San Diego Property Management Blog

What Are Typical Application Fees in San Diego, CA?

What Are Typical Application Fees in San Diego, CA?

We firmly believe that now is a great time to invest in San Diego real estate. From our booming economy to our steadily growing population, San Diego holds promise for property investors.

That said, buying a great rental property isn't the end of your journey or a guarantee of steady rental income. You're going to need to familiarize yourself with state and local laws to ensure compliance at every step.

Today, we're here to answer one of San Diego's more confusing questions: what is the typical application fee? Read on to get the answer from a top property management company.

What Is a Reasonable Application Fee?

The first step toward generating income via San Diego properties is attracting potential tenants. A professional listing will help draw interest, but a reasonable application process is a must to secure applicants. This includes charging an application fee that doesn't act as a barrier for most people.

In San Diego, applicants are used to paying application fees between $30 and $50. Anything more may strike tenants as excessive and cause them to go looking for housing elsewhere.

As of 2023, tenants also have the option of presenting their own credit report. Landlords are not required to accept this credit report, but it can save time to do so.

Is There an Application Fee Cap?

In the state of California, there is a maximum rental application fee that landlords can charge. It changes each year based on the Consumer Price Index to keep up with inflation. In 2024, the application fee cap is $62.02.

Bear in mind that you can't charge the cap without cause. Application fees cover the cost of credit screening and the time it takes to process an applicant's credit report. You can only charge tenants for the actual value of that service, even if it's less than $62.02.

Will Application Fee Limits Change?

As of right now, the application fee cap does change every year. However, we're currently waiting to see if a new suite of state laws pass that will impact several rental fees, including the application fee.

If Assembly Bill 2785 passes, the application fee cap will change to $50 permanently (or until the legislation changes again). While a reduced cap may seem like a bad thing for landlords, having a consistent cap will make it easier for landlords to operate within the law.

This bill will also introduce a new rule regarding refunds. If it passes, landlords will need to refund the application fees paid for any applicants that aren't chosen to sign the lease.

Hire a Property Management Company and Stay Compliant

You purchased your first San Diego rental property and started drafting your lease. You're ready to start accepting applicants and now you know how to charge a reasonable (and legal) application fee. What's next?

If you're looking for a source of passive income, you'll need to outsource the landlord role to a property management company. Penny Realty is one of San Diego's oldest and most reliable property management companies, taking a cutting-edge approach to property management since 1965. Contact us to find out how we can ensure legal compliance and maximize your returns.

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