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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  • Bryant K.
    Rental Property Investor · Rochester, NY · Member since 2020 · 17 posts · 8 votes
    5y

    So long as you arent collecting the fees without running the applicant through the screening process, i don't think it's over kill. At first i thought it was a high number of applications but in my area if you advertise that you're looking for a section 8 tenant you'll usually get a flood of applications

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

    @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.

     How many apps do you take?

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

    So long as you arent collecting the fees without running the applicant through the screening process, i don't think it's over kill. At first i thought it was a high number of applications but in my area if you advertise that you're looking for a section 8 tenant you'll usually get a flood of applications

    Every applicant gets ran and Yeah we get floods. So should I cut it off at 10-15 applicants?

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  • Jim K.
    Handyman · Pittsburgh, PA · Member since 2018 · 5k+ posts · 13k+ votes
    5y
    Originally posted by @Cameron Riley:
    Originally posted by @Jim K.:

    @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.

     How many apps do you take?

    I do not charge an applicant fee and I typically take four applications or fewer. I then pay for the TransUnion SmartMove background search.

    1Reply
  • Pat L.
    Rental Property Investor · Upstate, NY · Member since 2012 · 3k+ posts · 3k+ votes
    5y

    One of our investors threw out on Craigslist a ranch he rehabbed & to his surprise he immediately had 20+ applicants, he emailed them applications, most of whom Venmo'd the application fees. I can only assume he reimbursed those rejected. 

    We had a semi-rural trailer park here where the manager put a rundown trailer for sale on craigslist for $600. She took $25 from each person applying. I knew a couple of handyman types who went through it with their significant others & they paid the fees. The kid working maintenance at the park did some rehab for me for several months & he told me she probably had 10-20 a month applying as he would take them through it after-hours & weekends. It ran for at least 8 months that year & apparently never 'sold'. After the winter months it popped up again, same routine.

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  • Bryant K.
    Rental Property Investor · Rochester, NY · Member since 2020 · 17 posts · 8 votes
    5y

    @Cameron Riley I can certainly see the pros and cons, and could see why you'd screen that many people to have a bigger pool to select from. I would personally but a limit on it, because I wouldn't want to charge that many people the fee considering they're lower income families. However, i think it depends of other factors as well, like the likelihood you could find a decent tenant in 15 applications. Where I own properties the housing authority that oversees section 8 tries to protect the landlords and are great to work with from my experience. I know that's not the case everywhere.

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  • Account Closed
    Investor · Las Vegas, NV · Member since 2010 · 15 posts · 4 votes
    5y

    The listing agents are supposed to change the status to "Multiple Offer"  but they are not doing it.  I always ask, some won't say how many...I have to make an offer within a few hours of the listing coming on the market to be first in line. 

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

    One of our investors threw out on Craigslist a ranch he rehabbed & to his surprise he immediately had 20+ applicants, he emailed them applications, most of whom Venmo'd the application fees. I can only assume he reimbursed those rejected. 

    We had a semi-rural trailer park here where the manager put a rundown trailer for sale on craigslist for $600. She took $25 from each person applying. I knew a couple of handyman types who went through it with their significant others & they paid the fees. The kid working maintenance at the park did some rehab for me for several months & he told me she probably had 10-20 a month applying as he would take them through it after-hours & weekends. It ran for at least 8 months that year & apparently never 'sold'. After the winter months it popped up again, same routine.

     Yeah, people never believe me but ultimately, my listings average 200-400 views bare minimum and 20-80 people trying to apply lol

    - What do you suggest I do, especially when they ask " How many applied? " Who is all interested?" 

    - Should I make a 10-15 cut off?

    It sounds like the trailer park made a few GRAND lolL!!!!

    0Reply
  • Beau Watson
    Rental Property Investor · Atlanta, GA · Member since 2019 · 90 posts · 73 votes
    5y

    Evening everyone,

    As I read through this whole thread quite a few thoughts come up.

    First and foremost, there is quite a few different opinions and @Cameron Riley was taking them very professionally from everyone. Kudos to you sir for taking all the opinions in even when some of them seem to be negative towards you.

    Second, it would be my opinion to do a mix of a lot of these ideas. The beauty of a forum like this is to get all the different opinions and use what works for you in your business at the stage you are in.

    Third, let me tell you how I have done it recently (Sept) with my C class duplex.

    We roll out the marketing as would anyone. As interested parties connect with me whether it is via text, call or email, I immediately ask them to text me their email. Nightly I send an informational email out to all interested parties (I keep a generic version of this in my drafts so it is easy to copy and paste). This email has info about pets, security deposit, verbiage about checking the surrounding community, criteria to qualify, link to my website where the application is and lastly a date and time slots for an open house. They are usually 45mins apart and when I speak with a potential tenant I am honest about it being first come first serve and they should pick the earliest time slot available. I also advise them to come see the place first before filling out an app. I spend a full day at the home and I am very honest with each potential applicant that it is first come first serve. If they ask how many showing before them. I’ll tell them. If they ask how many applicants. I’ll tell them. I will take applications for 48hrs after open house, not because I cut it off but because I want a tentant so I jump on doing the work to get someone to sign the lease. This last round I got 9 applicants at $40 a piece. I did get 2 applications before they even saw the place. 1 showed up and was in the first three. The other didn’t show (why would I refund that) I did a BG and credit check on the first three that met qualifications. 2nd person ultimately got it.

