Rental Application: Include Application fee or not?

6 Replies

Good morning, 

I'm getting quite a lot of interested applicants. Which makes me wonder how to handle them all. Should I include an application fee? Seems somewhat mean to take 10 application fees and only award the property to one. How do you guys manage that? Thanks

Hello @Bradley Coleman

I would view the application fee as a barrier to entry for your property.

If you are getting a lot of qualified tenants that meet your criteria, I wouldn’t charge it. This will allow you to get the best tenant.

If you keep getting a lot of applicants that don’t fit your criteria, the application fee could deter them for applying.

Let me know if you have any other application questions, I would be happy to help!

I don't take a fee. I use SmartMove. I'm very clear on my website as to what my qualifications are, so that weeds out many applicants once they see the background/credit check and pet requirements. As I get applications I review them. If I get one that would work and the references check out I email them the SmartMove link and they pay the credit/background check money right to them. If i get several applications I just process them in the order I got them if they all appear to be good applicants.
Another option that I have tried as well is telling people that I will deduct their credit/background fee from their first month's rent. That way they know that if they actually do meet the requirements and aren't lying to me they'll get the money back at lease signing.

There's nothing wrong with charging a fee.

1. It pays you for your time;

2. It eliminates a few people that aren't serious.

3. It eliminates people that can't afford $20. It happens quite often that I get people wanting to apply for a rental but they tell me they can't afford to pay the fee until their next paycheck. Yes, these people exist.

If you use a screening service like @Jennifer Rysdam then you should definitely charge a fee, at least enough to cover your expenses. It's bad business to incur an expense, pay it on behalf of the customer, and then donate your time to deal with it.

My background checks cost $16. I charge $20 to cover that cost, make $4 per application, and avoid having to give back change. I "donate" the time required to process it but that's because a very high percentage of applicants end up renting so it's not a waste of time.

Let's say you have ten applications. It takes 15 minutes per application which is two-and-a-half hours of your time. Most of the applications won't qualify. The ones that are approved may tell you they found something else or changed their minds. Or maybe they'll reveal new information like they don't need a rental for three more months or they ask, "will that apartment take three horses and a goat?" You've wasted three hours of your time. 

If, on the other hand, you charge $20 per applicant (applicant, not application), half of them probably won't even bother to apply because they aren't really serious or because they're afraid you'll actually screen them and discover they suck as tenants. That just gave you back at least one hour of your life. I was the first property manager in my area to start charging application fees and as soon as I started it, the number of applications was easily cut in half and the quality of tenants started to improve.

Thank you kindly for all the helpful answers. Ok I'll look into Smartmove or other like services. And I think I'll just make it easy on myself and not charge a fee until I move onto the final steps of the credit checks. Thanks guys!

@Bradley Coleman In order to save yourself a bunch of time you will want to set up minimum qualifications for credit, criminal activity, and eviction history. 

After someone fits those you will definitely want to have an application process set up that charges a fee.

Michael Noto, Real Estate Agent in CT (#RES.0799665)

I would throw out one more thing to consider, are you seeing others in your area charge application fees? Where I am you see it but it isn't the norm so we don't charge applicant fees but this is something that I pay attention to. 

Daniel P.

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