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How Apartment Locators Make Money


This post is a brief description of how apartment locators make money. 

How


Apartment complexes pay you commission fees when you bring them paying tenants. 

Why 


Apartment complexes are owned by big investment companies looking to maximize investment returns. 

Empty units (also known as vacancy) is the biggest expense apartment complexes have.

Less tenants. Less money.  More tenants more money. 

To solve this problem, these investors hire professional management companies to get tenants and minimize vacancy. But they have lot's of other stuff to do too. They need to maintain the building, handle leases, do tours, put on events for residents, and handle general miscellaneous bullshit the world throws at them. 

So if somebody comes along and brings them a qualified client, the building is like "Oh wow this is really valuable. Somebody is doing our job for us!"

Therefor apartments value people bringing them qualified clients. 

When you bring an apartment complex a paying client, they make money. 

How much do apartments pay? 


This varies. 

Apartments calculate commissions in one of two ways: Percent of a month's rent (the most common) and flat-fee (less common)

Percentage Commissions Example: 

  • You have a client that rents a $1500 1 bedroom apartment for at a building that pays 100% commission. 

  • The apartment building will then pay your broker $1500. 

  • It's very common for apartments to pay out 100%. Sometimes they pay less, like 75%, 50%, 25%, etc. 

  • Sometimes they pay more than 100%. Some buildings, especially brand new buildings pay out 125%, 150%, or the holy grail of commission: 200%. 

Flat fee commissions are simple. 

  • A building can pay $100, $200 $500, $1000, $2000, $3000, etc. 

Commissions can vary on a few factors

  • Bedrooms 

    • Sometimes buildings pay different depending on the floorplan type. For example, $1000 for 1 bedrooms, and $1500 for 2 bedrooms. 

  • Lease Length - Max commissions usually happen for 12 month+ leases. 

    • The building may pay less for shorter team leases. 

    • 100% for 12 month leases

    • 75 for 9 month leases, 

    • 50% for 6 months. 

    • etc. 

  • Send/Escort

    • Here's a big thing with apartment locating - buildings sometimes have different commission rates depending on if you physically join the apartment tour with the client (escort) or if you don't (send)

    • In some markets like Houston & Dallas, it's very common for buildings to pay the same commission for both sending/escorting. In some markets, buildings are more anal about this, and demand that you be there as part of the tour. 

    • Markets like Austin are a blend of both. 

  • No Commission

    • Not all buildings pay commission. This is a big thing with apartment locating. Your client can choose a building that pays zero commission and all your work goes to waste. That sucks. It's like clicking the bomb on Minesweeper. 

      • The number of low/zero commission buildings depends on your market. This is why apartment locating doesn't work in all cities. 

      • Your city may have many buildings that pay high commission. This makes your market great. 

      • Your city may have a ton of buildings that pay zero/low commission. This makes your market shitty. 

Takeaway


Apartment buildings pay you because you solve one of their biggest problems - vacancy. The more desperate buildings are to fill up empty units - the more they will pay when you bring them tenants.