Questions about collecting application fees
As a property manager or landlord, one thing that you commonly do is collect application fees. Each state has different rules and laws on application fees, so you should know what your states requirements and limitations are. This blog is going to be a topic blog with more questions then answers. Why? Because there are so many variables that differ from one landlord to another. There is no one ‘right’ way of collecting these fees.
Best time to collect application fees
When is the best time to collect application fees for new rental applications? The property management industry is all over the place on this. Do you collect application fees before the applicant fills out the application? One good outcome using this approach is that you weed out applicants who are not really committed to your rental property.
Collecting multiple applications per rental unit
But what if you are in a hot market and accept 2-5 applications per property in order to find the best tenant? Is it best to collect the fee up front and then return it for those apps that did not get accepted by you? Do you even return the application fee? If you submit 2 screenings because one came back as unacceptable, you will need those applicants to pay the fee beforehand.
Or should you review all the applications first and then process the application fee for the one that you feel you want to accept?
If you process a couple of applications along with background screening for each property, then you probably want to collect the fee up front. Because you want the applicant to bare that background screening expense.
Obviously a background screening is generally required my most property managers to validate a tenants application, but many applications can be eliminated without a screening. For example, if the applicant doesn’t meet your financial requires based on what the applicant stated on the application, then you can rule them out without the expense of a screening.
No matter what is the best practices for your property management company, your property management software should be flexible enough to allow you to collect when you want to collect it.
If you are not sure when is the best time to collect, check with other landlords or brokers in your area and find out what works for them. Then do what is best for you.
PropertyZar is a real estate technology company specifically in the web-based property management software for owners and professional property managers. Learn more www.PropertyZar.com