Is it wrong to accept 20-25 applications with the fees?

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Is it wrong to accept 20-25 applications with the fees?

Cameron Riley
Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes

Hi guys! how many applicants per unit?

Sometimes I’m getting 20-25 people paying and filling out applications with the fees, how about you?

When does In become unethical?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
5y

If you are getting that many applications....raise the rent

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Jake Drappi:

    @Cameron Riley learned this in business. If you have to ask, then you already know the answer.

    Eh, I see what your poking at but ultimately asking questions is the entire basis of human existence. I knew nothing about science until I asked the professor lol 

    0Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Jaquetta T Ragland:

    @Cameron Riley can you accept the application fees in batches so you’re not accepting everyone’s application fees at once?

    We do a showing window and so on... Plus, I think it is GOOD to have a batch of 6-10 applications in hopes to get great tenant

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Jon Kelly:

    @Cameron Riley 20-25 applications with fees is excessive. If most of these applicants are qualified, then increase your rent. 

    I would make sure you tell the applicants how many other applications you received. I would also return the app fees for any applicants you don't screen. For example, if you decide to rent to applicant #6, only keep the fees for the first 6 applicants. 

    On your journey towards being a real estate mogul, these $25 application fees are peanuts. Do the right thing and return the fees for any applicants you did not seriously consider. 

    Yeah, we have to pay someone to stand at the property during the showing and so on.... It takes effort, money and man hours to conduct it. So 25 bucks seems fair, especially when we pay a third party to run the backgrounds... 

    - Should I cut it off at 10-12 applicants? 

    0Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Joe Splitrock:

    I don't know any landlord who actually does full screening that makes money from applications. All my application fee goes towards the credit and background check. On top of that I have time verifying references and employment, so each applicant costs me more than I get. I view applications like acquiring customers in any other business - there is a cost. For that reason I do pre-screening and I accept first qualified applicant. I rarely get more than two applicants, just because of my process.

    Since you are asking if it is unethical, it leads me to believe you are collecting money and not even screening people. Maybe you look through the stack and pick a good one. I am not sure what your process is, but if you are not screening people, you should not be charging people. If someone has no chance of getting approved, don't take their money. Section 8 people are on a fixed income, so you are taking from the poorest people during a pandemic.

     We have clear standards. We are looking for people with good references, Government sponsored incomes, no criminal activity

    1Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Nate Bell:

    @Cameron Riley

    It sounds like people have access to an online application without you sending it to them. I meet with folks, show them the unit, talk about the rules, ask about their lives, and then send them a link to the application. After I get about 3 in process, I start telling new prospects that I have applications in already and I’ll put them on a list in case they all fall through.

    There would never be a scenario where I’d receive 25 applications.

    The first come first serve thing was tedious... So I do the four hour showing window and let the people who have appointments to come see the unit, apply. I just want to know, if I am getting heavy interest when Should I cut it off?  

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @JD Martin:

    Simple answer: yes, it's unethical. If you don't have a pre-screening process already in place to weed out people who have no shot then you are simply using the application process as a revenue generator. I would consider that unethical if not downright illegal. We pre-screen for free and then Transunion (or, lately Zillow) collect fees for the credit/background checks. The application is not the point to us, the successful tenant is. If I had that many paid applicants I would seriously revisit my screening process or my rent levels. 

    True, I guess we do have a set screening in place. We clearly ask that you are a government sponsored tenant, have verified income and good reference  

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Russell Brazil

    Rent is fair market. I only accept section 8 tenants anyways but we have TONS who try to come and apply..

    Just never know when to stop letting people apply

    Once I hit 10 apps should I cut it off?

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Theresa Harris

    A third party person will check every single application

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Joe Splitrock

    Don’t assume things as well, as a note.

    Would never blindly take money from an applicant. The point is to find the best fit tenant.

    We pay a third party to look at every application

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  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y

    @Jason C.

    Essentially i try to think, if I went to an apartment and tried to rent it with my girlfriend and there were already 10 applications put in, I guess I would be pretty upset

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  • Jake Drappi
    New to Real Estate · Brick, NJ · Member since 2020 · 115 posts · 39 votes
    5y
    Originally posted by @Cameron Riley:
    Originally posted by @Jake Drappi:

    @Cameron Riley learned this in business. If you have to ask, then you already know the answer.

    Eh, I see what your poking at but ultimately asking questions is the entire basis of human existence. I knew nothing about science until I asked the professor lol 

     I guess I should have been more specific.  When it comes to ethics in particular, if you have to ask, you know the answer.

    1Reply
  • Caleb Johnson
    Investor · Mesa, AZ · Member since 2019 · 53 posts · 63 votes
    5y

    Hey Cameron, I think that is a great way to make some money. I don't necessarily think it is unethical, as long as the amount isn't more the $25. This amount might just be because of the area that I am in. If you are in a more expensive market, like CA, then that is subject to change. Bottom line, I wouldn't have a high application fee just so I can make some money on peoples applications. Maybe you want to host an open house so people can see the place and know if they even like it before they pay an application fee. That way you weed some people out and you are still giving them the opportunity to see the place without paying you. 

