Investor/Contractor · Moore, SC · Member since 2017 · 54 posts · 28 votes
I am in the process of renovating my first rental unit. I am house hacking on a duplex and almost have the other side ready to rent! I hope to have it move in ready by the first of December. So here's my question for all of you experienced landlords...
Do you make money on applications? If so, how? If not, why not?
If you do make some side cash on the applications, what screening service do you use, how much do you pay and what do you make them pay?
Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
8y
@Ryan Davis We charge $40 per adult applicant. Our screening service through Appfolio costs us $15 per applicant. While the delta may seem like a profit center, when you also factor in your costs associated with the lease up---the time it takes to show a unit, screen the applicant, call references, and do a move-in inspection---I would say you're still in the red.
We are on the low side for our market in terms of the application fee. I'd rather not put up a barrier simply because of the application. With that said, however, I also don't want to set application fees too low.
Developer · Portland, OR · Member since 2014 · 732 posts · 490 votes
8y
@Ryan Davis We charge $40 per adult applicant. Our screening service through Appfolio costs us $15 per applicant. While the delta may seem like a profit center, when you also factor in your costs associated with the lease up---the time it takes to show a unit, screen the applicant, call references, and do a move-in inspection---I would say you're still in the red.
We are on the low side for our market in terms of the application fee. I'd rather not put up a barrier simply because of the application. With that said, however, I also don't want to set application fees too low.
We don't make any money off applications, tenants are required to do a background check ($25) and depending on the property also a credit check ($39 total), all fees go to cozy.co. If your property is in very high demand, or you want to make an extra step to weed out non-serious applications, you could charge a fee, I've seen it before.. but I just don't incorporate it.
Realtor · Hialeah, FL · Member since 2017 · 24 posts · 11 votes
8y
Good afternoon Ryan,
I work as a property manager operating out of South Florida. We typically charge $100 per adult and while the background check doesn't exactly cost that much, it gives you a good gauge on whether that prospective tenant is wasting your time or not. If you do not charge them to do a background check and pay for it yourself, then they are much more likely to move into another unit or not respond to you anymore because they haven't invested any money in renting with you. This is why we charge them, and while we do make money off application fee's its really not that significant of profit and is really more to show solid intent.
That being said, and it took me a few tries to figure this out at first.. if you don't want to steal money from people then you would first meet them, show them your property and ask them to show proof of income. After they have passed that point and show solid interest then ask for the application fee and run the background check to make sure you aren't moving any murderers into your unit. If you do want to make some cash and be an a**hole then you can ask for application fee's upfront and find out the details later if you are going to deny them or not.
We use the RealID service for background checks.
Also, as a friendly tip, make sure your tenants pass the %33 rent to income rule.. Or you're going to have issues with them paying rent in the future.