Tenant Screening Fees- is $40 per person too much?

42 Replies

Hi BP community I'm looking for your opinions on tenant screening fees for credit and background checks.

We have a SFH for rent and were going to do the screening process through Cozy.co since it seems really easy for both parties--but they charge the prospective tenants $40 per person.  So for a couple it would be $80.  That seems like a lot of money to me-- the community our rentals are in is a small working class community where people don't have a lot of disposable income (Adrian MI). 

So I am wondering for those in similar communities, what does your screening process look like?  Do you use a website? In your opinion is $80 a lot of money for a couple of background checks & credit reports? 

I don't want to scare away a potential great renter just because of the application process-- but don't want to get a terrible renter because I skimped on the process either.

Thanks so much!

I charge a non-refundable fee of $75 per adult

@Tiffany Roberts I charge $40. I think more than that is ripping people off. I also just pick the person that has the better credit according to a couple and just charge one fee and run that one report. The one with the better credit is going to be more concerned with paying the rent on time.

I also charge a deposit equal to about 1.5x the rent. 

@Tiffany Roberts I use cozy for screening and rent payments. if you ask every applicant to pay this then you will probably piss off a lot of people. i pre screen and state my qualifications in writing. and verbally before requesting the screening. this scares off the deadbeats. i actually like the high price as i feel it scares potential bad tenants away. I have had to denile a few people that went through tge process because thay had things like evictions and assault charges. i also has some with a 750 credit score pay for themselves and spouse only to turn down my acceptance because they wanted to buy instead. i receive 8 - 12 applications but only cozy screen 2-3 of them based on the prescreen.

Hi  @Tiffany Roberts , we have a similar community that we rent to, and we do require a tenant screening for each adult that will be on  lease. It also costs $40 dls p/person. and it's non refundable. We use www.mysmartmove.com, what I like about mysmartmove is that the prospect tenant can make the payment directly to the website, so they don't feel like I am just charging extra fees. So far, it hasn't been an issue, in fact it helps a lot for you to see who is seriously interested instead of loosing your time or maybe even your money. 

Now, we don't encourage everyone to apply and pay the tenant screening. When we meet the prospect tenants or talk to them we tell them upfront our min requirements, if they comply with all of them, it's likely they will get a good report from the screening, so we encourage them to apply and pay the fee. 

Set your requirements and stick to them, we've only made one exception once, and we are still regretting it. If you skip tenant screening it may cost you money in the long run. 

@Tiffany Roberts I don't think it's a lot. I say try it and if people complain then you can try to find another place to screen. But I've paid that and more for couples. It's just an expense they have to put in. Remember they also have security deposit so if they can't afford $80 then imagine a one month security deposit. Sometimes we stress about things and they end up being a non issue  :)

Also, as far as I understand the tenants do - or can - get a copy of their screening report and reuse it at the next place they apply at if they aren’t approved for yours, within a certain number of days.

@John Thedford , @John Underwood , @Jim Vanhorn , @Ana M. , @Elenis C., @Kat Rathell  

Thank you all for taking the time to respond- that's why this community is so great!  I see I am not really out of line with the fees.  I was getting a little anxious because we had someone see it yesterday (it's still not officially listed for rent- they were referred to us) and they said they LOVE it and want to get in by March 1st.  So we sent them the link to apply but still have not seen that they submitted an application (per the Cozy) so I was getting anxious and wondering what the issue could be.  It could be just that's it's been less than 24 hours :)  but I was also thinking the screening fee was high. 

But I will just let it go and if they apply great and if not then we'll list it as planned.  

Thanks again! :) 

I use Cozy and the tenant pays the fee themselves....... I'm not getting any cut of it, no refunds etc. Don't like what Cozy charges? Take it up with them....

Everyone over 18 has to do the full background etc. If you only have one do it to cut costs, guess who ISNT going to be the "one" to submit? The deadbeat, crack head,  pedophile.....

I pre-screen with all my requirements....make it 100% clear of what my requirements are...... tell them to only apply if they are truly interested and feel like they meet these requirements, since the fee is non-refundable. If you don't meet my requirements and apply anyway, then that's on you.....

I select the BEST applicant....so submitting isn't a guarantee you will get it.....deal with it.

You will get LOTS of people that say "oh I love it...we want it..."....blah blah blah......and then never put in an application. It happens ALL the time.....don't sweat it.

Thanks for the reassurance @Ned J. …  You are so right that really I should be looking out for myself which is selecting the best applicant!  Since I'm newer to this everything seems so "high stakes" so it's great to hear for others who can see the trees through the forest (or however that saying goes...) :) 

@Tiffany Roberts $40 is no much like others have said when you set the expectations upfront the ones that are serious will pony up the money. Congrats on your rental. Happy Investing!!

I only had one applicant push back on the $40/person fee. I made them a deal: if they were accepted then I would credit them back on their 2nd month's rent. If I declined them then they were out of luck.

@Tiffany Roberts @Tiffany Roberts good renters are willing to pay. You want someone who doesn’t see that kind of fee as a burden. Many places charge that or more. It’s very common. If 80$ is a burden for a couple then they might not be the people you want to rely on for your passive income.

Things cost money! That’s life. If you want to create a low cost environment good for you, this is America. But like I said, that’s a fee people will pay and is pretty standard. Value is a different story. You can provide it by providing better service or better prices but you are not scaring away great renters, great renters can pay 80$ a couple for an app. You can always create an incentive or waive the fee for good potential renters. But like I probably said already in someway, if someone sees 40$ and is turned away, they are likely not going to be renters you want.

