Fees, I understand but does this seem excessive to anyone else?

Boise, ID · Member since 2013 · 18 posts · 7 votes

The required security deposit/move-in fee of $2795.00 breaks down as follows:
Non-refundable administrative fee of $100.00--I get kind of like the $299 dealer doc fee a car dealership charges(Isn't that a part of business expense?)
Non-refundable fee of $350.00-----(for? Excessive to me.)
Refundable deposit of $2345.00

$450 in fees because you can?

I know not a charity. The market is HOT here. Do you think this is asking for some government intervention. I feel it is going to get lawmakers involved.

What are your thoughts?

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

Look, we live in an adult world where you are free to purchase products from people that are free to sell products. Or you can buy from someone else. Or don't buy.

This Landlord is offering a property for rent in a very hot market. He charges an arm and leg for it. You can opt to pay his price or you can try to rent through someone else. The fees are fully disclosed and you can opt to pay them or take your chances somewhere else. It's a free country.

Why would government get involved? This is exactly what a hamburger joint does when you want to add cheese. 50 years ago the cheese was included. Airlines make you pay a fee for checked bags or a 6oz bottle of gut-rot wine or another 20% on your ticket price for a seat with 4" of extra leg room. Car rental companies charge a fee for additional renters or an exorbitant price if you fail to fill the tank. And government adds all kinds of fees to your phone bill, gas, utilities, hotels, etc.

Property Management is a fee world. People that charge a flat rate of 10% are making a living but they're not building a business that generates profit or that they can sell in the future. Those low-fee manager that charge 6% or 8% and nothing else likely won't survive the next 10 years. We stack nickels to make dollars.

As long as their fees are disclosed up front and can be justified, I see it as a great thing. The free market will decide who is fair and who's raking clients over the coals.

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Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
6y
Security deposit of 2795. How much rent on top of that? Politicians will get involved if there is face time and votes involved. So if it heats up, then yes.
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Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
@Bjorn Ahlblad This was just a listing of this PM's property. Very nice property $2695 rent. What concerns me is the $450 in fees-not including app fee/pet fees etc. Just fees for the sake of fees. I am a landlord and this just doesn't seem right to me.
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Jeff Willis
CA & NV · Member since 2019 · 216 posts · 378 votes
6y
On a different subject. Tell the car dealer to shove the $299 doc fee. It is just extra profit for them
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Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
@Jeff Willis I tell them to reduce car price by that in the finance office or I walk. Yes have walked. And yes it has worked for me.
2 Reply
David BarnettPro Member
Rental Property Investor · Cambridge, MA · Member since 2016 · 634 posts · 415 votes
6y
Judging from the numbers, it looks like the PM is charging part of the security deposit as non-refundable (the $350) and then the remainder of the 1 month as refundable. I would ask the PM if that is what they are doing and ask them to explain it. I would push for having all of the security deposit be refundable based on successful return of the property in the same condition that it was when you moved in.
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Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
Thanks for your thoughts @David Barnett What concerns me, is big brother gubrmnt is gonna get involved quickly with this(In Boise some of this is going on already) and harm ALL landlords and in the end tenants.
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Look, we live in an adult world where you are free to purchase products from people that are free to sell products. Or you can buy from someone else. Or don't buy.
This Landlord is offering a property for rent in a very hot market. He charges an arm and leg for it. You can opt to pay his price or you can try to rent through someone else. The fees are fully disclosed and you can opt to pay them or take your chances somewhere else. It's a free country.
Why would government get involved? This is exactly what a hamburger joint does when you want to add cheese. 50 years ago the cheese was included. Airlines make you pay a fee for checked bags or a 6oz bottle of gut-rot wine or another 20% on your ticket price for a seat with 4" of extra leg room. Car rental companies charge a fee for additional renters or an exorbitant price if you fail to fill the tank. And government adds all kinds of fees to your phone bill, gas, utilities, hotels, etc.
Property Management is a fee world. People that charge a flat rate of 10% are making a living but they're not building a business that generates profit or that they can sell in the future. Those low-fee manager that charge 6% or 8% and nothing else likely won't survive the next 10 years. We stack nickels to make dollars.
As long as their fees are disclosed up front and can be justified, I see it as a great thing. The free market will decide who is fair and who's raking clients over the coals.
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Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
@Jenni G. yes,excessive and is an example of greed that will propel lawmakers to legislate against non refundable fees for move in costs.
2 Reply
Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
@Nathan Gesner I agree adult world and if you don't like go somewhere else. As I have stated before I am a different landlord not involved with this property or PM. I think the government will get involved and are starting to get involved.

