The cost of living in Chatanooga is on the rise, and many residents are feeling the financial strain. Some potential homebuyers are waiting for prices and interest rates to drop, but even renting doesn't provide the relief it once did.
Chatanooga landlords need to find new and creative ways to attract tenants in such a tough market. Re-evaluating rent prices, leasing conditions, and even rental application fees can help.
What does Chatanooga's leading property management company have to say about application fees? Read on to find out.
Tennessee Laws Don't Impact Application Fees
As always, state and local laws are the place to start when creating a new rental strategy. There are laws regulating certain types of fees, including late rent payment fees. However, Tennessee doesn't regulate rental application fees or how much to charge.
That said, it isn't in your best interest to charge more than $100 per person to apply for your rental unit. Egregious application fees will drive applicants away and tarnish your reputation.
Application Fees Aren't Meant for Profit
When you're setting your application fee amount, there's one thing to remember: application fees aren't meant to turn a profit. Application fees should cover costs associated with rental applications, such as:
- Credit checks
- Background checks
- Additional clerical work
You should only charge enough to cover these costs without paying out of pocket. The applicant should not be contributing to your rental income.
Lease Renewals Should Not Cost Money
Most landlords do not issue refunds for rental application fees, even if an applicant is not chosen. It is generally safe to assume that fees are non-refundable while deposits are conditionally refundable. To reduce potential liabilities or conflicts, make sure you state in writing which of your fees are nonrefundable.
If a current tenant decides to renew their lease, they should not have to pay any fees to do so. While it's standard to run credit and background checks on an applicant, landlords do not need to collect this information when a tenant resigns.
Property Management Can Help
Many Chatanooga rental property owners invest in real estate as a passive source of income. However, it takes constant hands-on work to keep a rental property in good condition and maintain good tenant relations.
If you want to earn rental income without having to do things like collect applications or schedule maintenance, work with a property management company. Not only can property managers take responsibilities off your plate, but they can also bring a new level of expertise to your rental properties.
Partner with PMI Property Management Company
Chatanooga property owners don't need to meet any specific laws or regulations about application fees. However, those fees should only cover the cost of reviewing a rental application. Setting high fees can alienate applicants and hurt your reputation as a landlord.
Partnering with a property management company is a great way to maximize profits while getting your free time back. PMI Chatanooga is part of a nationwide company that offers local expertise. Contact us today to discuss our property management strategy.
