Managing Tenants Part Three: Written Criteria for Tenant Selection

Success as a landlord depends on screening tenants-weeding out the Naughty and renting to the Nice. Awareness of (and compliance with the Fair Housing Act is not only necessary, but essential to success for any rental business. Adopting a set of written criteria for tenant selection is one of the best (and easiest) ways to stay on the goodie-good side of the Fair Housing Act.

In its simplest incarnation, written criteria can be nothing more than a simple set of guidelines which clearly define who can rent your properties. For example:

Applicants:

• Must have verifiable monthly income of at least 3 times the rent
• Need credit score over 600
• Provide copy of photo ID
• Must have no prior evictions

Keeping things simple works, but more detailed criteria can help chose between several qualified applicants.

Let’s Makes Things as Difficult as Possible…

Here’s a sample set of written criteria using a point system. Criteria are weighted according to the importance the landlord places on each item- a system that allows more freedom for personal preference. (In the example below, it’s fairly obvious the landlord gets highly peeved by lateness and no-shows when showing his properties.)

Once again, feel free to cut, paste and personalize to suit your circumstances. A quick internet search will yield a surplus of additional ideas and clauses to suit a multitude of situations and localities. (Apologies in advance for formatting errors which fail to translate well from MSWord to Blogsville.)

Interview: House showing:

1. On time for appointment: 5 points
   1. Running late, called to inform: 3 points
   2. Late: 0-10 minutes 2 points
   3. 11-20 minutes 0 points
   4. 20+ minutes- landlord leaves, applicant rejected
2. Respectful and courteous: (subjective, score -5 to 5)
   1. To landlord:
   2. To each other:
   3. *Cursing, swearing, pushing, shoving, and violent behavior, demeaning speech or treatment of landlord or landlord’s agent or to one another: Applicant rejected
3. Neat/Clean appearance of all parties: 5 points

Application:

1. Attached copies of ID to application: (Driver’s license and social security card)
   1. Yes: 5 points
   2. No: 0 points
2. Filled out application entirely leaving no blanks:
   1. Yes: 5 points
   2. No: -5 points, grounds for rejection
3. Brought application fee? ($25)
   1. Yes: 5 points
   2. No: application shelved until funds received
4. Application complete without errors or omissions:
   1. Yes: 0 points- expected
   2. No: application rejected
5. Able to provide
   1. verification of previous address: Driver’s license or utility bill: 5 points
   2. Proof of income, employment: Pay stub: 5 points
   3. If self employed, a tax return or bank statement: 5 points
6. Able to pay first months rent:
   1. Yes: 0 points
   2. No: application rejected
7. Able to pay full amount of security deposit: 5 points
   1. Half of security deposit? 0 points
8. Monthly income= 3X rent amount ie: ($1350 x 3 = 4050/month or $48,600 / year).
   1. Higher 3X-4X: 5 points
   2. 3X: 0 points
   3. 2X or below: Application rejected, co-signer considered
9. Stable income or employment
   1. For of 3+ years: 5 points
   2. 1-3 years: 3 points
   3. 0-1 year: 0 points
10. Credit history:
    1. Score over 700: 10 points
    2. Score 650-700: 5 points
    3. Score 600-650: 2 points
    4. Below 600: 0 points
    5. Bankruptcy: -10 points
    6. Collections: -5 points
11. At current address for a minimum of:
    1. 1 year: 3 points
    2. 1+ years: 5 points
    3. Less than 1 year: -5 points
12. No pets: 5 points

Pets accepted on a case by case basis. No large or heavy breeds of dogs-no dogs over 20 pounds. No snakes, reptiles or birds larger than a canary.

1. Non-smoker: 10 points
2. Number of residents does not exceed occupancy limits: (2 per bedroom+1)

Background Check/Screening

Name must not appear in Sex Offenders Registry.

Criminal history may not contain drug offenses within 7 years except for one conviction for possession of a controlled substance.

Criminal history may not contain felony convictions within 7 years for violent crimes or property crimes.

Those with criminal history’s dating 7+ years will be considered on a case by case basis.

1. Verified previous landlord? 5 points
2. Verified 2 previous landlords? 10 points
3. Gave proper notice to previous landlord? 5 points
4. Verified rent amount to previous landlord? 0 points
5. No problems with previous landlord? 0 points
   1. Problems: Possible rejection
6. Prior evictions: Application rejected
7. Previous deposit fully returned: (None held for damages) 5 points
8. No significant violations of previous rental agreement: 5 points
9. Complaints filed with police dept for disturbances: Application rejected

Score: ______

Applicant: Accepted _____ Rejected____

Meanwhile, Back at the Ranch…

Many small-fry landlords never grow up to become big-shot landlords, because they never learn to do business like a grown-up. Professionalism is mandatory. Think like a pro, act like a pro, be a pro. It’s vital to set up systems and procedures and behave like the successful business person you want to become-not the one-home owner you may be at the moment.

Next week: The Home Office (unless I drown under piles unorganized paperwork between now and then…)

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