Qualifying Tenants Without Discriminating?
I posted this same question earlier today, and it seems to have disappeared. The Forum was doing some strange stuff earlier today. . . .
I’m new to landlording and have 7 units.
I have a unit that is empty, and I'm having very few responses to my ad. I think this is mostly because of the Holidays. Most of the Tenants are Mexican, and many of them are home for Christmas.
I had a lady look at the empty unit today and fill out an application. She lied on her application and has a past eviction, a criminal record, and is currently unemployed. It is still hard for me to reject her because I want to get my unit filled – but in my gut I know that it will be a mistake to rent to her.
As I was making phone calls to (un)verify her information I started to think. Most of my Mexican tenants do not have any history in the US and I can not verify employment on them because they are day labor. But they are hard working people and excellent tenants.
I rented to them without any background or credit check and have so far made out great for it. But checking this information on today’s applicant is a double standard and could get me into trouble.
What qualification guidelines can I set up that will weed out deadbeats like I met today but allow me to rent to hardworking people such as most of my current tenants.
Gut instinct can guide me through some of this question, but I'm looking for a solid guideline that I can write down and hold all future applicants to so I can't be accused of discriminatory practices.
I'm looking for good people that will work hard to pay rent. But at the same time, I'm not expecting to find applicants with great jobs and credit. If they did they would be renting nicer (and more expensive) places. How do I set guidelines that find this middle ground so I can qualify good tenants even if they are poor and or new to the country but ban people like I met today?
The best thing to do is to write up a screening policy and have it either on your computer or printed and placed in the folder for that rental unit.
I keep a folder for all of my units; I have a copy of my screening criteria and a list of all the calls I recieved for that unit in the folder along with the lease, application, and all paperwork relating to the new tenant I selected. I keep this info at least 2 years.
Just because you set criteria for one unit, doesn't mean you need to have the same criteria when the next unit becomes vacant. That is why I print the criteria for each unit and put it in the folder.
In the winter and when the market is slower, your criteria may be more lax, and that's perfectly OK.
Income verification should be a must for every applicant. You need to know that they have the ability to pay rent every month. If they have 3 kids and only make $100 per month above the rent you know that will not work.
Another thing you may decide to do is ask for a higher security deposit. A person may qualify under your standards, but you may decide that because this person is a minister (and you can't descriminate against religion) you may need a double or triple security deposit because this profession is non-for profit and that is almost like being self-employed (I made this change on the fly when I had a minister apply) but I added it to my policy and its in the file. But be careful with your rules and justifications, because now, if the next person to apply was self-employed, I would now have to follow this rule or I would be descriminating.
You can also find a reason to make them need a co-signer.
Extra deposits and co-signers make it difficult for the person to actually be able to follow through and lease the unit. But if you get extra security dollars and/ or a co-signer with great credit and an assett like a house that you can attach judgements to, your risk has gone down since you've got protection against late pays and/ or property damage.
In the case of your example, it is written on my application that any false information will be grounds for denial. And then my lease states that if it is found that any information on the application is false, the lease will be terminated.
Even if its not listed in your lease or on your application, false information is a valid reason for denial. I would not worry about descrimination one bit in this case.
One thing you must not do; however, is tell someone the unit is rented when it is not. You must allow all people the same opportunity to view the unit and to fill out an application.
I would not get all worked up about issues like descrimination. True, you have to be concerned about it, and there are people out there that use the descrimination card to intimidate others such as landlords, but as long as you keep some general guidelines written down, and note reasonable decisions as to why you accepted or denied particular applicants, you should be fine.
I read your post again and saw another issue you had. My last post was to provide you with some basic screening tips and to help you justify denying someone.
But I also see now that you are actually considering this woman.
"She lied on her application and has a past eviction, a criminal record, and is currently unemployed."
What?! I see 4 reasons right there to deny her.
Keep you wits about you. How can she pay rent without a job?
Depending on the type of criminal record, theives beget theives, and drug criminals beget drug criminals. -- If she does crime for someone, its likely that person will recruit all of your tenants.
(I had this happen with a 4 unit I had) - I ended up evicting everyone but not all at the same time; so new tenants that moved in went bad as well - ended up selling the property to solve the problem. Not good.
I know things are rough, but a vacancy is better than a nightmare tenant.
Advertise in local Spanish publications, pay one of your tenants to convert a flyer to spanish and post it in the local spanish grocery stores. Call the day labor agency and ask them to inform some of the workers of your vacancy. On weekends, post signs in major intersections near your unit - maybe at the malls or shopping centers if they're nearby.
Good Luck.
I'm not going to rent to her - but it's hard saying no when the unit is empty and the phones not ringing.
Thanks for the input...
We have two units vacant right now, soon to be three. It's been really slow on the phone calls as well. We had gotten an application turned in. She said that she had her unit broken in to, hence why she was leaving. We checked with her previous landlord, and he said she had collections all over the place. When we ran the credit report, it just validated that claim. Add to the fact that the rent was 400/mo, and she was only making approx. 700/mo...plus she had a kid... This was an easy turn down.
We have set up a point system. There are approx 34 different criteria we have points for. We set the limit for the amount of points they must receive in order to get accepted. She got 13 points out of 34...ouch.
Some things are as simple as "On time for showing appointment", but this helps take away the "do I take them or not", and leans away from any type of discrimination.
Chris