    Now for all of those that are saying the app fee should be refunded. First of all, app fees to me do not solely include BG and credit check. But my time. My monthly fee for the software that does it. The time it took to learn. The time I spend at the open house and getting ready for it. So let’s break down the math. I brought in $360 total in application fees. I spend $60 on BG and credit checks. This leaves $300. I spend $45 a month for my management software. I spent 1hr driving to my rental. 1hr cleaning and staging. Another 6hrs showing the home. Drove home 1hr. Add it all up times two because my wife came and helped...9hrs x 2 people = 18 labor hours. $300/18hrs = $16.66 an hour.

    Now to those saying I or anyone should refund that money doesn’t break down there life in terms of time. I do. So this is why I charge what I do. I know it is ethical because I am VERY open and clear about what stage they are in if they ask. We can all make more money but what you can’t get back is your time. So if I am going to spend my time and my wife’s. I make sure it is worth our time.

    I appreciate all the difference of opinions on this thread and again kudos for all the constructive criticism and how professionally everyone is receiving it!

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  • Matthew Irish-JonesBusiness Member
    Real Estate Agent · Buffalo, NY · Member since 2017 · 2k+ posts · 2k+ votes
    5y

    @Cameron Riley better check your state laws. Its illegal in NYS

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  • Brian H.
    Carolina · Member since 2017 · 519 posts · 222 votes
    5y
    Originally posted by @Cameron Riley:

    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?

     Are you using Facebook Marketplace? Craigslist? That's a lot of people going that far in the process!

    0Reply
  • Gino PassantePro Member
    Professional · Milwaukee, WI · Member since 2013 · 52 posts · 25 votes
    5y

    Hi Cameron, I work with a professional property management company in the Wisconsin market.  Sometimes this happens with applicants... First- make sure you are posting your basic qualifications on your marketing material. Second- prequalify your leads via text, call or digital message prior to having them apply. This will decrease the amount of unqualified applicants while saving you the most valuable possession, your time. Feel free to DM me anytime as id be happy to share our process, tips and tricks. 

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  • Tanner Sherman
    Real Estate Broker · Omaha, NE · Member since 2020 · 329 posts · 203 votes
    5y

    @Cameron Riley if you’re keeping all the money and only considering a small few applications then I would say there is a moral/ethical issue here. But if each of them are honest to God contenders and require a lot of due diligence to select the best one then maybe I can understand. However I think the best way to pick a tenant is to accept the first application that meets your criteria and not sift through a pool of applications. This helps protect you against fair housing claims.

    0Reply
  • Roy Nash
    Rental Property Investor · Spokane, WA · Member since 2018 · 64 posts · 59 votes
    5y

    @Nicky Reader.  I do almost exactly the same procedure.  If they tell the truth up front rarely do I need to take their money for screening and then turn them down.   It can slow you down though if you end up not accepting the one you thought you were going to approve!

    0Reply
  • Bud Gaffney
    Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes
    5y

    @Cameron Riley I would categorize this as unethical. It is 1 unit, and you will be picking 1 person. 20-25 paying applicants seems excessive. Just my opinion :)

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  • Rumen Mladenov
    Investor · Newark, DE · Member since 2014 · 245 posts · 198 votes
    5y

    @Beau Watson, I am going to have to disagree. All of those expenses are valid and legitimate, and must be covered by your rental income if you bought right. Applicants are not your employer and I do not think they should be the ones paying for your time and expenses. Look at it from the other side for a moment. Imagine you're an applicant who knows rental demand is very high, so you take a couple of unpaid hours off from work to go tour a property, drive your car and burn gas, only to be rejected for the property. Would you expect the landlord to reimburse you for the missed wages, gas for your car, and so on? Especially when you cover all qualification requirements and still got rejected?

    I do not charge any application fees. At the end of the day, screening costs are a small fraction of my rental portfolio expenses, and it would not make a big difference in my bottom line if I charged for them. I bet for a potential tenant that pays numerous application fees to be rejected from numerous places those fees have a much bigger impact. 

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  • Blaine Johnson
    Rental Property Investor · Pocatello, ID · Member since 2014 · 33 posts · 6 votes
    5y
    Originally posted by @Cameron Riley:

    @Adam Martin

    My

    Qualifications are simple

    No violent felonies

    Good landlord references

    And must have a section 8 voucher

    I have little to no issue with non-violent/endangerment felonies.

    However, there are many of those that I would be wary of;

    Fraud, embezzlement, identity theft, etc. What were the circumstances, and what has changed

    besides being on parole (not necessarily a deal breaker)

    And, is misdemeanor domestic battery OK? Animal Abuse?

