Looking to fill a vacancy at your Boise rental property? If so, one of the first things you'll need to know is what to do about rental application fees.
First things first: what is an application fee? This is something you (or your property management company) collect from all prospective tenants. You'll use the fee to pay for screening reports and other administrative costs.
For many landlords, application fees can be a source of confusion. In this post, we'll answer all the common questions you may have about them!
Why Are Application Fees Necessary?
Technically, Boise landlords aren't legally required to charge application fees. That said, it's in their best interest to do so.
Without an application fee, you'll need to cover background checks out of pocket. Alternatively, you may decide to forgo them entirely. This isn't a good idea, as it allows bad actors to slip through the cracks.
Waiving an application fee for certain tenants can also count as preferential treatment. According to federal law, all prospective tenants should have equal access to a rental property.
What Are Application Fees Used For?
The purpose of application fees is to help you discern if an applicant would make a good tenant. This covers the following checks:
- Credit checks
- Personal information check
- Income verification
- Employment history
- Criminal records
- Address history
- Eviction records
What Is a Typical Application Fee?
The average application fee in the U.S. is $30-$50 per applicant. The exact amount will depend on the location and market of your property.
In Idaho, there's no limit to what you can charge. In general, if your unit warrants a higher rent, it's acceptable to up your application fees. Take a look at what your competitors are charging to calculate the ideal fee.
When Do You Receive an Application Fee?
All rental applications should come with an application fee. The application form should state the amount of the fee and how to pay it.
Beyond application fees, prospective tenants shouldn't have to pay for any other services. For example, you shouldn't charge them for viewing your unit, even if providing this service would incur some costs.
Are Application Fees Refundable?
In most states, the landlord or property manager doesn't need to refund the application fee. In Idaho, you may do so if you wish.
For instance, some application fees will be higher than the actual costs of screening. In this case, you can refund the difference. This is a good way to promote transparency and fairness in the application process.
Some states (not Idaho) have specific limits on how much you can charge for a fee. This prevents landlords from using application fees to supplement their rental income.
Hiring a Property Management Company
The bottom line: application fees are standard practice in the industry. This fee makes it much easier to vet prospective tenants. The above guide contains everything you need to know about handling these fees.
Want to outsource application fees to a property management company? At 1st Rate Property Management, we manage every property as if it were our own! Contact us here to see why we've been in business for 30+ years!