How many of you are charging application fees?

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

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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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Tom McGrath
Investor · Riverside, CT · Member since 2013 · 8 posts · 1 vote
10y
I do not have an application fee although like others I have the potential tenant pay for the background and credit check. The service I use is Transunion Smartmove. very easy and not too expensive for applicants
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Rick BassettBusiness Member
Property Manager · Greater New Haven, CT · Member since 2010 · 377 posts · 434 votes
10y
We have a hard time getting applicants to pay an application / screening fee. Most won't submit apps if they have to pay. Perhaps its a local thing so we just bake it into the cost of the rental.
We do most of the screening the cheap and easy route first and generally we only run our finalist through the paid screening services but sometimes we have 2 or 3 'finalists' depending upon what's discovered.
Rick
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Shawn Davis
Investor · Wilsonville, OR · Member since 2014 · 59 posts · 51 votes
10y
I also use rentapplication.net. The applicant pays the screening fee ($39.95) directly to the service and I receive a completed application and background, credit, and eviction reports. I am very clear up front (before they fill out an application) about my criteria. I have it written down and in addition I always make it a point to remind potential applicants that these reports will be run. If they anticipate any negative history, they should tell me before they pay the fee. I do not make one dime off of these "fees" but could not imagine foregoing the reports in a screening. I also call work/rental references. I do not process more than one application at a time and only get people serious enough to pay the fee.
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Franklin Romine
Visalia-Fresno, CA · Member since 2009 · 1k+ posts · 863 votes
10y
I would only charge an application fee if I had overhead. Right now my overhead is just me.

Franklin
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Steven Gesis
Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 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?
Hello Craig,
That is a good question! We charge an application fee, but only to cover the cost of the credit report we have to run. The system we use (like most) charge for every credit report we do. We do not charge the applicant any extra for their application. When they ask, we explain to them we need the fee to gather the background information. We tell them without it we cannot examine their potential residency. Mostly they are understanding, but there will be a few who still do not wish to pay it.
Please let me know if you have any questions.
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Chris Carollo
Western Springs, IL · Member since 2012 · 81 posts · 38 votes
10y
I also use mysmartmove.com and let them know that they will be paying directly to the site. I also have them submit to me a leasing application before I send over the link to them. Between both steps enough self selection happens so I don't end up wasting a lot of time with the wrong tenants.
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Alex Brookbank
Investor · Cincinnati, OH · Member since 2015 · 90 posts · 44 votes
10y
I have charged an application fee of $25.00 per person. And only one group has ever questioned it. If they trust you, it's a not problem. It definitely weeds out some individuals - those who reply to my listing post asking if I charge an application fee, for instance, big red flag, particularly when the post says their is a $25 application fee.
Next time, I might use a third party service where the tenant submits their application. Simplifies the process, although it is more expensive than the $25 I charge.
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Sam Leon
Investor · Fort Lauderdale, FL · Member since 2012 · 1k+ posts · 465 votes
10y
Like many others, I charge a $30 application fee per adult occupant.
The fee is credited to the security deposit.
I have never had anyone back out AFTER application is approved though.
However, during the application process I let them know I expect the lease to be signed within 1 week, at which time I would collect first month's rent, last month's rent and security deposit - basically 3X rent. If they can't cover it or need to wait, fine, I will wait to accept or process the application and most likely someone else will jump ahead. This of course would only work if your location and market is used to paying 3X to move in.
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Steven Gesis
Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
10y
Originally posted by @Franklin Romine:

I would only charge an application fee if I had overhead. Right now my overhead is just me.

Franklin
Frank, when you reference overhead do you mean the cost of the application processing or operational overhead? If you are self managing the overhead is still existing, its your time and money. If managed assets by a property management company, they certainly have overhead. We charge a nominal fee that is the actual cost of the processing, the fee also acts as an additional layer of efficiency, as less serious or unqualified applicants will avoid the process because they cannot pay the fee, this is not always the case but it certainly has an impact, savings countless hours. We manage hundreds of doors, so we must be diligent and efficient at every level. We tend to be very critical of applicants, reviewing every nook and cranny as we believe in being patient and placing excellent candidates, rather than just placing anyone.
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Steven Gesis
Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 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.
Craig, you want to charge a fee just to weed out these potential incidents, as the future tenants have no skin in the game, therefore they will be much more likely to flake out at any given moment and you have extended yourself and your time. I just want to mention that, its not only about reviewing the background and credit, I advise taking a deep look at the people you are replacing: DTI, previous & current tenancy verification, current employment verification. Everyone has a different strategy and that is 100% great, just build good habits form the beginning so you keep transcending into the next level with ease and agility, its about systems, so the better your system, the more successful and fruitful your investment.
Happy Investing!
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Ken P.
Rental Property Investor · Northville, MI · Member since 2013 · 263 posts · 183 votes
10y
We charge $25 per applicant, which hasn't been a deterrent to finding great tenants. It's the price of looking for an apartment, and potential renters expect to be charged. We put the application fee right in our ad, so no is surprised.
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Steven Gesis
Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
10y
Originally posted by @Ken P.:

