When to have tenants fill out an application fee

[Mike Bonadies]

Hi Bigger Pockets Community and Property Managers -

I've got a question regarding when you your prospective tenants fill out an application form and pay their application fee. I am starting a RE Investment company that is using the BRRRR in South Jersey so I am a rookie. My research tells me that property managers typically have an initial screening call and a property walk before they have their tenant fill out an application, but recently I came across a few companies in Washington DC that were doing things a little differently. The companies in Washington DC were asking people who were interested in the property to fill out an application first and pay the application fee before they walk the property or have the initial screening call. That seems great to me as it weeds out the people who really want the place but it also seems to me, how do I say this....scummy and would create a bad rep for your properties not to mention unwanted inquires with fair housing laws. Here are my reservations:

What happens if the company accepts multiple applications but issues the house to the first application?
What if you walk the property and the pictures are completely misleading to the actual look of the property?
Do you have to give each application a look before you can issue the rental?

Maybe I'm overthinking this a bit. Anyone have experience executing this or any knowledge?

-MB

[Penny Clark]

Im a property manager and I always encourage people to see the place first before paying the nonrefundable fee.

However, our market in Sacramento is so competitive for rentals, I've had applicants pay the fee anyway just to get an edge over the competition. 

You may consider using a third party screening service like Cozy or SmartMove where applicant pays fee direct to them. Once the applicant views the property, tell them what rental criteria is on a written sheet. Rental apps are not first come first serve but rather first come first qualified.

Screening an applicant for verifying income, rental history and analyzing their credit report shows you are a serious landlord and will keep you from looking like a sucker to professional tenants on wheels.

Best of luck to you!