I have finally finished fixing up a rental and have listed it for rent. I have received much interest, and decided to just have an open house for a few hours to show the place to prospective tenants and collect applications, rather than trying to meet with individuals one by one (so I'm not driving across town everyday for a showing and dealing with people who are no longer interested, not qualified, or don't show up at all). I'm wondering the best way to handle applications and collection of application fees, as well as selecting the most qualified tenant. Note that this is a low income rental in a C-class neighborhood that is beginning to gentrify but still has a few years before it attracts very well qualified tenants.
I have a pretty detailed application, so I'm hoping I can rank the applicants based on the application, and then verify information through a background check starting with the strongest. I won't know that until I collect all applications, and I won't have all applications until the 3 hour open house ends.
I can collect fees and then try to return for those that I don't run a background check on, but this could be a hassle and I don't want to take people's money away from them for a period of time while they would need it to get another place if I don't choose them. Do I just take applications, rank them, and then call the most qualified, meet up with them to collect the application fee, and then run the background check? That seems like the best option, but just causes more work for me and the applicant to try to meet up again at a later date.
Any recommendations on how best to handle? Thanks!
Hi Daniel! Congrats on getting your rental ready to cash flow. :) I suggest reviewing your applications, and then asking your top applicant to run their background using TransUnion Smartmove. We use this for all of our applicants at my brokerage because of the low cost - $40.00 per person. This might still be a lot for applicants in a C-class neighborhood, but it will be much less work for both of you if they can do it online (again, assuming they have access to a computer and a debit or credit card). If lack of access to these resources is prohibitive, then I think your plan of collecting the fee later is best. Maybe offer to meet them halfway?
Lastly, I think open houses are great when a property receives a lot of interest. It's much less time consuming for you, and it also generates a sense of urgency among potential renters when they see others who are interested, too.
Thanks! Open house is tomorrow - we'll see how it goes. :)
@Daniel Wolz I have to disagree with @Gloria Wiekert . The application fee should be non-refundable for any reason. Charging an application fee and then stating that it's non-refundable are two great ways to pre-screen applicants. If they think there's a chance they won't pass your screening, they won't spend $40 or waste their time filling out your application. Could you imagine the time required if a Landlord took 10 applications and then had to track down nine people to refund their money? I have 300 rentals and it would literally take all my time.
Sit down with a pad of paper and come up with some minimum standards. Here are some common ones you can tweak based on your market and personal standards:
1. Active bankruptcy or foreclosure, or one that closed within the last 12 months
2. Credit score above 600
3. Combined income of at least 3x the rent
4. At least one current Landlord reference of 6 months or greater
Those are just some thoughts. Search BP for "application screening" and you'll come up with tons of information. Develop a standard that is written down so you can memorize it and share it with applicants. As you show the property to people, you can hand out applications with these basic standards printed or you can tell them what your minimum standards are. This saves all of you a lot of time and trouble.
Your idea of an open house is a good one depending on the market.