How Many Of You Charge An Application Fee.. - Posted by phil fernandez

Posted by Rob FL on July 05, 2001 at 08:26:17:

I’m a member of a local credit bureau in Orlando.

How Many Of You Charge An Application Fee… - Posted by phil fernandez

Posted by phil fernandez on July 04, 2001 at 17:41:19:

…when you take the application from a possible tenant and what do you charge. I have always just absorbed the cost of the credit check, but not sure if I’m doing the right thing.

Also wondering if charging a fee is a good screening device, which I think it would be. To my knowledge in my market not many if any landlords charge the fee. Would I lose good tenants to other landlords if I had an application fee.

Comments please.

Re: How Many Of You Charge An Application Fee… - Posted by John P.

Posted by John P. on July 06, 2001 at 07:10:06:

When I started out with my first rental 2 years ago I didn’t charge an application fee and I got terrible tenants. Granted I wasn’t as thorough as I am now.I find that the application fee eliminates alot of not so great tenants. I charge a $35.00. dollar fee per person on the lease. I do a credit and background check. I do ask the propspective tenants what their credit is like and if they have a criminal record. If they say credit is great and no record and I find that they lie. I don’t rent to them. I have learn that the other tenants get upset if you have a person of poor character in one of your apartments.I feel that a credit and background check are part of the screening process and that the applicants know you are serious about your rental from day one.

John P.

Re: How Many Of You Charge An Application Fee… - Posted by Ronald * Starr

Posted by Ronald * Starr on July 05, 2001 at 20:56:05:

Phil Fernadez---------

For many years I did not charge an application fee. But my properties are in the below-average parts of town and the below-below-average parts of town. Thus, I typically have to go through about 15 or 20 applications to find an applicant I will offer the property. I do other things to eliminate applicants before running a credit check. However, I do run a credit check before offering the property.

I got tired of paying for several credit checks to rent one property. So I started charging my cost for the credit check. I will not not process an application without the non-refundable “application and credit check fee.”

I have returned application and credit check fees only a few times. If I take in an application just before offering the property to a different applicant, I will typically return it. If the person insists on getting it back because I did not call their current landlord or employer, I probably will give it back.

At the advice of a friend, I am now raising my application fee to $20, even though it costs me only $12 or so. He suggests that it screens out poorer quality applicants who will self-select not to apply. Also, the other property owners and managers in the area charge even higher fees than that.

If few or no other managers are charging a fee, I would advise you not to charge a fee. Good renters might feel annoyed at you and not bother to apply. They are conficent they will get a good place and so, why mess with somebody who charges when the norm is not to charge?

I like to compete for the good renters with BRIBERY: my rents are noticably below average market, but not tremendously below. I therefore can get my renters from the top 5%-10% of the rental pool.

If I were you, I would do a survey to be sure that not many people charge a fee. It would not be wise to have no fee when many other people do, in my opinion.

Good Investing********Ron Starr*************

I Don’t charge In New York City - Posted by Frank Chin

Posted by Frank Chin on July 05, 2001 at 09:05:01:

I don’t do it in New York City but considering it elsewhere.

Here’s the scenerio in New York City:

1- Apartment becomes available on the last day of the month, say June 30.

2- It’s painted and cleaned as of July 5.

3- Advertised for rental on the weekend of the 7th or the 8th.

4- Receive 150 to 200 calls, about 60 lookers, and about 12 applications. Applicants told to leave application if interested, but we refuse to take deposits or application fee. We found that when people leave deposits or fees, they assumed they got the apartment.

5- Applicants are told decision will be made on Monday July 9, 2001, and call on July 10 for status.

6- The dozen or so applicants are then priortized, and choice number one is called first, and screening done early Monday afternoon.

7- We have on many occasions processed choice one to choice four in one afternoon, incurring a $25.00 fee each for credit, eviction and bad check screening.

8- We don’t ask the applicants to drop by with the application fee before processing because then we’ll have to do one at a time, and probably can’t do four credit checks till Thursday or Friday.

9- Applicants are told the one renting immediately gets priority over those renting by the 15th, and those renting up as of the 1st of the following month gets least priority.

10- So by not charging a application fee, I’m able to rent it out immediatley after screening a number of tenants. With apartments costing $1,200/month here, each week of delay costs $300.00.