https://www.kivitv.com/news/state-of-208/beverly-hills-company-moves-in-drives-rent-up-by-nearly-45-percent-for-some-boiseans

https://idahonews.com/news/local/a-look-at-proposed-boise-housing-ordinance-here-is-what-it-means-to-locals

https://www.ktvb.com/article/news/local/boise-considering-capping-rental-application-fees-at-30/277-4cbd1a75-a6e9-4214-9fe9-bb21483d246b

I suppose kudos to the company that figured out this way of making money. But feel it is going to negatively impact landlords by further scrutiny(and new regulations) from the government which will harm tenants on down the road.
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Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
@Mary M. Thanks for the input. Yup. I wish we were in the times of regulating ourselves before government regulates for us. I fear legislation will be coming.
2 Reply
Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
@Nathan Gesner government will get involved because housing, for better or worse, is a sensitive topic and seen as a basic human right. When LLs or PMs charge ridiculous non refundable fees the masses start yelling and the lawmakers listen.
Unfortunately unreasonable fees have a tendency to grow as each complex says “well if xyz charges it I need to charge it ” this leads to an ever increasing cost to tenants.

A good example is Application fees- those were unheard of back in the day, now the are ubiquitous and a revenue stream for many.
many tenant groups are fighting against application/screening fees and IMO these will be legislated against this coming year.
When you work in an industry that is considered a basic human right you need to be cognizant that people will react when they feel they are being screwed
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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Originally posted by @Jenni G.:
@Nathan Gesner I agree adult world and if you don't like go somewhere else. As I have stated before I am a different landlord not involved with this property or PM. I think the government will get involved and are starting to get involved.

https://www.kivitv.com/news/state-of-208/beverly-hills-company-moves-in-drives-rent-up-by-nearly-45-percent-for-some-boiseans

https://idahonews.com/news/local/a-look-at-proposed-boise-housing-ordinance-here-is-what-it-means-to-locals

https://www.ktvb.com/article/news/local/boise-considering-capping-rental-application-fees-at-30/277-4cbd1a75-a6e9-4214-9fe9-bb21483d246b

I suppose kudos to the company that figured out this way of making money. But feel it is going to negatively impact landlords by further scrutiny(and new regulations) from the government which will harm tenants on down the road.

I'm not sure how it "harms tenants" any more than any other business harms customers by raising prices.
Around 70% of rental property is managed by a professional property manager in Australia whereas it's more like 20% in America. As government regulations increase, professional management will become more necessary because private landlords can't keep up. This will drive up management fees, as has already happened in Australia.
The free market determines what is acceptable. If these fees are outrageous, people won't pay and the company will fail. If the market is as hot as you claim, people will pay the fees to procure housing

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Nathan GesnerBusiness Member
Moderator
Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
6y
Originally posted by @Mary M.:
@Nathan Gesner government will get involved because housing, for better or worse, is a sensitive topic and seen as a basic human right. When LLs or PMs charge ridiculous non refundable fees the masses start yelling and the lawmakers listen.
Unfortunately unreasonable fees have a tendency to grow as each complex says “well if xyz charges it I need to charge it ” this leads to an ever increasing cost to tenants.

A good example is Application fees- those were unheard of back in the day, now the are ubiquitous and a revenue stream for many.
many tenant groups are fighting against application/screening fees and IMO these will be legislated against this coming year.
When you work in an industry that is considered a basic human right you need to be cognizant that people will react when they feel they are being screwed

We all have opinions. In my opinion, the more government gets involved, the more difficult it will be for private Landlords to navigate the laws and manage their properties, making professional property management even more important.
Time will tell.
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Mary M.
Rental Property Investor · Portland OR · Member since 2018 · 2k+ posts · 3k+ votes
6y
That is just another push by big business to suck the life out of a mom and pop mainstay way of creating wealth. it has been done with so many industries, i guess RE is next.

Luckily we have loads of tools to allow us to self manage and not give up a large percentage of out revenue to others. :)
1 Reply
Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
@Nathan Gesner

I feel it will harm the tenants eventually in the same manner that rent control has the propensity for lackadaisical landlording.

@Mary M.
Before, when I would read items about people looking for a property not run by a PM company, I always thought it was because they were looking for someone who didn't screen tenants well. I now think it is more about the fees and not caring for the property very well. I could be correct on my first assumption, but eh, who knows.
I am thankful for the tools, such as BP, to help me with my properties. I actually enjoy self managing my properties. Catch me on a different day and I may say otherwise.

