Tell me why I can't charge a fee or fine for someone putting a Security Deposit down on an apartment to reserve it.... and then changing their mind 2 or 3 days later when they see a better apartment, have second thoughts, see something they want to buy with the cash.... whatever and demanding it back.

2nd time in a week. I'm tired of the uncertainty and being taken advantage of here. Its time to start writing better CYA contracts!

This has got to change.

The holding deposits need to be not refundable if the tenant backs out. Otherwise there is no point in holding the apartment. They just change their mind the same night, or a day later and want cash back.

I haven't seen anyone answer yet what they are doing.

Are you charging a non refundable holding fee for reserving an apartment to process applicants, and if so how much is it?

I process applicants before they get inside the apartment.

By then I have a better understanding of who they are.

If I were to charge it would be a holding fee, as mentioned above.

Ken stated what you are doing incorrectly. Use a form and the term HOLDING FEE. Do NOT use the term "deposit".

On the form you can indicate what you are doing and what the tenant needs to do as well (such as YOU will hold the apartment for them, not show it to others, stop advertising and advise other inquirers that the property is no longer available. THEY will take possession (by a certain date), sign all paperwork, put all named utilities (as applicable) into their names, pay the remaining portion of what is owed (with dollar amounts), etc.).

As long as THEY hold up to their part and YOU hold up to your part - then the FEE amount may be "credited" to their total move in amount $x,xxx. If they do NOT hold up to their agreement part then the FEE stays a FEE and will be kept.

@ jonny [NY]

How much of a fee, then?

My holding 'deposit' was the same as the security deposit, and the form stated it becomes that if applicant is approved, is returned if not approved.

Thats all well and good until they change their mind two hours later.

I don't know about the wording, "Fee", nobody wants to pay a fee, and I picture everyone saying "Fee? Oh no thanks not right now, I'll think about it." Deposits however sound more attractive. They sound like security. As does the phrase 'security deposit'. Just my take. Could be wrong.

Nevertheless, my first attempt and changing the wording stating that the Holding Deposit (by whatever name).... is a required step in the process, that it is returned if not approved, but there is a fee IF they change their mind.... resulted in said prospect filling out the application in full, but refusing to put down any money right now (despite announcing they have plenty in savings) and leaving.

I said "Please keep in touch, and let me know when you are ready for the next step in the process".

I get the feeling I pushed them off by saying they have to put money down asap, but not sure. Many want to know they have the apartment before putting any money down- but obviously that would involve spending all kinds of time and money backchecking dead ends.

I think the issue is that you want to charge the fee BEFORE they have been approved.

I know that personally, I wouldn't feel comfortable giving someone $$$ with my application. What if they disappear? What if they tell me that I haven't been approved but fail to return my money? Too many unknowns.

What happens if you get three solid applications and they're all approved?

They sign this form when they give me the security deposit. I explain to them that it is nonrefundable but rolls over the security deposit once they sign the lease.

Landlord does hereby acknowledge the receipt of $_______________ from ____________________________________________________ on _____________, 20____

This fee is a non refundable holding fee that will hold the property at _______________________________ in the prospective residents’ name until ____/_____/20____. Should the prospective resident not sign the lease contract as agreed on or before this date, the holding fee will be kept as liquidated damages to compensate for the expense incurred in making and keeping the property available for the applicant. On completion of the signed lease contract this fee will be applied to the security deposit identified in the lease.

I don't take Holding anything anymore. Until a full application is completed and approved and a lease signed and a Security Deposit paid, it's not rented. Those steps used to take a week or more, so tenants begged to pay Holding Fees so as not to lose a place they wanted.

Nowadays an App can be done in a day if everyone is on board and cooperating.

@MikeA[TX] I don't see any problem with that.

There is so much uncertainty with these people, its maddening.

How much is your holding fee? Is it the same amount as the Security Deposit?

Not that they don't deserve it for reserving the apartment and then backing out.

Honestly from experience I can now say whats the use of even having a holding form if there's no penalty for them not living up to their end of the agreement

As others have said, how long you hold it depends. I use this as one of the tools that slides based on how tough athe rental market is. If it's very strong as it was a couple of years ago then I do not use holding fees, the first one that signs the lease gets it. Good tenants are getting harder to find these days so I will hold it up to 10 days with the full security deposit as a holding fee. That generally gives them 2 weeks from the time they apply, basically one pay-period for most people.

If it's a great applicant, and times are really tough, the applicant is wanting to wait a bit longer, say to the end of the month when their lease is up, I will sometimes throw in a few days free (future) rent.

Here's what that looks like. Let's say someone comes in on the 3rd and applies but they don't want the place until the 30th because they are paid up on their current place. I tell them I can only hold it 10 days which will be around the 15th. But, I will give them half a month free rent so they can have the place on the 15th to have some time to move. To do that I will require 1) they put the security deposit down as a holding fee, 2) they pay a full month's rent on the 15th, 3) they get the utilities switched to their name effective the 15th. I will then prorate the 2nd month down to the 2 weeks they still owe. The good thing with this is it is in a tough market it will probably sit vacant those 2 weeks so it really isn't costing me anything and I am able to make a deal to snag a good applicant when there aren't many of them to go around.