11- Outside of New York City, there’re only several applicants per month, so awaiting a application fee will not slow me down very much.

Frank Chin.

Re: How Many Of You Charge An Application Fee… - Posted by TRandle

Posted by TRandle on July 05, 2001 at 08:20:20:

We charge $25 per adult, non-refundable. It costs us $10.95 for a single bureau report with a score and we easily have $14 in time checking references. We don’t accept the app fee until they say they want the place and we only process one app at a time. The first applicants serious enough to get me app fees and a holding deposit get first shot at it. From my perspective that may not be the “best” way, but it seems fair.

Credit check and screenign fees - Posted by Earnest

Posted by Earnest on July 05, 2001 at 07:27:53:

I think it’s important not to make application fees a racket, not a money maker. We are in a rental business not the application business. If we make applications a money making scheme, the courts could see it as an unfair practice and take the ability to charge fees away. I don’t think that anyone would find it unfair if all we are doing is recouping our expenses.

I charge $22.95 per application AFTER prospective renters have seen the rental. My application form is taken from the book “Mr. Landlord” by Leigh Robinson. It itemizes each cost and shows that my fee is modest.

My form also explains that the fee is not refundable under most instances. I also think it’s important not to cash too many application fees at one time. My practice is to cash no more than thee at a time, but I do accept more than three and hold these extras uncashed. If I choose a renter and have other application I have not checked credit or done anything on them, I return the application fee.

My maket is not that competitive or litigous, but I have toyed with the notion of having a written Operating Procedure for screening and accepting renters, and having it notarized. My thinking is that this might help me if I were to be sued for unfair practices.

My two cents.

Half towards first months rent - Posted by PBoone

Posted by PBoone on July 05, 2001 at 01:21:25:

We charge 20.00 (cost) w/ half going to first months rent. This keeps us from wasting time on lookers and usually gets the truth from the prospect, because we always tell them up front what will cause a decline.

Re: How Many Of You Charge An Application Fee… - Posted by Carey_PA

Posted by Carey_PA on July 04, 2001 at 21:47:53:


I charge $25 per individual, $40 for a joint credit check for married couples. (I think I’m suppose to be charging married couples $25 each too though, huh?)


Re: How Many Of You Charge An Application Fee… - Posted by Jim Rayner

Posted by Jim Rayner on July 04, 2001 at 18:44:32:


I charge 25 per applicant when we reach that point in the process. I have holding deposit ( non refundable if they fail to sign lease within 24 hrs of acceptance) and have already prescreened and interviewed by this point. I use Jeff Taylors Application About 9 pages total so many do not even bother to apply.

The local Rental agents charge $50 per applicant for the screening and a one month’s rent finder’s fee from the Tenant

Re: How Many Of You Charge An Application Fee… - Posted by Lori Samson

Posted by Lori Samson on July 04, 2001 at 17:59:09:

Happy 4th Phil,
We always charge a fee of 25 that just resently went up 30. I do feel it does screen them a little. If they don’t send in the ap fee I don’t even bother. I do however call them to see if they simply forget. If they tell me they tell me they will bring it by later I will wait until I get it before I work with their ap.
In the past I have let a few slid and low and behold they will be the ones that pay late, swear it’s in the mail or pay in payments. I saw a pattern and wised up. I, now, will not even touch their ap until they get that fee in. If they have a problem with $25-30 I don’t want them anyway!It tends to keep the tire kickers away.


Re: How Many Of You Charge An Application Fee… - Posted by Rob FL

Posted by Rob FL on July 04, 2001 at 17:55:36:

When I started out as a landlord, I didn’t charge a fee. I would get applications from individuals, pay for a credit check, and spend my time, money, and energy only to (1) find out they were a loser that would probably give me nothing but grief or (2) that they just rented an apartment from somebody else.

I now charge a minimal application fee of $15. I figure this screens out many of the losers (after all a landlord who doesn’t charge a fee probably doesn’t screen very well – at least that’s what tenants apparently think). I also get to make a profit if I have multiple applicants because a credit check costs me $8.00 (and I only pull a credit check if I am seriously considering a person after checking out everything else). This helps reduce some of the cost of turnover as well.

Mr. Landlord, Jeff Taylor, suggests that landlords find ways to make money in other ways besides just rent collection.

Also, most of the apartment complexes in my town charge $25 and $35 fees just for an application. Hopefully they know what they are doing. My price is a bargain.

