Overwhelmed with applicants

17 Replies

Hello all. I am curious to know from the long time, experienced landlords, how do you approach a situation with numerous applicants or potential applicants? I am new and still learning, and especially learning a lot from the good people t this website. I initially listed my first rental and was overwhelmed with potential applicants. Unfortunately I selected one that I believed would be a good choice (prior to getting application or deposit) and removed my ad. That potential tenant turned out to be a not so good choice. Some of you may have read my forum on that.

Now, I have the same problem again. Do you let them all complete an application and collect application fee and deposit from all of them, then do your background and credit checks, and then select your best candidate based on everything? Or do you screen one potential candidate at a time?

I don't know. I just find myself feeling kind of guilty collecting application fee and then having to tell people they were not selected, then they are out the $30. Or am I being over sensitive? Do potential tenants know and expect they might be out the application fee (I know it say's right on my application "non-refundable")? Or do the applicants who are not accepted get upset wanting their application fee back?

I am just wondering how the screening process is approached by those of you who are experienced in ding this. I know it is a good problem that I have and I wish I had about 3 or 4 more of these townhouses.

Thank you very much!

Mark

@Mark Werner I just take one application for a vacancy, first one who applies.  This is after I've already been explicit about my standards for approval.  I personally prefer this approach, its simple and straght-forward, and you're not dealing with the awkwardness of taking application fees from numerous applicants.

You are too low on asking rent if you are being overwhelmed with applications. 

If you don't have some ridiculously stringent rental criteria, you should probably avoid the "beauty pageant" approach (of picking the one that looks nicest), and instead you should pick the first in time to qualify. Ridiculously stringent criteria are so crazy that nobody meets the minimum qualification, thus you pick the one that comes closest - but if there should be an applicant that does qualify then you accept that applicant. 

Even in selecting the first to qualify, you can take multiple applications explaining that the applications are in a backup position to others received ahead of them (and make sure you have a way of tracking the order to the applications like marking date and time submitted); if somebody ahead of them qualifies and pays upfront money (rent and security deposit) in full and signs a lease, then you return application fees for any unprocessed applications. 

One other consideration you can use is the move in date; those with a later move in date will be placed behind earlier move in dates. 

I agree with most of everything  @Steve Babiak said except the part about when an applicant can move in.  The earlier an applicant can move in, in my experience, the more likely there is a problem with where they are currently living.  I didn't want tenants who could move in tomorrow, unless they just moved here for a job or for college and they're currently living in an extended stay hotel - with proof of the new job or recently being accepted to university.  Anybody else will be a problem tenant, in my experience.

You will always be bombarded with 99% applicants who don't meet your criteria.  So, it's really important to know what your criteria is.  Then you pre-screen them over the phone.  "is your credit score 700 or above?  (if not, denied) Will your current landlord give you a good reference?  Is your landlord reference a relative? (denied)  Do you make 3 times the rent?  How long have you been at your job (if their income is based on employment)? Why are you moving? Do you have any type of criminal background?  Have you filed bankruptcy? Have you ever been evicted?  Are you on the sexual offender's list?  And before you give me your application fee, I want you to know that I will pay to check out everything on the application.  Are you sure you want to give me the fee?

You'll screen most out this way.  But, you'll still have some who will lie, because they're hoping you won't really check them out.

So, with the ones who actually show up and give you a check, you screen them one at a time, in the order received.  And you don't process their application fees, until/if you actually deny the one before them, and start to process theirs.

This is to avoid any possible fair housing issues.

And I learned to make appointments and if they were more than 15 minutes late without calling me with an acceptable excuse - denied.  If they didn't fill out the application completely, and don't remind them! - denied.  If they lie on the application or don't include the correct info in the correct order (like previous addresses) - denied.  

You'll screen out a bunch more this way, too.  Also, if it's a couple and they're arguing in front of you - denied.  If they are rude to you - denied.  None of these are protected classes.

But, just be aware that you will always have at least 90% applicants who will not qualify, who know they won't qualify, and who are hoping to trick you into letting them in anyway.  So, don't get too excited about a huge turnout.

And I agree, that if the turnout is too huge, your rent price is too low.  The lower the rent, the more applicants you'll get who won't qualify and who will show up anyway and waste your time.

Everyone has their own opinion but I PERSONALLY am a first one first complete. I can qualify someone usually with in hours. If they are interested they will get it completed asap. Therefore I let who ever wants to apply and do NOT take it off till i have a APPROVED applicant, signed lease and security deposit. 

