First Rental, Need Help W/ Prospective Tenants!

7 Replies

We listed our property and have starting screening tenants. This is our first rental (actually our home being put up for rent), and are a bit nervous to ensure we select the right individuals. We had a great response from a craigslist ad, showed it to 5 prospects today and have an additional showing or two for tomorrow. We did mention requirements of 3x rent for an income base, credit and background check, and follow-up with references. Three people expressed immediate interest. We also read the base tenant screening informational guide, but are finding meeting in person to be a little less clear as to what direction to go! Help with the following will be appreciated!!

1) Should we tell multiple tenants that verbally claimed to meet the criteria to apply at the same time? If so and they both qualify, do we refund the application fee (plan on using smart move and having the tenant pay for smart move check)? What are your best methods for picking between two or more qualifications? If they both meet the base criteria, how do we tell the other individual they did get accepted? Woah lot of questions there!

At a high level somebody with a solid job record and credit history with 5 animals (two dogs, two large fish tanks, one lizard) or someone who is very professional and thorough but has had a recent divorce and bankruptcy (would also bring a dog, and two college age working children),  but since bankruptcy appears to have a solid rental history (and mentioned prepaying early)...

Thank you!!!

the best advice I can give you in this is to make your qualifications very clear and post them online and give them a copy in person. If any of the above criteria are things you will not accept then state that. 

We make it a practice that we take the first qualified applicant that has turned in a complete packet to us. In my opinion if you deviate from this rule you can be putting yourself in a fair housing violation or discrimition suit. It is a very fine line and landlords are sued and fined all the time for not following the law and violating rights. 

Also just as important, you MUST send anyone you turn down a denial letter. These are the people that may be upset and will turn you in. Make this a standard practice in your business and it could save you a HUGE headache in the future

If your interested in our process I would be happy to share it with you if you PM me. We manage over 400 homes and have a 2% eviction rate.

Medium empire logo graySteve Rozenberg, Empire Industries, L.L.C. | [email protected] | 888‑866‑6727 | http://www.empireindustriesllc.com

Hi Jason,

These are good questions. To be honest, and to protect yourself and your investment, I would recommend always processing applicants on a first come, first served basis. It is helpful to have this policy stayed clearly in writing on your application criteria provided to each and every prospect. As soon as you meet someone who expresses serious interest, collect their email and send them the SmartMove link.  Whoever applies, qualifies (no matter the specifics of their situation) and provides you with required payments such as security deposits first is who you move forward with. I would refund all other application fees from other prospects. This is to protect you and make sure you are operating within the guidelines of Fair Housing, which can bite you no matter your intentions if you are not clear about selection criteria. 

Great job on getting such great leads! You must have a good product. Good luck!

We told each applicant that we would send out the formal application tomorrow (Sunday). We put in criteria as follows (will look familiar): 

1) Gross monthly income must equal or greater than three times monthly rent

2) Applicants must have a favorable credit history
3) Applicants must be employed and be able to furnish acceptable proof
of the required income
4) Applicants must have good references concerning rental payment,
housekeeping, and property maintenance from all previous landlords

When I send out the application tomorrow to the prospective tenants along with the movinguide request, should I further define favorable credit history? That seems to be the only vague requirement

@Jason Williams  

  Welcome to BP!

In addition to what you said, our criteria includes no bankruptcy, credit score must be greater than 600, and no evictions.  You should have a pet policy as well - just make sure it is in sync with your liability insurance.  Use the same criteria for all applicants. Give them the criteria in writing.  We process based on first come first serve and the credit/background check fee is non-refundable.

@Jason Williams  There is another BP thread that has some good information shared by others along this same topic... see http://www.biggerpockets.com/forums/52/topics/1704...

What you decide as your rental criteria may be more stringent or less stringent than others depending on your rental market and the type of property and your preferences. It is important to be in compliance with non-discrimination laws, both federal and state. The Fair Housing Act comes into play here. You can discriminate on other factors, if they are not seen as discriminatory against a protected class.

If you require all applicants to be employed, it may be seen as discriminating based on source of income. Most of our retired tenants are not employed, yet have verifiable unearned income. Some jurisdictions do not allow landlords to discriminate on source of income.

Also, there is no requirement that you select your tenant on a first come-first serve basis. We accept applications during the days we are showing, and rank them by how well they stand up to our rental criteria. Our rental criteria is in written form and given out, along with the application, at the time we do our showing. We process one application at a time and only keep the application fees for those we fully process. If we choose one candidate over another, we provide the one we didn't choose with a letter that informs them of this.... we also typically call them as well so they will get the news sooner.

Marcia Maynard, Fischer Properties | Podcast Guest on Show #83

Originally posted by @Steve Rozenberg :

...

Also just as important, you MUST send anyone you turn down a denial letter. These are the people that may be upset and will turn you in. Make this a standard practice in your business and it could save you a HUGE headache in the future

...

I would agree with this but for one exception. Often, I will be handed an application and a quick review shows that the stated income is insufficient to qualify. For these, I give them back the application on the spot and explain that they will not qualify. I won't send a letter in such a case. 

But if I take the application, I will send an adverse action letter in the event that the applicant is declined. 

Great, thank you all for your responses. This has been extremely helpful and I'll check out the other thread as well! Jason