    References?; Lived in (grandmas) "2 bed 2 bath luxury flat" (basement) for last 3 years and has impeccable reference and "rent history"? People lie, and lie for others, including the system (by omission due to confidentiality laws).

    "Section 8" does have some good people. My best overall, and longest term tenant was section 8. They are a family friend to this day although not a tenant. I have also had my worst tenants through the system too. I am owed thousands that I will never get despite system guaranties and judgements.

    I am tired of going to court. I now do full criminal and financial background, period. The application fee is the first test of ability to pay and take responsibility. It is the only way to assess my risk.

    0Reply
  • Joe P.
    Philadelphia, PA · Member since 2017 · 824 posts · 1k+ votes
    5y

    I think the concept of an application fee is outdated. I've heard many folks talk about charging the application fee to weed out the "tire-kickers". Here's what I'd say -- set the bar high from the get-go. If you have a nice property that is well-priced for the market, let people know what your requirements are, e.g. 620 credit, 1.5x rent due upon lease sign as deposit, no criminal history, etc. If you let it be known early on, that will weed out quite a bit at that time.

    Now, some people don't pay attention and forge ahead accordingly. Not much you can do there. I started using Zillow's background screen service to keep myself out of the "background-screen-and-charge-people" business. Zillow does it and charges them directly, and then I may ask additional questions about their application as needed.

    I put more stock in the gut feel I have in meeting folks during my open houses (always schedule people for a 1 to 2 hour time frame) and seeing their interest level, how they interact with me, etc.

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  • Beau Watson
    Rental Property Investor · Atlanta, GA · Member since 2019 · 90 posts · 73 votes
    5y

    @Rumen Mladenov

    I see it from the other side. Truly, let’s all keep in mind you are unaware of how I grew up and where I came from. As I said, I am VERY CLEAR. How many applicants have already come in. I coach these potential tenants about picking the earliest times slot. I coach them to NOT put in an app if they haven’t seen it. I coach them to not waste their money if they have other properties they like as well if I have numerous apps in. At the end of the day everyone is going to make their own choices. No matter the advice or honesty I lay out in front of them.

    Let me ask this question..... and this is to anyone. How do management companies make their money? Just off the monthly % from the property owner? Do they mark up move-in inspections? Do they add a % to work orders?

    Let me go a step further.... how do general contractors make their money? Is it only labor? Or do they add a % to the material cost when buying?

    0Reply
  • Jim Spatzenfeld
    Investor · NorCal · Member since 2015 · 281 posts · 240 votes
    5y
    Originally posted by @Cameron Riley:

    @Adam Martin

    My

    Qualifications are simple

    No violent felonies

    Good landlord references

    And must have a section 8 voucher

    In NY the last requirement would be illegal as you cannot discriminate against source of income.  

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

    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?

     Are you using Facebook Marketplace? Craigslist? That's a lot of people going that far in the process!

     I have a masters in marketing from PSU (Humble brag lmfao)

    I use a mix of MARKETPLACE AND PAID LISTING SITES!!

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

    @Cameron Riley I would categorize this as unethical. It is 1 unit, and you will be picking 1 person. 20-25 paying applicants seems excessive. Just my opinion :)

    fair enough. I came to the conclusion that it is unethical, but since i Can't stop the amount of interest a listing gets, I can CREATE a cut off limit... " Cut off is 12-15 applications per unit "  

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  • Gus Pages
    Property Manager · Hackensack, NJ · Member since 2017 · 14 posts · 8 votes
    5y

    The application fees should cover the cost of the background and credit checks, possibly a bit more considering labor and other overhead. If application fees are being received after another applicant has been accepted, the fees should be returned to the applicant, even if they are being put on a waitlist of some kind. 

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  • William Jenkins
    Real Estate Broker · St. Louis, MO · Member since 2014 · 206 posts · 194 votes
    5y

    I would say the answer is yes..... It is 100% wrong to collect fees on that many applications.  Illegal no, wrong yes. 

    Is your time not worth more than the markup you are charging on those applications?  I don't charge for any application on any of my properties (residential or commercial)....high end or low end.  I have a set criteria of what I am looking for and if a prospective tenant doesn't meet that criteria then why would I want to waste my time with them?  If they make it past my "pre-qualification," then I simply foot the bill for the background check as a cost of doing business.  Some would stay that is a mistake, but I don't really want to waste time asking for, collecting, and processing a $50 application fee.

    On a side note once people pay for an application they are usually pretty adamant about getting a response and knowing the exact reason why they were turned down (and rightly so).  I really don't feel like having that many conversations to defend my decision, and nor do I have the time.     
    1Reply
  • Guido Nunez
    Investor · Los Angeles, CA · Member since 2019 · 38 posts · 22 votes
    5y

    @Cameron Riley I choose the most qualified and process the application. I then offer the unit with a 24 hour turn around to deliver the deposit. If it doesn’t come around then I move to the next application. Any unprocessed applications will get their deposit returned.

    You’re in the multi family business not applicable processing business.

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