I have been burned a few times so I have a few articles on my process. Pm me if you want the link.

Originally posted by @Sue K. :

I agree with most of everything  @Steve Babiak said except the part about when an applicant can move in.  The earlier an applicant can move in, in my experience, the more likely there is a problem with where they are currently living.  I didn't want tenants who could move in tomorrow, unless they just moved here for a job or for college and they're currently living in an extended stay hotel - with proof of the new job or recently being accepted to university.  Anybody else will be a problem tenant, in my experience.

...

So, with the ones who actually show up and give you a check, you screen them one at a time, in the order received.  And you don't process their application fees, until/if you actually deny the one before them, and start to process theirs.

This is to avoid any possible fair housing issues.

...

When I mentioned move in dates, I neglected to cover what Sue Kelly wrote about moving in immediately.  That is a bad sign. What I was getting at is some people are looking for a place a month or two ahead of when they intend to move, and I would prefer to get a tenant sooner than that - so that is where a sooner move in date is a better fit for the landlord. 

Establish a good policy for these things up front to avoid discrimination, and tweak as the need arises. 

I would schedule appointments with multiple applicants(3 maybe) who pass your pre-screen.  If you decide to order the appointments, I would use that for the processing order.  If someone is late for their time slot, they would go to back of the line if there are multiple applications.  If you want to have them all at the same time, I would process according in order of their phone/email response to your ad.

If you are at a slower time of year, I might use a willingness to go with a 14 or 15 month lease as a tie-breaker.  

If you can process your applications quickly and thoroughly, you should be able to select a good tenant fairly quickly and inform the others of their status.  If you can't process their application it shouldn't be a big deal if you aren't leaving them in limbo for too long.  If they fail your application process you have a little less obligation - although you may have a legal one if it is a credit-based rejection.

Fair housing red flag. Process them in the order they are received until you have one approved. Great time to raise your scoring system or screening standards. Its a good problem to have.

By the way, raise your rent ;-)

We manage quite a few properties here in Indianapolis.

Our procedure is that we encourage everyone to apply, just for the simple fact of what you stated before. You think you have a good applicant and then for some reason or another they don't perform and the you've potentially lost other good applicants.

We have found that using the leverage of multiple applicants applying it forces those tenants that really want the property to get all the required documents to us faster. This obviously speeds up our process of being able to screen them quicker and more efficiently.

We do not accept holding fees (deposits) until we have approved them. So we collect application fees but won't allow anyone to put a hold on the property until they are fully vetted and approved. Then once we approve them we call them and tell them they need to bring us in the holding fee (deposit) or they will lose the property to another applicant. This almost always lights a fire under then and we then quickly get the hold.

For those other applicants that have applied and paid their fee, we allow them to transfer that application to any other vacancy that we have.

Originally posted by @Steve Babiak :
Originally posted by @Sue Kelly:

I agree with most of everything  @Steve Babiak said except the part about when an applicant can move in.  The earlier an applicant can move in, in my experience, the more likely there is a problem with where they are currently living.  I didn't want tenants who could move in tomorrow, unless they just moved here for a job or for college and they're currently living in an extended stay hotel - with proof of the new job or recently being accepted to university.  Anybody else will be a problem tenant, in my experience.

...

So, with the ones who actually show up and give you a check, you screen them one at a time, in the order received.  And you don't process their application fees, until/if you actually deny the one before them, and start to process theirs.

This is to avoid any possible fair housing issues.

...

When I mentioned move in dates, I neglected to cover what Sue Kelly wrote about moving in immediately.  That is a bad sign. What I was getting at is some people are looking for a place a month or two ahead of when they intend to move, and I would prefer to get a tenant sooner than that - so that is where a sooner move in date is a better fit for the landlord. 

Establish a good policy for these things up front to avoid discrimination, and tweak as the need arises. 

 Oh, yes, sorry for the misunderstanding.  Yes, I would get students call from out of state or out of country, who wanted to rent an apartment I had advertised, but they would want to move in a couple months. I'd tell them that I'll put them on a waiting list, and if I have something available closer to when they would be moving to town, I would let them know.

Waiting lists are beautiful things :-)

@Mark Werner - all good points above.  Yes, for sure raise your rent.

In addition, I always have my leases expire at the end of April.  This ensures you have plenty of time to re-rent it once its vacant before winter.  So, if someone signs a lease for June 1, 2015 - it will expire April 30, 2017.  Even if you have to offer a small tenant concession, it's worth it.