We charge $25 per applicant, which hasn't been a deterrent to finding great tenants. It's the price of looking for an apartment, and potential renters expect to be charged. We put the application fee right in our ad, so no is surprised.
Ken, thats an excellent point, might as well just post it, you said it perfectly "hasn't been a deterrent to finding great tenants," it is all about GREAT tenants, anyone can just place anyone. Be patient place GREAT tenants, this is a highly critical component to a simpler and greater ROI.
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Steven Gesis
Investor · Miami, FL · Member since 2015 · 1k+ posts · 390 votes
10y
Originally posted by @Meghan Reed:

I charge $35/adult. We have had to turn down a couple people after running their credit history and while they weren't thrilled to lose the money they understood it was non-refundable.
Meghan, its important to define the exact type of fee, as some fees some people think are refundable. We had several cases where the prospect did not qualify and they requested a refund, we had to make sure to place the correct language in the application to affirm the fee was non-refundable. We really do not have any issues with charging $40 for an application, we have a cost to run reports and process, our acceptance rate in comparison to declines is drastically broad 25/75 split. It is all about placing GREAT tenants!
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James Syed
Real Estate Broker · Mount Olive, IL · Member since 2013 · 1k+ posts · 310 votes
10y
Welcome to BP.
We don't charge any application fee, however If we like everything on the application, we charge $30 per applicant for credit and background check fee.
We tell the applicants up front that if they have anything other than medical bills or traffic violations, they will NOT be approved and fee is non refundable.
Trust me charging a fee will keep away lookie loos and trouble makers as we didn't charge anything until about 2 months ago and had wasted a lot of time showing our properties and handing out applications.
Hope it helps.
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Meghan Reed
Investor · West Suffield, CT · Member since 2013 · 106 posts · 42 votes
10y
Totally agree, @Steven Gesis. Our app states that the fee is non-refundable.
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David Chwaszczewski
Tega Cay, SC · Member since 2014 · 213 posts · 74 votes
10y
@Craig Garrow I have the potential tenant fill out an application from my website and then I send them a link to do the background check if they qualify. I don't charge a fee for my time (10min to look at app), however the background check is $35. They put in their CC info and SS# (takes the liability off of me) and when it is done the report is generated and sent to me within a few hrs. I let them know they have 24hrs from the decision process to move forward with paperwork and non refundable deposit. Most tenants, not all, need to be told what to do and when to do it or they will just disappear in the wind.
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Tom Ott
Equity Raiser and Turnkey Provider · Cleveland, OH · Member since 2016 · 4k+ posts · 1k+ 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?
That is a great question! Always make sure you never charge more than what you need to run a background check. Whatever system you use will probably ask for a fee to run a report. Have that be your application fee. If you receive any push back simply explain to them that you need the fee to run their report. Without the report you cannot determine if they are a good fit for your property.
Please let me know if you have any questions.
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Johann Jells
Rental Property Investor · Jersey City, NJ · Member since 2011 · 1k+ posts · 876 votes
10y
Hmm. We've never charged a fee, but MrLandlord.com is only $15 for Transunion and eviction. I guess I see it as giving me more flexibility if I collect more than one app, and with units around $1500, $30 for a couple seems no big deal as a cost of doing business. I do try to suss out how serious they are. I've only had a few flake out after running credit and approving.
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Cameron Riley
Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
7y
@Sib Bahjat what do you say to them when you have chosen someone else
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Bob RomanoPro Member
Investor · Warwick, RI · Member since 2015 · 137 posts · 100 votes
7y
I charge $35 for each person that's going on the lease. If they push back, they don't really want the place.
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Account Closed
Rental Property Investor · Central, FL · Member since 2016 · 950 posts · 821 votes
7y
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?
I charge them for the application which is the exact cost of using the mysmartmove website. So I don’t make money off of anyone applying.
I could use cozy or have them pay smartmove directly but I want them to provide information then I can check it against what actually comes up. But again my units around in B/C areas so it’s mostly money orders and no checking accounts or no credit card to pay the online fee directly.
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