Re: I Don’t charge In New York City - Posted by Tim (CT)

Posted by Tim (CT) on July 05, 2001 at 11:51:11:

Why not get the application/Credit check fee upfront?

How important is your time? - Posted by Ben (FL)

Posted by Ben (FL) on July 05, 2001 at 08:27:48:

I haven’t been charging fees, but now htat I think about it, I will. First, there’s the cost of getting the credit, then I have to look at it. Sure, I don’t pore over it for hours, but my time is very valuable (and so is yours). I did spend the time to 1) get the fee from the tenant 2) Call for the credit report 3) Read the report 4) inform the tenant of the results. So, ok, maybe that only took 15 minutes, but if you’re screening 4 applicants, that’s an hour - an hour you could’ve spent making offers on other rel estate. What is you time worth, per hour? My J.O.B. pays me $24 per hour. My real estate career pays me much more.

Re: Credit check and screenign fees - Posted by Rob FL

Posted by Rob FL on July 05, 2001 at 07:37:50:

Mortgage companies charge $50-60 for a credit check fee when applying for a loan. We all know it only costs $15 for a retail buyer to obtain one of these and probably about $2 wholesale. I’m sure they are making a killer profit on these. What’s the difference?

Re: How Many Of You Charge An Application Fee… - Posted by jamesGalTx.

Posted by jamesGalTx. on July 05, 2001 at 06:10:00:

If I have a house for rent and take 10 applications,charging $15.00 per app., should I check all 10 or take the first one with good credit and refrences. If this is the third application do I refund the other 7 people their money? Do you send a letter to the ones that don’t qualify? Thanks for any info, James

Re: I Don’t charge In New York City - Posted by Frank Chin

Posted by Frank Chin on July 05, 2001 at 19:36:56:

I try not to collect anything during the apartment showing since people feel they got the apartment if they left me a deposit or an application fee. Competition is very intense here. I got into nasty situations trying to return it.

If I insist on collecting an application fee before going forward, this is the scenario.

1- I show the apartment Saturday and Sunday.

2- Monday, I call applicant number one and ask him to come by with the app fee. Of course, he’ll be at work and I’ll have to make a trip to the rental unit to meet him. The screening service closes at 7:00, so I’ll probably call it in Tuesday morning.

2- Tuesday morning. I check out applicant one, and lets say he bombs out. I’ll have to call applicant two, and the same thing happens. I’ll have to collect the fee from him Tuesday night, and check him out Wednesday morning.

3- It would be OK if applicant two checks out Wednesday morning. If not - I’ll have to make a decision to put the ad in the local paper again for the following weekend. Problem is if the next applicant, that’s applicant number three, may check out, and I’ll be stuck paying for an ad, and receiving over 100 calls the following weekend for nothing.

Currently, I go through applicants one, two three and four all on Monday afternoon, with lease signing on Tuesday or Wednesday. I get people anxious to move in, and sign on a few days sooner.

Also, I sometimes find that later in the week, the better applicants would already be accepted elsewhere.

The bigger problem here is if this drags on another week, I’ll be showing the apartment around the 15th of the month again, and tenants at that point won’t be signing up till the first of the following month.

At that point, losing half a month’s rent is $600.00, all to collect $25.00.

Frank Chin

Re: Credit check and screenign fees - Posted by Charles K. Clarkson (TX)

Posted by Charles K. Clarkson (TX) on July 07, 2001 at 24:49:58:

I think it depends on ethics. Some ethics might allow for a profit on a fee, while others would not. While my ethic dictates a fee based on my time and cost, I do not slight others whose ethic is more flexible. It still comes down to what price the market will bear. Also, how I value my time may be quite different than how you value your time.

Re: How Many Of You Charge An Application Fee… - Posted by Rob FL

Posted by Rob FL on July 05, 2001 at 07:31:12:

I do a basic check on everyone. Otherwise I feel the fee is unjustified.

I tell people that don’t get accepted by telephone.

Re: I Don’t charge In New York City - Posted by Ronald * Starr

Posted by Ronald * Starr on July 05, 2001 at 20:39:33:

Frank Chin------------

Thanks for your discussion of your process. It is interting to me that different markets require different approaches.

I admire your clear-sighted analysis of your situation and your technques for dealing with it.

Good Investing and Good PostingRon Starr***