How many of you are charging application fees?

General Landlording & Rental Properties
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How many of you are charging application fees?

Craig Garrow
Real Estate Broker · Malone, NY · Member since 2013 · 345 posts · 70 votes
Just looking to find out who's charging fees for rental apps, and what you're charging? Have you had any push back from a tenant who was denied?
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
10y

I started charging application fees four years ago. Charging a fee will automatically screen out some potential "problem" applications. I manage 210 rentals and you'll be amazed how many times people want to rent an apartment or house but can't even afford the application fee. I also disclose up front what my screening process includes. I am telling the truth when I say my applications were cut in half within a few months but so were my problems!

I charge $20 per adult and the background check costs me $16. My fee is 100% non-refundable. If granny dies 15 minutes after they submitted the application and they have to go back to Kansas, I still keep the fee. Be sure to disclose this up front.

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  • Nada Mohamed
    Real Estate Broker and Attorney · Durham, NC · Member since 2015 · 74 posts · 73 votes
    10y

    Hi there,

    I don't personally charge an application fee, but use a service for background/credit check that does. Want to make applying for one of our rentals as easy as possible.

    Nada

    1Reply
  • Assata Moore
    Investor · Chicago, IL · Member since 2015 · 40 posts · 24 votes
    10y
    Originally posted by @Craig Garrow:

    Just looking to find out who's charging fees for rental apps, and what you're charging? Have you had any push back from a tenant who was denied?

     cozy.co is a great site to use for this.  Yes, charge.  Make it clear that it's a non-refundable fee.

    4Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    10y

    I have gone on record saying that I don't charge application fees, and it's for a few reasons:

    a) I don't want to deal with cash or money orders at the showings.  I'm not interested in people knowing I carry cash with me, because I don't.

    b) I find that I can get more applicants by not charging an application fee.

    c) I can rule people out pretty quickly with the open records we have in my state, whether it's on the criminal side or the eviction side, as well as financial judgements.

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    4Reply
  • Craig Garrow
    OP
    Real Estate Broker · Malone, NY · Member since 2013 · 345 posts · 70 votes
    10y
    I've heard of cozy. Is that a site where I can input all of the data myself? I'm in a super rural area and most of my tenants either aren't savvy enough or don't have the capability to do it themselves.
    0Reply
  • Craig Garrow
    OP
    Real Estate Broker · Malone, NY · Member since 2013 · 345 posts · 70 votes
    10y
    Dawn Anastasi I haven't been charging, but I've had about 5 potential applicants in the last year apply, have me screen them and get right up to lease signing, then bail. At least if I charge a nominal fee, I can cover my time somewhat.
    0Reply
  • Assata Moore
    Investor · Chicago, IL · Member since 2015 · 40 posts · 24 votes
    10y
    Originally posted by @Craig Garrow:

    I've heard of cozy. Is that a site where I can input all of the data myself? I'm in a super rural area and most of my tenants either aren't savvy enough or don't have the capability to do it themselves.

    Got it.  It works best if they enter it on their own.  However, it may be possible for you to do it as long as you have all of their information, just more work on your part.  Otherwise, just charge and use a paper application and then check your local court docs to determine their credibility.  Good luck.

    0Reply
  • Dawn AnastasiPro Member
    Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
    10y
    Originally posted by @Craig Garrow:

    Dawn Anastasi I haven't been charging, but I've had about 5 potential applicants in the last year apply, have me screen them and get right up to lease signing, then bail. At least if I charge a nominal fee, I can cover my time somewhat.

    Don't wait until you get to lease signing.  Collect a holding fee once you approve them.  Even if you collect $100 or $200 if they bail you keep the money because it's a non-refundable fee, not a deposit.  And they would be less likely to bail on $100 or $200 than $20 or $30.

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  • Beth L.
    Investor · Hagerstown, MD · Member since 2014 · 299 posts · 140 votes
    10y

    @Craig Garrow I charge $25/application per adult. This mostly covers my background check. I haven't had any issues and this way I know they are interested. I use www.tenantbackgroundsearch.com and have had great success. In Maryland, landlord/tenant laws allow charges up to $25 for application fees.

    0Reply
  • Roy N.Pro Member
    Rental Property Investor · Fredericton, New Brunswick · Member since 2013 · 7k+ posts · 4k+ votes
    10y

    We also charge a $25.00 per adult fee {which is a real bargain these days when you consider where the Loonie is sitting ;-)} which covers half of our screening costs.  

    Furthermore, if the candidates are successful and we arrive at a lease, we credit the application fee towards their security deposit.   If we do not process the application, we return the fees.

    1Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    10y

    I started charging application fees four years ago. Charging a fee will automatically screen out some potential "problem" applications. I manage 210 rentals and you'll be amazed how many times people want to rent an apartment or house but can't even afford the application fee. I also disclose up front what my screening process includes. I am telling the truth when I say my applications were cut in half within a few months but so were my problems!

    I charge $20 per adult and the background check costs me $16. My fee is 100% non-refundable. If granny dies 15 minutes after they submitted the application and they have to go back to Kansas, I still keep the fee. Be sure to disclose this up front.

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    5Reply
  • Jonathan Wildy
    Investor · Atchison, KS · Member since 2015 · 46 posts · 6 votes
    10y

    I charge a $40 fee... I used the Bigger pockets recommended Background/credit check... I didn't like it though because it then had tenant fill in information to send to me... so the whole application was like... why did I get all this info.  Anyways... they were happy to pay and only took one solid application for my first rental.