1 Reply
Joel Fine
Rental Property Investor · Leander, TX · Member since 2018 · 183 posts · 264 votes
6y
Economics 101: if landlords are charging "excessive" fees in a free market, then one or more of the following will happen.
1. New supply will come on the market. Investors will build more rental units to take advantage of this new profit opportunity, or idle supply (vacant homes) will be activated. Perhaps some owner occupied homes will be converted to rentals. This will tend to push prices down.
2. Demand will drop. Potential tenants will find ways to get by with less. People will move out of the area, or take on extra roommates. Some renters will buy a home and stop renting. This will also push prices down.
3. Neither 1 nor 2. This means the fees aren't actually excessive, just reflecting a new equilibrium (market clearing) price (which may make some buyers unhappy).
A 4th possibility: The government will act to 'defend' tenants, imposing price controls or other regulatory barriers to a market clearing price. This will have the exact opposite effect intended. Demand will exceed supply because the price controls distort the market, discouraging potential landlords from investing.
2 Reply
Bill O'Donnell
Rental Property Investor · Newburgh, NY · Member since 2018 · 160 posts · 117 votes
6y
@Jenni G.
Lawmakers have gotten involved in this in NYS this past June.
If you are in a hot enough market for that, just increase the rent by enough to bring in the extra few dollars.
0 Reply
Brian Ploszay
Investor · Chicago, IL · Member since 2009 · 1k+ posts · 1k+ votes
6y
Move in fees are becoming popular. And that fee is not out of line. A $2,800 property in Idaho is probably a very nice asset. And apparently in high demand.
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Don SpaffordPro Member
Investor · Idaho Falls, ID · Member since 2016 · 935 posts · 629 votes
6y
Without specifically asking the PM what the fees are for I can see that perhaps that amount is set aside at the beginning to be used for something like cleaning the carpets. The tenant should always clean before they move out but there is always additional cleaning that needs to be done, carpets being one of them. For my tenants I tell them that the carpet cleaning will be taken out of their deposit, so in sense it is like saying part of the deposit is non-refundable, which this PM may just be calling a fee. If not, then it is just a higher fee for a high-end property. Kind of like a "luxury tax" that is paid for expensive things which people that can afford those things don't seem to complain about and pay it because they want it. If someone wants to rent a place for $2600/mo I'm sure they won't care about paying those fees. I highly doubt that same amount of fee is being charged for a property there that rents for $700/mo.
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Ned CareyPro Member
Moderator
Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes
6y
@Jenni G. Can I assume you rent for below market? So no one should be allowed to charge a higher price? Who is going to monitor that? Does that mean everyone has to charge the same price as the lowest cost provider? Personally I think it is unethical to take away people’s choice to pay more for quality.
1 Reply
Jerry Lucker
Flipper/Rehabber · Seattle, WA · Member since 2015 · 333 posts · 459 votes
6y
@Jenni G.
All they would have to do is raise the rent $25.00 per month and not mention non - refundable fees.
Prospective tenants wouldn’t be annoyed and the landlord would end up making more money on average in a multi family property.
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Anthony Wick
Rental Property Investor · Ankeny, IA · Member since 2017 · 2k+ posts · 3k+ votes
6y
@Jenni G.
If you know how much it costs ahead of time, there is no such thing as “too much fees”. From a landlord perspective, I’d say I charge “too much” if people stop renting from me. The market is the market. If people will pay, I will charge.
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Fred Cannon
Rental Property Investor · St Augustine, FL · Member since 2019 · 265 posts · 279 votes
6y
@Jenni G. The fees should not be part of the deposit. They should be separate.
A security check a pest control treatment and a through cleaning is around $350. That’s about what I charge total but it’s not deposit it’s expenses that incur every time a tenant moved out an a new tenant moves in. In a business you pass expenses on to customers, especially Real Estate because the customer is the one creating the expenses.
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Mark S.
Real Estate Investor · Saint Paul, MN · Member since 2017 · 543 posts · 475 votes
6y
@Jenni G.The way the politics are leaning in this country I agree with your concern. We will end up looking more like some of the European countries if it continues. For example, Berlin just passed a 5 year freeze on residential rents.
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Jenni G.
OP
Boise, ID · Member since 2013 · 18 posts · 7 votes
6y
Hey all. Thanks for the comments and input. Mayhaps the fees are for the carpet cleaning etc and do have a legitimate reason. Some say it may be a "luxury fee" as the example was for a higher priced rent. But alas this is not so. This PM has those fees regardless the price.
My properties are at market rates(I did spruce them up with some fresh items-paint/hardware as I increased the tenant's monthly rate this last year :) Maybe that shows my soft side but it softened the blow
Again, my worry is about possible legislation being put in place because of fees such as these.

I am also not hating on PMs They do provide a valuable service and when I finally do fully retire will be utilizing that service--although the old saying "No one cares for your property as well as you" creeps in my mind.
Again, Thank you all for the discussion and making me think..."hmmm didn't think of that" Keep it coming BP. You always help me think things through.

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