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I generally don't charge application fees for my places, and I typically pull credit only for my top one or two applicants (two only if the first one is bad-- I have never had to do more than 2.) I just consider it the cost of doing business and deduct it as an expense on my taxes. My biggest rental is a duplex and the rest are individual houses, so its never been a huge expense for me. I could see if I owned an apartment building with 30 units that I might change my policy.
Recently I was discussing this with another LL who always charges a fee for any applicant. He said it "keeps people from backing out" if they have invested a little up front.
When I was a tenant, I recall paying a fee for some of the more upscale, urban multi unit buildings I lived in, all of which were managed by a PM company. I don't remember being charged one on individual units like a house that was privately owned. but its been a while.
Tenants, do you always expect to pay an application fee? LLs, do you charge them in general?
I generally don't charge application fees for my places, and I typically pull credit only for my top one or two applicants (two only if the first one is bad-- I have never had to do more than 2.) I just consider it the cost of doing business and deduct it as an expense on my taxes. My biggest rental is a duplex and the rest are individual houses, so its never been a huge expense for me. I could see if I owned an apartment building with 30 units that I might change my policy.
Recently I was discussing this with another LL who always charges a fee for any applicant. He said it "keeps people from backing out" if they have invested a little up front.
When I was a tenant, I recall paying a fee for some of the more upscale, urban multi unit buildings I lived in, all of which were managed by a PM company. I don't remember being charged one on individual units like a house that was privately owned. but its been a while.
Tenants, do you always expect to pay an application fee? LLs, do you charge them in general?
No as a tenant, and I have never had to pay an application fee.
No as a LL, because it is very rare that we need to run more than 2. if even that. They are usually disqualified before even running any background checks; income, dogs, etc.
Many LLs charge for every person, which sometimes can amount to every single person that views the apt that is interested, because they are just running a racket. Because if they weren't then they would need to refund a hell of a lot of application fees if they find a tenant within the first couple of background checks, but I can guarantee that any that are running a racket are not returning app fees like they should. IF they pre-screen well enough before taking applications (which we do) it won't take long to find a tenant within the first 1 or 2 applicants, most times.
I charge no application fee. When I have received an application that on the face of it I would accept pending a credit check I notify the prospective tenant(s) that I will be running a credit check. My credit agency has provision to have the applicant pay the fee so I inform the prospective tenant(s) they must pay the fee and I select that option when I run their report. (They get an email from the agency that combines identification, permission and credit card acceptance.)
I never run more than one credit check at a time, and I consider no other applicants until I have decided if the credit report is satisfactory to rent to them, which I then do.
The important points are (1) no more than one active credit check at a time, (2) the credit check is my only applicant paid fee, and (3) since they pay the agency directly I have no income or expenses to declare on my income taxes. (I hate the nickel and dime stuff.)
I am a LL with only one property (a SFH that I used to live in) and the only thing I charge is a credit check fee, which the tenants pay directly to the credit company, NOT to me. (I think it's $19 per adult, but my current tenants are in the middle of a 2-year lease so I can't remember for sure.)
Prospective tenants know that they will need to pay this fee, and I have a frank talk with them BEFORE they apply. I don't want to waste my time or theirs if their report is going to come back with a 500-something credit score. (That's happened once, alas, with a woman that I liked very much. She hadn't checked her own credit and I don't think she realized how truly horrible it was. As much as I liked her, I simply could not take a chance on someone who had paid other creditors late -- or not at all -- so many times.)
I typically do only one credit check at a time (even though I may take more than 1 application), as I make decisions very quickly. It would feel weird (and dishonest) to take applications from a bunch of people that I KNOW will never rent the place.
When I was a renter, which is close to 20 years ago now, I don't remember application fees being so common. Back then, I think credit checks were considered the cost of doing business.
Many LL's charge for every person, which sometimes can amount to every single person
that views the apt that is interested, because they are just running a racket.
My observation is that the PM's are more to blame for this and other cash generating "policies"
that mostly just make LL'ing more difficult for the actual property owners (LL) and tenants.
Yes, I charge an application fee. I will get in the neighborhood of 150 inquiries for every vacancy. Over 100 of those people won't pay an application fee after they hear the rental criteria and know they won't be accepted. If it didn't cost them a penny, they would apply anyway, because what the heck, applying is free and maybe a miracle will happen and the landlord won't notice their felony conviction or eviction. I do not want to screen all those 100 plus people to find the legal reason to reject them.
If 38 people apply at $35 each to run their credit report, it would cost me $1330 to run all of those credit reports. No thank you.
It's not possible to screen one at a time. It can take 3-4 days to do the screening, trying to get references to call me back. 3 days per applicant times 38 applicants, by the time I got to the end, every one of them would have found another place to live.
The most important part of the application fee is it stops the absolutely no-hopers from applying and wasting my time.
Every applicant must read my written criteria before they are allowed to apply, so they know whether or not they will qualify. The ones who apply often do not qualify, but they have been warned before they pay the application fee that they are going to be rejected for cause. I consider it a "stupid fee" for those who think they can trick me into taking them by lying on the application.
I tend to screen really well so by the time I get to a tenant that hits all the points I sometimes end up just running the checks. Sometimes I pay for it, other times I have the tenant pay and if they sign a lease I reimburse the app fees. My last two tenants one I refunded her and his fees another tenant in another unit I just paid and ran it.
The ones I refunded was because they were out of state. The other was local.
What I can respect is that 99% of the people I interview are very honest about their situation.
I typically do only one credit check at a time (even though I may take more than 1 application), as I make decisions very quickly. It would feel weird (and dishonest) to take applications from a bunch of people that I KNOW will never rent the place.
That's pretty much what I do. I'll take as many applications as people wishing to apply, but I pick the best one and request a credit report if the prospective tenant meets my standards. I won't look at any more applications until I decide yes or no on the pending application based upon the credit report results.
Running credit reports is not a profit center for me. I don't even touch the money, the applicant pays the credit report service themselves.
Just beginning my first rental experience due to a job change in another state. We viewed several properties with the employer provided realtor and decided on one that met a majority of our needs. 3 people over 18 will be residing in the home and we all paid a $65 application/screening fee to the property management company.
I believe my college age daughters have paid around $30 for their application fees.
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