    0Reply
  • Jonathan Wildy
    Investor · Atchison, KS · Member since 2015 · 46 posts · 6 votes
    10y

    I also, collected deposit, 1st month rent and fees all together and deposited the week before move-in so all was cleared

    0Reply
  • Kay Kay Singh
    Rental Property Investor · Fort Wayne, IN · Member since 2016 · 258 posts · 177 votes
    10y
    I charge an application fee of $35 for two applicants and $25 for one and have never been questioned about it.
    0Reply
  • Jeff Gates
    Investor · Cathedral City, CA · Member since 2014 · 481 posts · 170 votes
    10y

    Unfortunately everyone is not honest. You must weed out the evictions and the criminals. And many folks just walk away. Should the landlord pay fees for applicants that change their mind, no! 

    If someone is untruthful they may not fill out the application if they are assured it will expose them. 

    This is the correct process. On bad tenant can spoil everything. 

    1Reply
  • Max T.
    Investor · Philadelphia, PA · Member since 2015 · 3k+ posts · 3k+ votes
    10y

    I have used mysmartmove for background checks. The tenant pays them directly. I believe it is $35 per person. I do not collect any money directly.

    3Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    10y

    We charge $25 per applicant over 18 years old.  This covers our charge for a credit, criminal, eviction check.

    With that said, we let the candidates know the minimum qualifications before we take any money from them.

    0Reply
  • Jim Adrian
    Architect · Papillion, NE · Member since 2015 · 1k+ posts · 840 votes
    10y

    I charge $35 for a married couple with both of them being background checked.  I eat most the cost of one background check.   If I get a non married couple or college kids for a Joint Tenant then I charge them each $35.

    0Reply
  • Jeff B.
    Buy & Hold Owner · Redlands, CA · Member since 2015 · 5k+ posts · 2k+ votes
    10y

    The application fee - - NAH.  Some object to the personal info on the form and over the years had only a few who would not submit that data.  One even told ME I should take her application because I'm the own/manager -- nearly fell off my chair.

    Had another that hounded me for 4 months to take his app which did not include source of income, stating it's a new business -- sorry (he's had 3 jobs in 4 months :ouch: )

    I've used rhol.com since '97 to access Experian or Trans Union *if* and *only if* the application passes preliminary guidelines, which reduces my expenses.

    0Reply
  • Joseph England
    Investor · Baltimore, MD · Member since 2015 · 152 posts · 231 votes
    10y

    We charge $35 per applicant. The application fee helps separate serious applicants especially in the lower income areas of Baltimore.

    0Reply
  • Sib Bahjat
    Investor · Colleyville, TX · Member since 2012 · 70 posts · 7 votes
    10y

    I charge $35 per. I charge this to weed out the people that might complain about $35. If they complain about $35, then there is a great chance you will get your rent checks late as well. In the past several years, I have never had an issue with renters paying $35 for an application process. This applies to DFW where I lease my properties. 

    2Reply
  • Bob RomanoPro Member
    Investor · Warwick, RI · Member since 2015 · 137 posts · 100 votes
    10y
    I charge $35 per person to do a credit and background check on each person who will be living there. I feel it weeds out the non serious renters who are just "kicking the tires" and who aren't serious.
    0Reply
  • John Thedford
    Real Estate Broker · Naples, FL · Member since 2013 · 9k+ posts · 6k+ votes
    10y

    Hmmm....I almost feel guilty:) I charge $75 per adult. Ignoring the difference in pricing and commenting on the reason for the fee: weeding out the people that are not serious and those that won't pass the check. I have not had to turn down one potential tenant yet. I do accept multiple fees from different applicants, but once one is run that is approved I return the additional deposits from other prospects.

    0Reply
  • Dave MeyerPro Member
    Head of Real Estate Investing at BiggerPockets · Seattle, WA · Member since 2015 · 224 posts · 826 votes
    10y

    I've developed a system that works very well for me. 

    1. I only show the units at open houses. I live in Denver, a very hot rental market, so this very easy for me, but may not be possible in other places. Right after work on a weekday. If I put up a post on CL, I get anywhere between 50-100 responses within 24 hours. Usually about a third to half show up.  

    2. I tell people at the open house that in order to secure a spot in line, they have to give me a deposit of $30/applicant. 

    3. HOWEVER, I do tell the applicants to give me a check or send me the money via PayPal, so I can return their money if I don't accept their application (prior to running credit). 

    4. I then go in order of first-come-first serve. I will call professional and landlord references first. If those DO NOT pan out, then I refund the applicants money, as those references cost no money, and it took only a few minutes of my time. 

    5. If the initial references do check out, then I run their credit/criminal background check, which costs me $30/applicant. At that point I cash the check or accept the PayPal payment. If they pass, great! $30 for a new apartment is negligible. If they don't, then they lied, because they told me their credit scores met my standards when they didn't. 

    The point of all this is that I get a ton of applicants (plenty of backups), can cover my own costs, but am never profiting from just collecting application fees. In a hot market like Denver I've hard from applicants they've lost hundreds of dollars just applying for apartments and never hearing back from the PM after they cash their check. That's just not right. To me I think the ideal is to get plenty of applicants, cover your own cost of tenant acquisition, but be fair to applicants and not take their money if they're not being seriously considered. 

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    2Reply
  • David Roberts
    Brownstown, MI · Member since 2014 · 344 posts · 98 votes
    10y

    we use mysmartmove and let the tenant pay on their side.   

    0Reply
  • Alayne Galley
    Real Estate Agent · Lititz, PA · Member since 2015 · 10 posts · 2 votes
    10y

    I second mysmartmove.com. Does all the work for you and the potential tenant can pay via the website. I typically narrow down my applicant pool before this step, though. I hate to waste people's time and money.

    0Reply
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