Real Estate Agent · Midlothian, VA · Member since 2016 · 39 posts · 19 votes
Our rental unit (5/3 SFH) has typically been a group home with 4 unrelated adults. I have never run background checks or credit checks on tenants, and the only screening I've done in the past was verifying employment and calling previous landlords (unless it's their parents). This summer, our entire house is turning over, and we've decided to start running background and credit checks. We started using Cozy to manage leases and applications, and it has a built in credit check and background check that will charge the applicants $40 to run. I love the idea, and have used it on a sublease tenant before. But I'm getting lots of questions about it, because the potential tenants assume that it's $40 per group, not $40 per individual. Once they realize that it's $40 per individual, they're not completing the application process.
I love having the security of the process, but is it worth it? What do most people charge for application fees??
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
9y
@Krista Dodson We charge $25 per applicant. It is a way to weed out the dreamers. If someone is qualified to rent the apartment and really wants to live there they will pay the $40.
Real Estate Agent · Midlothian, VA · Member since 2016 · 39 posts · 19 votes
9y
@Russell Brazil, Good point re: market rates. In a potential group of four tenants, one has already had the background check run, and I just found out that the holdup is that one of the other three has just had a job change. So they're trying to figure everything out again. I need to be consistent with all applicants for this go around, so will have to stick with what I've advertised ($40 application fee per applicant) until I have no leads, and re-advertise differently.
So far, I've seen you from Rockville (pretty similar to Arlington), @Jonathan Jaime Velarde from Fredrick, MD. Anyone else from the Arlington, VA or Washington DC area want to chime in on application fees?
Investor · Brookfield, WI · Member since 2014 · 110 posts · 99 votes
9y
@Ryan Murdock I'm not a lawyer so I don't know if you can charge separately for that. We use smartmove (linked from biggerpockets) so TransUnion is charging for the service, not us as landlords charging an application fee. Also, that includes criminal checks and eviction checks. We make sure that we explain to applicants that we arent charging an application fee, etc. And we also tell them that the smartmove service is discounted because of a membership that we have that allows them to get a lower rate when running their reports. In 3 years, we havent had any complaints from anyone (he says while knocking on wood).
Alhambra, CA · Member since 2015 · 142 posts · 78 votes
9y
You absolutely want to charge an application fee, that is non-refundable. As a tenant myself, the only thing that really irks me is the idea that the landlord is collecting fees from more tenants than they can rent the unit to. I understand why landlords do this, because sometimes applicants flake and you don't want to waste 2 weeks on a maybe when you could have had a sure-bet paying their deposit a week ago. But on the tenant side, most couples will not want to look at 5 different apartment complexes and pay around $400 for a handful of maybes.
A better system would be for the landlord to accept a recent background check from an agreed upon company and credit checks (from the only three companies that do them, Experian, TransUnion and Equifax). That way tenant is not coming out of pocket for a maybe and landlord doesn't have to worry about not knowing the tenant's history.
Ultimately, the tenants you want will be willing to pay the fee, plain and simple. Just don't collect fees from 6 applicants over the course of a few days and rent to one of them, because then you might have 5 upset people to deal with!
Our rental unit (5/3 SFH) has typically been a group home with 4 unrelated adults. I have never run background checks or credit checks on tenants, and the only screening I've done in the past was verifying employment and calling previous landlords (unless it's their parents). This summer, our entire house is turning over, and we've decided to start running background and credit checks. We started using Cozy to manage leases and applications, and it has a built in credit check and background check that will charge the applicants $40 to run. I love the idea, and have used it on a sublease tenant before. But I'm getting lots of questions about it, because the potential tenants assume that it's $40 per group, not $40 per individual. Once they realize that it's $40 per individual, they're not completing the application process.
I love having the security of the process, but is it worth it? What do most people charge for application fees??
@Krista Dodson We charge $25 per applicant. It is a way to weed out the dreamers. If someone is qualified to rent the apartment and really wants to live there they will pay the $40.