If you manage rental properties, you’re almost certainly familiar with application fees already. Still, it’s important to talk about them, since they’re an important part of the application process and, consequently, of your business. Here are a few tips to help you make sure you’re getting the most out of your rental application fees.
Make sure to specify that application fees are non-refundable
You don’t want there to be any confusion regarding refunds for application fees. Make sure any applicants understand how the fee works and that they won’t be getting the money back. That way, you’ll hold onto the funds and avoid creating potential trouble for yourself down the road.
Consider the role credit and background checks play in your screening process
If you use a third-party service to conduct credit or background checks on your applicants, they’ll probably charge you a fee for their services. Make sure to take that into account when deciding how you should set your fees. Do you want to include that charge in your application fee? Do you want to charge applicants the screening fee separately? Do you want to cover this fee yourself? Keep these questions in mind and set your fees appropriately.
Know who you want to charge application fees to
Not everyone charges application fees to every applicant. Some property managers do collect a fee with every application, but others only charge their top candidate. Some say that the best practice is to charge an application fee to only those you plan to seriously consider approving. No matter your choice, make sure to stick to it as you receive applications.
Know your local laws about application fees
Some cities and states set a maximum on the amount that can be charged in application and screening fees. It’s your responsibility to know whether there’s a limit in effect in your area, to know what that limit is, and to not exceed it. You can check with authorities in your jurisdiction on this if you’re unsure.