We charge $32 per applicant for a credit/criminal/eviction check. Never any pushback from people who are actually qualified. Typcially if you pre screen people and tell people there is a fee they do not apply if they do not meet the minimums to save themselves the money.

Most States cap application fees, Virginia is $50.

@Tiffany Roberts

Hi, a slight correction with Cozy. They can submit an application or profile without paying the $39.99. This fee is for their background and credit check.

Now, personally I request the checks after persons have seen the property and I believe based on our preliminary discussion they would be a good fit. A very transparent process, as if during that time there is a possible red flag and they still go ahead knowingly that's on them.

Now while I don't charge an application fee for my time to do the above, others with more properties might attribute a cost for their time, which I also believe is fine.

So you are really paying for the background and credit check, which does not give the landlord any guarantee you will be a good renter just an indication that based on past records you might be.

Hence in the grand scheme of things, is this $39.99, one time fee really such a big deal. If it is, then you should perhaps not be looking to rent. As the renter, I believe you should factor this in your research cost or consider it return you get on being able to get a great property to rent.

On the other hand, for you the landlord, it helps to weed out some of the persons you would have wasted your precious time with.

Just my $0.05.

Happy investing and best of luck on your journey!

@Wendy Smith   thanks for clarifying that about Cozy. :)  I didn't realize you can split up the process from the application and the credit/background but that will be very helpful to let prospective tenants know.  

@John Underwood

I haven’t heard of the deposit being that much more than rent. 1.5x rent is probably 50% more of a deposit than other rentals in the area (I’m assuming based on my local market where the norm is deposit is within 10% or monthly rent). Do potential tenants try to negotiate or resist this? Any trouble with having a higher deposit? That seems like they way to go if you can swing it.

Originally posted by @Patrick Fraire :

@John Underwood

I haven’t heard of the deposit being that much more than rent. 1.5x rent is probably 50% more of a deposit than other rentals in the area (I’m assuming based on my local market where the norm is deposit is within 10% or monthly rent). Do potential tenants try to negotiate or resist this? Any trouble with having a higher deposit? That seems like they way to go if you can swing it.

 When they ask about the deposit I say it is equal to one months rent if they have good credit. Then they know it is their fault the deposit is higher. This gives me a buffer and encourages the decent tenants to pay the last months rent and leave house clean. 

I also used Cozy, and it didn't bother my tenants. It's really not that expensive, and it's standard anywhere you apply. 

What I did like about it, is that it weeds out the tire kickers.

Originally posted by @Tiffany Roberts :

Hi BP community I'm looking for your opinions on tenant screening fees for credit and background checks.

We have a SFH for rent and were going to do the screening process through Cozy.co since it seems really easy for both parties--but they charge the prospective tenants $40 per person.  So for a couple it would be $80.  That seems like a lot of money to me-- the community our rentals are in is a small working class community where people don't have a lot of disposable income (Adrian MI). 

So I am wondering for those in similar communities, what does your screening process look like?  Do you use a website? In your opinion is $80 a lot of money for a couple of background checks & credit reports? 

I don't want to scare away a potential great renter just because of the application process-- but don't want to get a terrible renter because I skimped on the process either.

Thanks so much!

 We charge $40 for our portfolio here in Cleveland. No issues with the tenant base. Don't think you'll run into any problems.

@Tiffany Roberts . I’ve paid anywhere from 25-50 per person for where I live (I’m a tenant) and charged about the same for my rentals. I don’t see an issue with 40.

That being said I am guessing cozy is making money off this fee, which is fine since it’s “free” to landlords. That being said I would make a case that ethically speaking you probably don’t want to be making money off background checks. Just charge whatever it costs you to do.

I once applied to a place, for me to live (moving there from out of state) and they charged me 100 bucks run a background check. I then changed my mind about wanting to live in their apartment (to far of a commute) and told them that, they still charged me the 100 bucks. I know it doesn’t cost that much to run a background check. I paid it, but I’m saying that’s an example of some shady business.

@Caleb Heimsoth Thanks Caleb, that's exactly what I was thinking.  I know Cozy does make their money off of running those checks but I tried to stress to the potential tenant that we do not make any money from them, in fact the money is paid directly to Cozy.  

$100 seems just way out of line and totally shady.  I would never try to make money off of things like background checks-- I'm trying to make money from rent :)  I figure I want upstanding renters so I better be an upstanding landlord.  I'm glad that $40 per person isn't really considered by most people too much though since I was liking Cozy.  

Originally posted by @Tiffany Roberts :

@Caleb Heimsoth Thanks Caleb, that's exactly what I was thinking.  I know Cozy does make their money off of running those checks but I tried to stress to the potential tenant that we do not make any money from them, in fact the money is paid directly to Cozy.  

$100 seems just way out of line and totally shady.  I would never try to make money off of things like background checks-- I'm trying to make money from rent :)  I figure I want upstanding renters so I better be an upstanding landlord.  I'm glad that $40 per person isn't really considered by most people too much though since I was liking Cozy.  

The biggest downside to cozy seems to be the amount of time it takes them deposit your money, which they do to collect the interest on your money.  I find it interesting to see how companies make money when providing a “free service” 

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