Is this the best way to go about it?

[Jessica Young]

My property is up for rent near LSU and I’ve only ever rented to graduate students. 

I have an international applicant this time around that has great references and her PhD letter from the school, but she has a collection. I wish to double the security deposit and approve their application to reduce my risk.

I’ve read about increasing the rents, but I’m not sure I care for that route.

Would simply asking for an increased deposit be best and move forward?

[Deandre P.]

I think the security deposit makes the most sense. I’m not much of a fan of increasing rents for a specific tenant for credit history, etc.

[Richard F.]

Aloha,

First you need to check local LL/Tenant laws to see if you are limited as to the SD amount. Also, you are essentially allowing the person to "buy" better credit, which can be frowned upon by Fair Housing. If one person is able to, all applicants need the same opportunity.

[Jessica Young]

Quote from @Deandre P.:

I think the security deposit makes the most sense. I’m not much of a fan of increasing rents for a specific tenant for credit history, etc.

I went the increased security route (while also asking for other suggestions from the applicant) and they backed out stating they can’t afford the double deposit and first month’s rent. I would have really liked to give it to them. What should I look out for in the future? 

[Jessica Young]

Quote from @Richard F.:

Aloha,

First you need to check local LL/Tenant laws to see if you are limited as to the SD amount. Also, you are essentially allowing the person to "buy" better credit, which can be frowned upon by Fair Housing. If one person is able to, all applicants need the same opportunity.

My state doesn’t cap the SD. Can you explain the “buying better credit” thing? If collections would’ve come back on other applicants credit checks, I would offer them the same thing if I wanted to approve their application. 

[Richard F.]

Quote from @Jessica Young:

Quote from @Richard F.:

Aloha,

First you need to check local LL/Tenant laws to see if you are limited as to the SD amount. Also, you are essentially allowing the person to "buy" better credit, which can be frowned upon by Fair Housing. If one person is able to, all applicants need the same opportunity.

My state doesn’t cap the SD. Can you explain the “buying better credit” thing? If collections would’ve come back on other applicants credit checks, I would offer them the same thing if I wanted to approve their application. 

 The Fair Credit Reporting Act requires an "adverse action" notice for any denials AND "conditional" approvals, where you require additional deposit, rent, co-signers, etc.

The basis of Fair Housing Violations is, pretty simply, treating one person differently from another. Particularly if you use a credit score as one of your criteria, yet you accept someone whose score is lower by paying additional money, this can be problematic for you. The important, and often overlooked aspect of Fair Housing, is that it does not matter what YOUR "intent" is. It only matters that a person "perceives" they are being discriminated against, in order to file a formal complaint. If you have varied SD amounts that are not consistent with the actual monthly rent, this can be difficult to defend, particularly if you keep no historical records of your decision process. Your records should include details indicating WHY certain approvals are conditional. We keep all denied application packages, and historical Tenant application packages, complete with our contemporaneous notations on each..."just in case".

[Nathan McBride]

@Richard F. I have not thought about the double deposit from a Fair Housing Perspective, so I'm glad you pointed that out.

We would typically recommend that our mgmt clients to accept a double deposit to remedy a credit score that is slightly below our general acceptance criteria if the prospective tenant meets income requirements and has good rental history.

We do this for every prospective tenant (pending owner approval), so I don't see it being a Fair Housing concern.  That said, I like your suggestion regarding going over and above on the documentation and having it clearly spelled out in our procedures.

[Jessica Young]

Quote from @Richard F.:

Quote from @Jessica Young:

Quote from @Richard F.:

Aloha,

First you need to check local LL/Tenant laws to see if you are limited as to the SD amount. Also, you are essentially allowing the person to "buy" better credit, which can be frowned upon by Fair Housing. If one person is able to, all applicants need the same opportunity.

My state doesn’t cap the SD. Can you explain the “buying better credit” thing? If collections would’ve come back on other applicants credit checks, I would offer them the same thing if I wanted to approve their application. 

 The Fair Credit Reporting Act requires an "adverse action" notice for any denials AND "conditional" approvals, where you require additional deposit, rent, co-signers, etc.

The basis of Fair Housing Violations is, pretty simply, treating one person differently from another. Particularly if you use a credit score as one of your criteria, yet you accept someone whose score is lower by paying additional money, this can be problematic for you. The important, and often overlooked aspect of Fair Housing, is that it does not matter what YOUR "intent" is. It only matters that a person "perceives" they are being discriminated against, in order to file a formal complaint. If you have varied SD amounts that are not consistent with the actual monthly rent, this can be difficult to defend, particularly if you keep no historical records of your decision process. Your records should include details indicating WHY certain approvals are conditional. We keep all denied application packages, and historical Tenant application packages, complete with our contemporaneous notations on each..."just in case".

 I appreciate you bringing this up. Certainly not the case there though as they are international students, so aside from the reference checks that came back...I suppose I was trying to "help them" by offering double deposit to mitigate my risk. Oh well, on to two other applicants who both have guarantors and helicopter parents...