Speaking of concessions - I offer something small [like a ceiling fan or one room of custom color paint] for them to sign another term once the current lease is about to expire.

Also, I assume/hope you have a rock solid lease.  Don't make the mistake of grabbing one off of rocket lawyer or borrowing your buddies lease.  I'd recommend spending the money and get one drawn up by a local, investor friendly, attorney to ensure you have all the laws covered.

Don't forget that YOU are the one giving them the keys to your house when they trash the place in a few months.  Waiting a few extra weeks/months for a great tenant vs taking one that is just okay now will come back to haunt you [ask me how I know!].

And finally, I learned this from Mike Butler.  As a final part of the application process, go to their current home.  Tell them you are just confirming their current address [you will surprised how many don't put the correct address down].  While you're there, try to get invited in or at least peak in and ask yourself this one simple question: "If they offered to make you a bologna sandwich, would you each it?"  This is a great filter and works very well - because this is what your home is going to look/smell like in just a few weeks/months.

There is not fair housing rules against discriminating against total pigs!

Originally posted by @Shawn Holsapple :

@Mark Werner - all good points above.  

...

And finally, I learned this from Mike Butler.  As a final part of the application process, go to their current home.  Tell them you are just confirming their current address [you will surprised how many don't put the correct address down].  While you're there, try to get invited in or at least peak in and ask yourself this one simple question: "If they offered to make you a bologna sandwich, would you each it?"  This is a great filter and works very well - because this is what your home is going to look/smell like in just a few weeks/months.

There is not fair housing rules against discriminating against total pigs!

Good info there from Shawn. 

There are a few ways to get invited in. One is to say there is some incomplete paperwork that must be addressed before final approval. Another is to ask if you can use the restroom. But sometimes it is just better to be blunt and just state that the owner requires that you be allowed to see the inside if where they now kive before giving a final approval. 

Updated over 2 years ago

Typo: "kive" should be "live"

Where I have a rental that is very popular.  I hold an "open house" on Saturday so I only have to show the property once.  I have a sign in sheet at the viewing and I explain the rental requirements AGAIN at showing.  Those who are able to move in and first apply are my new tenants.  I do not consider a home rented until I have a signed lease and deposit in hand to secure property.  Even then I keep my backup list as I had 1 "new" tenant receive a job offer in another city after signing the lease so she never moved in.

Originally posted by @Shawn Holsapple :

@Mark Werner - all good points above.  Yes, for sure raise your rent.

In addition, I always have my leases expire at the end of April.  This ensures you have plenty of time to re-rent it once its vacant before winter.  So, if someone signs a lease for June 1, 2015 - it will expire April 30, 2017.  Even if you have to offer a small tenant concession, it's worth it.

Speaking of concessions - I offer something small [like a ceiling fan or one room of custom color paint] for them to sign another term once the current lease is about to expire.

Also, I assume/hope you have a rock solid lease.  Don't make the mistake of grabbing one off of rocket lawyer or borrowing your buddies lease.  I'd recommend spending the money and get one drawn up by a local, investor friendly, attorney to ensure you have all the laws covered.

Don't forget that YOU are the one giving them the keys to your house when they trash the place in a few months.  Waiting a few extra weeks/months for a great tenant vs taking one that is just okay now will come back to haunt you [ask me how I know!].

And finally, I learned this from Mike Butler.  As a final part of the application process, go to their current home.  Tell them you are just confirming their current address [you will surprised how many don't put the correct address down].  While you're there, try to get invited in or at least peak in and ask yourself this one simple question: "If they offered to make you a bologna sandwich, would you each it?"  This is a great filter and works very well - because this is what your home is going to look/smell like in just a few weeks/months.

There is not fair housing rules against discriminating against total pigs!

Originally posted by @Joe Fairless :

@Mark Werner congrats on having so much demand - and will you be raising rents for future tenants? Just curious, what market is your property in? 

@Joe Fairless Thanks for the response Joe. I know many people here have told me to increase my rent. The property is in the New River Valley, VA area (Radford, Christiansburg, Blacksburg). I don't know that it is priced too low. I asked a realtor what she thought before I advertised it and she suggested $200 less a month than I advertised it for. I actually advertised it just for kicks while I had it listed for sale. I didn't expect to get much response at all. I wish I had 4 more of them to rent. The rental rate seems to be in line with other properties around the area.