NY imposed a $20 maximum on application fees.

We need to put our creative heads together and find ways to help our NY LLs. (and other crazy states!)

My question is how much are you spending on screening and have you considered alternatives?

Me? Pre-screen takes up our time so I want to be paid.

My suggestion is to ONLY accept a full, paid app.

1. It has the info you need if you want to continue with that person

2. People will pay. Stop being shy. Why are you so concerned they won't pay? When we changed from FREE to $25 we got the same number of apps.

3. Nervous about people applying without a chance? Provide your basic criteria in advance. Mine has 6 criteria to "Review before applying". It's up to them.

Our fee for more than 8000 apps on our spreadsheet has been $25 for 2 adults for years and has been a minor profit center for us. We do the free stuff first - pay stubs and loan figures for affordability, online court records for evictions and criminal. Those two items on my checklist knock out 80% off apps in minutes. LL references, move in money available now knocks out another 15%. Some find other homes or lose interest.

Our average: out of 50 apps 44 are red (no), 3-4 are yellow (maybe with some conditions), and 1 or 2 are green (good to sign but= only 1 is ready with funds). We do 1 In Home Visit to sign. 20% of those Visits fail, so sometimes 2 Visits.

Math: take in 10 $20 apps = $200, but 8 of those will be denied in MINUTES. Those apps provided you $160 income.

So if you want to spend more on screening those last few apps you have $200 to do it.

Too many LLs do verbal pre-screening which worries me because that can easily get them into a lawsuit. So we don't "talk" to them, only written - text or their written appl.

Why take money from people that clearly won't qualify in the first place? Morality aside, the amount of drama that comes with separating bottom of the barrel prospects from their money simply isn't worth $20. Not to mention, this will drive yet even more legislation against landlords.

The law says the landlord can't charge more than that.

So, use a screening system that does the billing directly to the tenants and not the landlord. It doesn't say third party vendors are limited to what they can charge. That law in itself says that our industry needs a serious face lift.

Yes, you will not profit from this approach, but it places the ball squarely on to the applicant as if they think they will qualify.

Now I have given out the name of this company on more than occasion. Yet, this issue with that state does routinely come up. Where that does frustrate me in all honesty - it also tells me a much bigger problem. If someone who has a problem refuses to act on their problem, is there anything that You or I can do for that person? Real estate investors are problem solvers. We might have lots of tools to help someone, but if they are not willing to change, it is time to go to the person and help them. This is a number game

Brad ... I totally understand where you are coming from but there are few flaws in the logic.

The first and foremost is that it is against NY Law to charge MORE than what your ACTUAL COST IS to run the application with the MAX of it being $20. So, if it only "costs" you $15 and you charge $20 - you could be in trouble if someone finds out. I don't want their $20 - I want a TENANT.

I don't have the time and I don't want to take peoples money from application "fees". That's how this industry is getting us into these situations.

My daughter lives in FL and when she was looking for apartments her application fees were anywhere from $50 - $150 or more PER PERSON, PER PROPERTY. That's just blatant "I'm taking your money" and I don't operate that way.

People here will NOT pay fees before seeing a place - at least, you will *not* get the good folks because they have their choice of places, and will move on to the next available place that will at least let them SEE the place before handing over money and identity info. Photos are not enough these days - scams are endemic, fraud is rampant.

I should charge an application fee I guess, but I don't.

Have yet to actually run anyone's credit (I know that I probably should). We have a wonderful online court presence.

My places seem to fill very fast. I have been lucky (trained) on getting good people in of late and no new bad apples.

I have them fill out my online application and submit it. Takes me a couple minutes to look them up and determine if they are not going to make the cut.

Maybe I should charge for that, but I don't. This allows me to know who is walking into my property ahead of time. I do lockbox showings as well. No need for me to stand around hoping that they take the place.

Once we get thru it all and decide that it is a good fit I meet at their current residence to go thru the online lease. This allows me to see, smell and hear if they were not truthful.

Have not been doing the in house meetings long. Before I would meet them at my property for a final walk thru and make my decisions there.

My turnovers are typically within weeks, not months. Smaller population as well around here but I am in a couple towns that are sought after.

Would have to look again but I think I had maybe seven people apply for my last open place. Of those one or two had applied before and were DQ'd, a few others lied about their backgrounds. It came down to maybe two people and I feel that I chose correctly.

Now I could have taken that $175 and bought dinner for the wife. But I still fed her and all seems to have worked out.

I will take an application from anyone who wants to apply, but it involves my time and effort to find a legal rejection. I would rather have them realize that it is a waste of their time and money and to make the decision on their own to not apply.

A $20 application fee limit would be painful. That doesn't cover the credit report and zero for your time and effort, or for salaries if you are paying an assistant to do the screening.

