Are You Charging the Right Fees as a Landlord?

As a landlord, how confident are you that the fees you’re charging your tenants are legal and fair? This is relevant because getting this right can save you a lot of headaches down the road.

I’ve been in the real estate game long enough to know that there’s a minefield of fees floating around out there, some legal, some are not. Each state has its own rules, which can differ even between cities.

Let’s break down some of the most common fees you may need to account for, and I’ll share real examples from my own experience to help you handle them smoothly.

1. Background check and screening fees. Early in my career, I included a small markup on background checks, thinking a $10 convenience fee was reasonable. But after reviewing my state’s regulations, I realized I could only charge the actual cost.

I issued a refund right away and learned an important lesson: always verify your local laws before passing along any third-party fees. Adding extra fees without justification could get you into hot water. It’s all about compliance.

2. Security deposits. These are typically equal to one or two months’ rent, but local laws often cap how much you can collect. More importantly, remember that a security deposit is only meant to cover actual damage, not normal wear and tear like scuffed floors or faded paint.

Keeping that line clear isn’t just fair to your tenant, it also protects you from disputes down the road.

3. Late fees and returned payments. If your tenant is late on rent, you can charge a late fee, as specified in the lease. Make sure that’s clear-cut to avoid disputes. Also, if a check bounces, you can charge a fee for that, too. Just ensure your lease outlines these fees explicitly.

4. Pet fees. Pet deposits are one thing, but pet fees are another. You can charge either a one-time fee when a tenant moves in or a monthly fee. Just be sure it’s well defined in the lease.

5. Lease break or early termination fees. If a tenant needs to leave before their lease ends, you can include a fee, but only if it’s clearly outlined in the lease agreement upfront. Being transparent from the start helps avoid confusion, protects your security deposit process, and keeps things fair for everyone.

6. Optional services. If your property offers perks like dedicated parking, extra storage, or garage access, you can charge separately for them. The same goes for replacement costs: specify upfront what tenants will pay for lost keys, garage remotes, or similar items. This can be a common oversight, but it could cost you if keys go missing. A little planning here prevents unexpected losses and keeps expectations transparent.

In a fluctuating market, buyers are increasingly looking into rental properties as an investment. If you’re ever unsure about what you can charge, always refer back to your local regulations.

So, are you charging the right fees? If you have any questions or concerns, feel free to reach out at (612)961-9448 or Mark@MarkCallenderHomes.com. Whether you’re just starting out as a landlord or you’re an old pro, keeping up with these details will help you maintain a smooth, compliant rental experience.