Whether it's a discrimination to require tenants' income 3* more than rent

Member since 2022 · 1k+ posts · 1k+ votes

3y

Sorry to hear about your frustration. 3x rent/income is a standard normal requirement. Understand that it is very hard to remove a non paying tenant these days. It costs thousands $$ in legal fees. They want positive proof that you meet the 3x requirement before acceptance, and have no problem paying their rent. There's only a case for discrimination if they bypass you and let someone else rent for less than 3x requirement, which I doubt would happen. You'll will see 3x, 4x, maybe higher, in states with laws that protect bad tenants.

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Karen MargraveBusiness Member

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Realtor, General Contractor, and Developer · Redding, CA · Member since 2009 · 7k+ posts · 4k+ votes

3y

Honestly I don't know where the 3X rent number came into play, but it is a huge problem for a lot of people in high rent areas of the country. Rent and mortgage payments are often taking up 46% of income it's said. Add to that the rising cost of utilities, food, etc. and people are stretched beyond reason.

Here in my area where homes are in high demand, I've seen seniors sell their homes, use their profits wanting to buy a MFD home, pay cash for it, and use their SS and other income for paying space rent, utilities, etc. However; the parks are requiring they make 3x what the TOTAL OF ALL BILLS are. Add to that the credit scores required, when often elderly people aren't using credit, therefore; have no score or low scores. It's insane!

Currently there is no protected class for people based on their income levels, or credit scores, but I can forsee a day when someone brings suit to try to have consistency applied, and formulas, based on an areas rental amounts.

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Nathan GesnerBusiness Member

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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes

3y

Quote from @Ruiyue Guo:

It is not discrimination if they are treating all applicants equally.

It does sound like they are charging a lot of junk fees with no justification. $565 to process an application?

The non-refundable payment of $875 makes sense because they are charging that to offset the risk posed by someone that doesn't meet their rental qualifications.

You can try complaining to the Chicago Assocation of REALTORS, but I don't know if it will get you anywhere.

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Brandon Vanderford

Property Manager · Raleigh, NC · Member since 2022 · 117 posts · 110 votes

3y

Taking income into consideration is not discrimination. And requiring an income of 3x the monthly rent is common.

I agree with Nathan re: the fees. The application charge seems ridiculous. However, the $875 payment to accept your application seems fair enough.

Of course, you can avoid that fee by finding a cosigner who meets the application requirements.

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Michael K.

Investor · Chicago, IL · Member since 2018 · 352 posts · 176 votes

3y

My standard application fee is $65. $875 is unheard of! Did they provide an explanation? It sounds like these guys are running a racket.

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Paul De Luca

Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes

3y

@Ruiyue Guo

That does sound like a frustrating experience, but were you aware of the income requirement being gross income 3x the monthly rent before applying? Seems like all of these issues could have been avoided if there was transparency of the landlord's side with their renter requirements and your income situation on your side. I always put the renter requirements in the listing description and reconfirm with a potential renter, and would hope that your agent passed along all requirements to you. It's actually normal for a landlord to request a co-signer if you do not meet the income requirement.

That being said, if the landlord is demanding an application fee of $565 and then another non-refundable payment of $875 that is absurd. An application fee should be something like $30-40 for a credit & background check and then if you meet all the requirements and ready to sign a lease THEN a landlord would charge you the non-refundable "move in" fee & first month's rent due before move in. Landlords in Chicago commonly charge move-in fees rather than taking a security deposit to avoid legal troubles.

3x rent/income is a standard requirement like others have said but sadly I could see this going away in the future because people are going to say it's "discriminatory against lower income individuals".

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Henry T.

Member since 2022 · 1k+ posts · 1k+ votes

3y

I'm thinking there may be a miscommunication. Perhaps those high app fees were a deposit to hold. If he walked away/realizing he couldn't afford, maybe it was lost. There may have been lost time and effort expended by the manager and the tenant eventually failed to qualify. I used to require a 1K deposit in case the tenant pulled out and wasted my time after spending much time and due diligence. In the intial stage I always refund, even the app fee, but if a lot of time is involved, that's different. I'm just guessing here, but maybe that's what happened.