    In conclusion, I think it is a great way to make some extra money and don't think it is unethical. As long as you are making sure people know that just because you give them an application and they pay you money, doesn't mean they will get the place. I don't think there is any laws that prohibit from excessive app fees or the amount you can hand out. But I don't know your state, so look into that yourself. 

    Hope this gave you another perspective. -Caleb

    1Reply
  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    5y
    Originally posted by @Cameron Riley:

    @Theresa Harris

    A third party person will check every single application

     There is no reason for you to check all of the applications.  Look through them and pick the best one and do the full background check on that person.  If they don't pass, then move onto the next.  Only those that you actually do the background check on should be charged a fee.

    1Reply
  • Jon KellyPro Member
    Investor · Bethlehem, PA · Member since 2016 · 929 posts · 951 votes
    5y

    @Cameron Riley You should cut if off after you have an appropriate amount of well qualified applicants. You only need 1 well qualified tenant... 

    If 90% of your applicants are not qualified then make your application requirements clearer (# of references, minimum income, length of employment history, etc.)

    If you are truly getting 20-25 well qualified tenants then increase your rent by 10-20%


    0Reply
  • Rob Gillespie
    Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    5y

    @Cameron Riley it becomes unethical when the unit is filled and you’re still taking applications LOL

    When we take applications we tell everybody that they are good for an entire year on any of our properties that come up. I do not think $25 is too much. We actually changed the application To a Jott form that we have them fill out via text message and they pay at the end of it. really streamlined the process.

    Think of all the people that wanted to look at the unit and made an appointment and then didn’t show up, when they raise their hand with their wallet prior to looking, it really increases the follow-through from them.

    0Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    5y

    If the people applying know they are in a competitive situation upfront when applying then I see nothing wrong with it. 

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Cameron Riley:

    @Joe Splitrock

    Don’t assume things as well, as a note.

    Would never blindly take money from an applicant. The point is to find the best fit tenant.

    We pay a third party to look at every application

     So if you are collecting only $25 and paying a third party, I wonder if that third party is doing credit and criminal background checks? In my experience the cost of running those checks by itself it $25. Maybe as a way to better filter people, change your application fee to $50 per applicant and run credit/criminal back ground checks. 

    Another question is if you are pre-screening of any type? I just question why you are getting so many applicants. It seems either un-qualified people are applying or your rent is far too low.

    0Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Joe Splitrock:
    Originally posted by @Cameron Riley:

    @Joe Splitrock

    Don’t assume things as well, as a note.

    Would never blindly take money from an applicant. The point is to find the best fit tenant.

    We pay a third party to look at every application

     So if you are collecting only $25 and paying a third party, I wonder if that third party is doing credit and criminal background checks? In my experience the cost of running those checks by itself it $25. Maybe as a way to better filter people, change your application fee to $50 per applicant and run credit/criminal back ground checks. 

    Another question is if you are pre-screening of any type? I just question why you are getting so many applicants. It seems either un-qualified people are applying or your rent is far too low.

     well,  I had 4k views on facebook marketplace and I tell people " Must have section 8 or partial government income to apply "

    0Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Jon Kelly:

    @Cameron Riley You should cut if off after you have an appropriate amount of well qualified applicants. You only need 1 well qualified tenant... 

    If 90% of your applicants are not qualified then make your application requirements clearer (# of references, minimum income, length of employment history, etc.)

    If you are truly getting 20-25 well qualified tenants then increase your rent by 10-20%


     4k views on FB marketplace. Insane.

    0Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Caleb Johnson:

    Hey Cameron, I think that is a great way to make some money. I don't necessarily think it is unethical, as long as the amount isn't more the $25. This amount might just be because of the area that I am in. If you are in a more expensive market, like CA, then that is subject to change. Bottom line, I wouldn't have a high application fee just so I can make some money on peoples applications. Maybe you want to host an open house so people can see the place and know if they even like it before they pay an application fee. That way you weed some people out and you are still giving them the opportunity to see the place without paying you. 

    In conclusion, I think it is a great way to make some extra money and don't think it is unethical. As long as you are making sure people know that just because you give them an application and they pay you money, doesn't mean they will get the place. I don't think there is any laws that prohibit from excessive app fees or the amount you can hand out. But I don't know your state, so look into that yourself. 

    Hope this gave you another perspective. -Caleb

     Loved this reply, this is essentially what happens to us, due to high interest. Not my fault 20 people want to apply lol. Might as well take that fee

    1Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Jake Drappi:
    Originally posted by @Cameron Riley:
    Originally posted by @Jake Drappi:

    @Cameron Riley learned this in business. If you have to ask, then you already know the answer.