I would prefer to spend three minutes on the phone or to sit at an open house for an afternoon, over carefully combing through each application to find a legal reason to reject. I would never reject an applicant because "I don't like you". I find the legal reason that causes me to not like you. That takes time and concentration and it involves risk. There is always the risk of not being able to dig up the reason I don't like you because some tenants are really good liars and while I do a pretty good investigation, I do not have the resources of the FBI and the government keeps cutting me off from the resources I need.

To repeat, our app has 6 basic criteria listed at the top of the app with the words REVIEW BEFORE APPLYING. It's their choice to apply.

Who am I to discourage someone?

"Everyone is welcome to apply" keeps us super clean with Fair Housing Law and our local administrators. Give EVERYONE an app or the website so NO ONE can complain they did not get a chance.

If we advise anyone, in any fashion, to not apply the do gooder officials could be on us in a hot second.

Remember, Fair Housing lawsuits are not "innocent until proven guilty", they are GUILTY, PAY UP to make us go away. THEY determine THEY are right, with govt/liberal/poor little tenant/hate the LL thinking, not logic.

LLs are sued for their words, so be careful what you say at open houses, showings, etc. Casual comments can get you in trouble.

I'll also add that many of those applicants who we deny would be accepted by casual LLs. They look good, sound good, have jobs...sign here. We dig deeper.

Overall, work to stay legal and out value on your life (time).

BRAD

A better explanation:

Fair Housing lawsuits are often based on the applicant complaining they did not get the OPPORTUNITY to apply.

That's one reason we promote applying online - it's always on, always available, and does not discriminate who can apply.

I agree that if you tell them the main criteria, especially if they ask, and they still want to apply and pay, even though they know they don't qualify, then let them apply and pay.

That said, I find that most people want to view the home before applying and paying an app fee. I would myself, so I do a prescreen to let them view then apply. I don't know how you get people to apply and pay a fee before getting to see the place.

I have personally witnessed myself, by going to open houses, that there are a lot of out of state investors here who are slumlords and who's houses are filthy, rundown, and stink. Yet they are doing open houses in this condition. Can you imagine applying and paying a fee before getting to view and then see one of these bad places just to realize it is a slumlord and you have wasted time and money?

Personally, I think nobody should be agreeing to pay anything upfront and give out all their personal information without getting to see the product first. I realize that some may do that, but would you do that?

This brings a question to mind.

Are those same tenants, that are willing to do that, the same tenants that end up on a "pay day plan" because they can't figure things out?

Show before fee:

ALL 8000 applicants on record paid before doing a walk thru.

-We don't show occupied homes or overlap residents. Too complicated, too many hassles, reduces my FREEDOM!!! We do a full Move Out, 200 Point Turnover Checklist, often some upgrades, all while marketing the home with ads and signs.

-The lease starts the day we take it off the market with their money and signatures so usually mid-month. Weekly rents help make this happen.

-Our ads show lots of quality photos and a video walkthru. TONS of views on each video.

-We leave the blinds cracked open and some lights on, and invite them to peek inside.

-We don't give out the lockbox code until their app is 75% approved.

-Don't be shy. RUN your business, not let applicants run YOU.

"When can I see the home?" is just an everyday question prospects ask. Ask "Have you seen the photos, driven by the house?"

It might also indicate a lack of photos, video, and description. Try adding more.

Today's shoppers make flash judments based on the photos.

I just heard that AirBnb had a slow start with lousy flip phone photos, but their business exploded when they provided pro photographers to the hosts.

I don’t want to make money on credit reports. I will look at the applicants CR

I just charge what the program charges me, which I think is $29.

I don't view it as a profit center and I don't run a ton of apps, I flat out tell people if their credit is not over 700 don't apply. I think for my last vacant unit I rant 2-3 applications.

"Thinking like this is why they are passing all these laws"

It is why they get introduced.

"Now thinking about it I might just start doing that to remove a potential gotcha"

It's a service/labor we provide when they ask. We don't force anyone, they choose.

The people who do the service/labor deserve to be paid.

I started this post to help those caught in the $20 max fee laws can still cover their expenses

UNLESS they are using a flat based fee service to do it for them. WE do it in house.

I like to present fresh ideas that work for us and get other LLs to think and consider.

These ideas get poo-pood for a year or two then a few LLs try it. Soon it's accepted as standard LL practice.

We have 8000 applications on record of applicants willing to pay a small few before touring a home.

Did ya see the car:)

BRAD

I like to present fresh ideas that work for us and get other LLs to think and consider.

These ideas get poo-pood for a year or two then a few LLs try it. Soon it's accepted as standard LL practice.

We have 8000 applications on record of applicants willing to pay a small few before touring a home.

Did ya see the car:)

BRAD