DIY Landlord – How to handle your money like a PRO?

There are seven fees you’ll collect or distribute before, during and after each rental contract in Northern Virginia. We’re going to cover every fee and discuss how you should collect those fees and the risk associated with when collected.

What fees are there throughout the rental process, and how are they collected?

Application fee

The first fee collected will be the application or processing fee. If you are using a third party site to advertise your listing, they may offer a service to process applications. I recommend against using this so you can determine your application fee based upon the amount of leg work you will have to do.

What do these service providers do outside of checking their credit? Remember, we previously address doing a criminal background, employment verification, and rental history check.

First month’s rent

The first month’s rent is unlike any other rent payment. It is collected either with the application or at the time the lease is signed. This essentially holds the property for this tenant. Real estate agents and property managers request that this be paid in certified funds. Why do professionals collect the first month’s rent with the application? It’s less risky. When we process an application we remove the listing or change its status to pending. That means it is basically off the market, at least temporarily. By collecting the first month’s rent with the application, there is less risk of the applicant not following through after the application has been approved.

Security deposit

This is also collected in certified funds. Many agents also receive this fee at the time of application. Typically, we collect this at the time the lease is signed. Again you mitigate loss and risk the earlier in the process you receive this fee. Per our standard lease agreement used by agents, it must be collected before the start date of the lease. Make sure you follow your state’s law regarding depositing this fee and commingling of funds.

Pet Deposit

This is a separate deposit explicitly collected from pet owners to protect you from damage that may be caused by their pets during the lease agreement.

Pet fee

The pet fee is also sometimes referred to as pet rent. This fee is collected every month with the monthly rent. This is different from the security deposit in that it is not refundable.

Maintenance fee

Charged when a repair is needed to the property during their tenancy. To charge a maintenance fee, you must include it in the lease. There are two ways to handle the maintenance fee. The tenant can pay you the pre-determined fee at the time of the maintenance request, or they can pay the service provider directly with you paying any balance after the payment is made.

Rent

Collected monthly. Recommend having this automated. You can use services such as Paypal, but be mindful that they charge a fee. You can also set up electronic payments with your bank.

Final Thoughts

Don’t forget to check out our Ultimate Guide to Renting Your Home Without an Agent.

If you’re thinking about renting your investment property and want to enlist the help of a professional give, me, Abraham Walker, a call at 703-539-2053 or email me.

About the Author

The above article was written by Abraham Walker, Your Northern Virginia Real Estate Agent, helping clients market their homes to achieve high sales with a quick closing time is my main priority. He’s the co-founder of Ask A Walker and can be found on YouTube, Facebook, and HERE on this blog.

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