    Eh, I see what your poking at but ultimately asking questions is the entire basis of human existence. I knew nothing about science until I asked the professor lol 

     I guess I should have been more specific.  When it comes to ethics in particular, if you have to ask, you know the answer.

     Fair enough. I am glad we have interest on our homes but yeah

    0Reply
  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    5y
    Originally posted by @Cameron Riley:
    Originally posted by @Caleb Johnson:

    Hey Cameron, I think that is a great way to make some money. I don't necessarily think it is unethical, as long as the amount isn't more the $25. This amount might just be because of the area that I am in. If you are in a more expensive market, like CA, then that is subject to change. Bottom line, I wouldn't have a high application fee just so I can make some money on peoples applications. Maybe you want to host an open house so people can see the place and know if they even like it before they pay an application fee. That way you weed some people out and you are still giving them the opportunity to see the place without paying you. 

    In conclusion, I think it is a great way to make some extra money and don't think it is unethical. As long as you are making sure people know that just because you give them an application and they pay you money, doesn't mean they will get the place. I don't think there is any laws that prohibit from excessive app fees or the amount you can hand out. But I don't know your state, so look into that yourself. 

    Hope this gave you another perspective. -Caleb

     Loved this reply, this is essentially what happens to us, due to high interest. Not my fault 20 people want to apply lol. Might as well take that fee

     So what you are saying is, might as well take money from poor people for my own gain. Worse yet you think it is funny. This is why landlords get called names, because bad actors take advantage of people. I encourage you to hold yourself and your business to a higher standard. There are several things you could do:

    1. You could simply stop taking applications after 5 or even 10. There is no reason to take 20 with your low qualification standards.

    2. You could use a "first qualified" approval method and tell everyone "you can apply but there are X number of people in line in front of you, so make sure you wan to pay. Honestly with your listed qualification standards, anyone on Section 8 would meet your standards anyway.

    3. You could refund money to anyone you chose not to screen. 

    2Reply
  • Cameron Riley
    OP
    Rental Property Investor · Phila, PA · Member since 2018 · 553 posts · 118 votes
    5y
    Originally posted by @Joe Splitrock:
    Originally posted by @Cameron Riley:
    Originally posted by @Caleb Johnson:

    Hey Cameron, I think that is a great way to make some money. I don't necessarily think it is unethical, as long as the amount isn't more the $25. This amount might just be because of the area that I am in. If you are in a more expensive market, like CA, then that is subject to change. Bottom line, I wouldn't have a high application fee just so I can make some money on peoples applications. Maybe you want to host an open house so people can see the place and know if they even like it before they pay an application fee. That way you weed some people out and you are still giving them the opportunity to see the place without paying you. 

    In conclusion, I think it is a great way to make some extra money and don't think it is unethical. As long as you are making sure people know that just because you give them an application and they pay you money, doesn't mean they will get the place. I don't think there is any laws that prohibit from excessive app fees or the amount you can hand out. But I don't know your state, so look into that yourself. 

    Hope this gave you another perspective. -Caleb

     Loved this reply, this is essentially what happens to us, due to high interest. Not my fault 20 people want to apply lol. Might as well take that fee

     So what you are saying is, might as well take money from poor people for my own gain. Worse yet you think it is funny. This is why landlords get called names, because bad actors take advantage of people. I encourage you to hold yourself and your business to a higher standard. There are several things you could do:

    1. You could simply stop taking applications after 5 or even 10. There is no reason to take 20 with your low qualification standards.

    2. You could use a "first qualified" approval method and tell everyone "you can apply but there are X number of people in line in front of you, so make sure you wan to pay. Honestly with your listed qualification standards, anyone on Section 8 would meet your standards anyway.

    3. You could refund money to anyone you chose not to screen. 

    Just a different view and I appreciated it. 

    If it was UP TO ME, I would NEVER do showings in the first place lol. They suck. They waste time. People don't show up. That is what we will do though, to keep it ethical. Cut if off now at 12-15 at MOST.  

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Bob S.:

    @Cameron Riley we charge $35 for BG and app. If the 1st person qualifies thats it we stop. Why are you taking 25 apps????

    profit center..  25X app fee of 50 bucks  1,250.00  one full month of rental income and never rent it.  :)  sounds like the advance fee lenders that just take advance fee's and never do produce a loan..  of course i am being factious..  

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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y

    @Cameron Riley

    If you're renting apartments that are in such high demand and the people you actually want to rent to are handing over their money like that, well, you're charging what the market will bear.

    I, personally, suspect I would reliably land crappy tenants and/or convert possibly good tenants to terrible tenants with that approach in my C-class long-term rental properties, for a bunch of reasons. If your mileage differs, then you should do it.

    If people are willing to play the lottery for the bare OPPORTUNITY to apply for an apartment, that's their business.

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