Screening Tenants

40 Replies

Originally posted by @Brian P. :

There are also many classes not protected that I wouldn't rent to, one was law students and lawyers. Boy did they like to get upset when I gave them he reason.

Brian, do you have this "no lawyers" clause in your rental application? Something like: "We do not rent to lawyers, law students, drug dealers, <other undesirable but unprotected groups>"

How do you phrase your rejection letter to a lawyer and what if that lawyer is also a member of a protected class?

Thanks
Nick

Do's: Run background check, don't accept violent felons, recent felons, people with evictions or people with several recent misdemeanors. You should be more or less strict depending on the area you're in and how hard it is to find tenants. But don't accept evictions unless they are really old and paid off. Also, make sure they have no rental or utility balances, are employed or have a decent income and are in decent standing with their current landlord.

Don't: Discriminate, accept people based on sob stories or reject people because they have some 15 year misdemeanor or something like that.

AAA is a good source for screening.

@Nick B. I would like to have that, too. I am not familar with the laws in Columbus, Ohio but I think it seems like a good idea.

No offence to you lawyers out there!

@Anne A.
Thank you for the encouragement and good luck being a new landlord! I am still working on my first deal. TOTALLY guilty of the analysis paralysis!!

Thanks,
Carlo

The screening company I use is www.landlordstation.com, and they are owned by transunion. They give their transunion score, full credit report, employment verification, criminal background, and eviction record if you request it. They've been fantastic, and easy to use because everything is web based. Turn around is quick unless there are criminal records, then it takes slightly longer than a day turnaround.

I would also type in tenant applicant's email address to see if it is actually their real email account or just something they make up for your application only (not a good sign).  Search on their facebook can also give you some lead to their life style.  Throw their name, phone number email can often get you some idea how and who they are.  The less information I can find the more cautious I would be.

Originally posted by @Nick B. :
Originally posted by @Brian P. :

There are also many classes not protected that I wouldn't rent to, one was law students and lawyers. Boy did they like to get upset when I gave them he reason.

Brian, do you have this "no lawyers" clause in your rental application? Something like: "We do not rent to lawyers, law students, drug dealers, <other undesirable but unprotected groups>"

How do you phrase your rejection letter to a lawyer and what if that lawyer is also a member of a protected class?

Thanks
Nick

Depending on how you handle applications, there might be no need for a rejection letter. In my method, I get a hard copy application in person along with cash payment of application fee. I check the application right there and then for disqualifications, such as insufficient income and excluded types of employment. If they have an automatic disqualification I simply tell them face to face and return money and paperwork on the spot.

If you have some other method, then you can use the sample letter I have posted in another thread and check the "other" box. And add a brief explanation that your qualification criteria exclude specific firms if employment including whatever their employment is.

This link has the sample rejection letter format:

http://www.biggerpockets.com/forums/52/topics/90852-tenant-screening-uncovered-duis-jail-time-etc?page=1#p563573

@Steve Babiak , your sample rejection letter refers to some criminal activity that had yet to be adjudicated. Excluding specific firms does not exclude specific occupations. If I want to exclude lawyers, should I put every law firm in my exclusion list? Makes no sense.

So, the question still stands: Is this legal to have this screening criteria:

Applicants who engage in the following occupations will no be considered: lawyers, strippers, <other undesired occupations>

and how to properly turn down a lawyer who otherwise quialifies?

@Carlo Santarelli While I am in Connecticut and not Ohio I think some of these general screening practices can apply anywhere. Look for tenants with:

- No evictions

- No felonies

- Also check your local laws for any maximum occupancy guideline that you can legally enforce (2 tenants for a 1bdrm, 4 for a 2 bdrm, etc)

- Always run a criminal, eviction, and credit background check. Do not get to wrapped up in credit though.

- charge a fee for your application per person over 18 (we charge $25) and don't run a persons app until their app fees are paid.

- Their income and ability to pay the rent is key. Always get paystubs proving their employment. Income wise we look for people to take home per month 3x of the monthly rent (if no utilities are included in the rent) and 2.5x the monthly rent (if utilities are included).

If you get all of the above boxes checked for a prospective tenant and keep yourself from bending those parameters you are doing what you can to minimize your risk.

The main things I am looking for when I screen my tenants are 1, previous rental history and if they have been evicted. 2, current income to help me know if they would be able to afford rent/pay on time. 3, criminal history check. I also run their credit reports, but I don't like to put a lot of weight into them because that could be from issues they had a long time ago and not their current situation now.

As for applications, I like use a screening agency to generate the reports I want. I personally use http://myrental.com/ because I have used them in the past and trust them. I also like the fact they allow you to do some stand alone reports if you need.

There are tons of screening agencies out there so it really comes down to just finding one you like. Aside from gathering all this information though, I like to meet with any prospective tenant personally to get my own read on them and compare that to all my reports.

If you do use an agency for pulling reports, I would just charge them an application fee to help cover the cost of the reports you run.

If you're really concerned ask for work references too. Getting an idea of what a current/former employer thought about your potential tenant can give you a reliable idea of the kind of person you're dealing with.

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