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Danny Polanski

Chicago, IL · Member since 2020 · 184 posts · 182 votes

3y

OP,

Try a mom and pop operation. Like a 4 flat or smaller.

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Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

3y

We have the 3x requirement. It means rent is no more than 33% of tenant income. It ensures tenant can afford the rent which increases our chance of collecting the rent. There is no discrimination there. It is similar to if you use obtain a loan, they confirm you have the means to pay the loan.

We collect a $35/adult application fee. This covers our credit and criminal background checks and maybe the first 5 minutes of checking the various references. We definitely are not making money off the application fee (when counting for the labor, we lose money at our application fee price). The application fee ideally eliminates applications that are likely not to meet our criteria (as well as those with bogus Emotional Support Animals (ESAs)).

I question if the large fee was a holding fee. We charge the weekly rent amount multilplied by weeks we are holding a property, with a minimum of $500, to hold a property. If you cannot move in no more than a month, we will not process your application; the lonest we wll hold a unit for a prospective tenant is one month. Example, if you want to hold a property for 2 weeks that rents for $3K/month, we require $1500 to hold the property. The $1500 is applied to the initial fees (first month rent and deposit). It protects us if the tenant chooses not to move in (basically if they choose not to move in they pay for the time the unit was not being marketed as a rental).

I question if what the OP called an application fee was in fact a fee to hold the unit. If it was just an application fee, that would be excessive, unfair, sleezy, but still not discrimination.

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Crystal SmithPro Member

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Real Estate Broker · Chicago, IL · Member since 2014 · 2k+ posts · 1k+ votes

3y

Quote from @Ruiyue Guo:

I want to share my real awful experience in recent days for applying for apartment in Chicago !!!

I am an international student graduated last December, and get a job in Chicago which start on March 20th. After my house agent visited Atwater on March 7th, I submitted my application with an non-refundable administration fee & application fee for $565 on March 8th, and set my moving date on March 14th.

From March 9th to March 12nd, I submitted all the files they needed, uploaded income verification several times and signed lots of documents they requested. The documents I provided are: my ssn card; EAD card; passport; income documents; offer letter; bank statements, previous rent payments history. However, on the day of March 13rd, they said because that my monthly income from my work are less than 3 times of my monthly rent, I need to upload some other income to support my rent. I provided them with my bank deposits which are far more beyond the rent payments. They still said that there are only two methods to approve my application. One is to find a guarantor whose monthly income are more than three times of monthly rent and he/she meets the credit numbers and other background check in U.S. Another method is to submit an non- refundable payment with $875.

The non-refundable $875 is totally ridiculous!!!

I already proved that I have multiple income which are both from my parents and work to meet the requirements. But to move in on time, I find my friend as my guarantor. She provided her ssn, income documents which meet all the requirements of their needs. I thought I could be able to move successfully on March 14th. However, on March 14, my approval was declined. They said that I still need to pay another non-refundable $875, because of my rent ??? I had to transfer my flight ticket from March 14th to March 15th…..Does anyone has some suggesitions on that? Thank you!

I'm trying to read between the lines on your post and I believe there's some kind of miscommunication. In your post you say "They still said that there are only two methods to approve my application. One is to find a guarantor whose monthly income are more than three times of monthly rent and he/she meets the credit numbers and other background check in U.S. Another method is to submit an non- refundable payment with $875."

Are you saying that if you submit a non-refundable payment of $875 that your application will be approved?

I would have your local agent contact Atwater to get some clarification.

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Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

3y

The income requirement is pretty standard and should have been explained before you paid any fees. I can see them wanting more for a down payment; however, that should be refunded after you move out (and all expenses are deducted). The high non-refundable fees are concerning-not the fees but the non-refundable part aside from a modest application fee (eg $50).

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Whether it's a discrimination to require tenants' income 3* more than rent

Whether it's a discrimination to require tenants' income 3* more than rent

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