There are certain aspects of real estate investing I could write a rambling non-coherent book about and tenant screening is one of them. One of the more crucial aspects that people miss the mark on when screening tenants for their rental property is not charging them an application fee. Here is why you should….

The Background Check Costs You Money

I am not talking about the application fees being a way for you to make money, but rather simply to be a way for you to cover your costs associated with running the background checks. A legit national credit, criminal, eviction check costs money to run so at least charge that much for your application fee. Our checks cost $32 to run and that is what we charge the applicant.

Applicants Will Think Twice Before Applying and Wasting Your Time

Even if you clearly outline what the minimum qualifications are for renting your apartment people will still apply if they know they do not meet them. Why? Who knows. You will drive yourself crazy trying to figure this out. I do know this, a free application does not provide them a deterrent for doing so. Your time/money is being wasted, not theirs. Application fees help minimize the time you spend on people who won’t qualify anyway.

Everyone Else is Doing It

Have you ever heard of a legit landlord providing a nice place to live that doesn’t require some sort of application fee? Neither have I. This is what I tell people who “feel bad” about charging an application fee. You have told them the minimums to qualify and are charging a fee just like every other legit landlord is. Nothing to feel bad about.

How Much Should I Charge

This is very much market dependent and how in demand your rentals are. Every market has its sweet spot. In mine it is between $25-$40 per applicant, it is in your best interest to require anyone over 18 who will be living in the apartment or co-signing to apply. Do some market research on apartments for rent in your area and how much they are charging for application fees. Once you do this what you should be charging will become clear.