers your expenses, stays competitive, and feels fair to tenants. Try experimenting with your approaches and see how the numbers compare to the vacancy rates.
If you are using a property manager, find out how their leasing fee compares to your DIY costs. This is important as the demand for reliable Northern Virginia property management continues to rise as the region's rental market expands.
Conclusion
Keep in mind that every rent fee should be fair, transparent, and easily compared to local market circumstances, from lease fees to pet leases.
In the very competitive rental market in Northern Virginia, you may want to lean toward being flexible. Being slightly lower than your fees may sometimes be how you get a good quality long-term tenant quicker than getting a dollar more than the market, so it may be worthwhile to be flexible when possible.