I still believe that you need to sell a place so you have a buffer in the bank.

Maybe get a part time job to help add some income to the mix?

I understand having only a few properties and then a couple come open. I only have 20 and I had five come open either at the same time or one after the other. It was frustrating but I chose the fastest to get back on market, rented that one, went to the next fastest, rinse and repeat.

When we started out I still had a W2. I dumped all the rent profits back into the biz. If you do not have a cushion you will always be terrified about an empty.

You really need to get to a Mr. Landlord Boot Camp. It will help you tremendously, and it will pay for itself quickly.

The drama isn't worth the money you are making now. Life is too short.

@zero[IN] I fell into this after I lost my contracting job and only ever planned on doing rentals part time.

I always planned on having a second business.

Unfortunately the drama has been such dealing with tenants that I never seem to get caught up and am always treading water. The musical chairs apartments, the signing and leaving is devastating time wise. But it seems everyone I know in my town leasing, experiences the same thing. Nobody stays.

Part of my problem is I can't afford to hire help until I get a second income, and I cant get a second income until I get caught up. When you're doing everything yourself it takes pretty much a month to clean renovate interview and sign someoene. Its a catch-22. I'm trapped.

Someone said on another page, "There are a million things to do in real estate. Why do rentals?"

I said, "What other things??? What??! Give me another idea."

crickets, lol.

okay then.

I also like the advice, 'sell and do something else.'

Right. So I sell and then what is that 'else?'

By the time I have 'else', all my life savings from selling will be gone spent on just living. And then I'll be broke with nothing.

I can't even find something else now, how would I find something else under the gun with no income.

They don't care that the advice makes no sense really. The people telling you to quit already want you to fail.

It sounds like you know what you need to do. So how are you making out with pushing these changes forward?

JP, yes you CAN afford to hire help. And it would be better for you to do so now rather than later. It's just a matter of how you do it.

1) You hire someone who only works very part-time to start off, who you train.

2) Just like professional property managers, you incorporate different administrative fees into your management business model. By doing so, the fees would help to cover the cost of the hired help.

In regard to the holding fee, I would suggest another way that you can handle that fee, which is slightly different than the ways suggested above. I charge a holding fee that is non-refundable. The cost of the holding fee is one-half the normal per day rental rate. And it is NOT credited or applied toward any security deposit.

Interesting, Jeffrey. So it's not credited to anything which means they need to get off the pot if they really want the place and get their app, lease and DEPOSIT in place.

You have been given sound advice, Heed it.

I do nearly everything myself. I have had people in the past. I am actively looking for part time help now. Seems in my little area everyone wants so much money for doing so little that it eats the profits up.

But I do it.

So you are constantly having people trash your places?

Here are a couple easy fixes for that.

Stop putting people in just because they have a heartbeat. Don't whine about no good people available.

What are your holding costs for one unit? Mortgage, taxes, insurance and minimum utilities for one month.

Now take that number and add in the cost of a complete rehab at turnover every single time.

No wonder you can't make ends meet.

Now go back to the first number. You are paying this no matter what. So if it sits empty for a month it costs you the same as last month. Look at the money you saved by not rehabbing the place Every.Single.Time.

Sounds crazy, right? You are losing money anyhow, but now you are losing less.

Spend the time looking for better tenants. Even if it sits empty, remember it costs you less than a rehab.

Go find a job, even if it is a McJob that is part time and pays little. The change of pace will do wonders. Don't let your ego get in the way. Just do it.

As for working all the time, well you fixed that issue by not renting to deadbeats. When I started out I worked a W2 and then worked on the rental at night and on weekends. I put in my time to get to where I am now. I don't make a lot of money, but I don't worry about paying my bills either.

When you get a person in that you think will be the perfect tenant make sure that you check in and see how they are taking care of your place. We all get tricked now and again. Putting eyes on will help alleviate the problem. See it, fix it or boot them.

I am home for a late lunch so I will stop pounding sand and get some food.

Embrace the Yet Mindset:

"I'm not good enough" becomes "I'm not good enough...yet."

"I don't know how to do it" becomes "I don't know how to do it...yet."

"I'm not capable of that" becomes "I'm not capable of that...yet."

Embrace the Yet Mindset:

"I'm not good enough" becomes "I'm not good enough...yet."

"I don't know how to do it" becomes "I don't know how to do it...yet."

"I'm not capable of that" becomes "I'm not capable of that...yet."

I keep it simple most of the time. I tell 'em: "I wouldn't hold it for my own granny without a deposit and first months rent. If ya'll get it figured out and saved up, let me know- I would love to rent it to you".

My thought process: this itself is somewhat of a litmus test... if they have trouble coming up with that... they're prolly gonna' have trouble paying you on time.

That said...for the right tenant...I have held it for a few days with a deposit.