Let me clarify...I'm not talking about age, race, religion, sex, national origin, handicap, or marital status. I work at a tourist attraction and environmental organization in FL which happens to be located right smack dab in the middle of a residential area of the city. I mean it's got neighborhoods on all 4 sides of it for about a 5 min drive in any direction.
I live in one of the neighborhoods and for the last few years had been renting out my detached inlaw suite to coworkers and friends (that's how I first got into rental property). Now I've moved out (because of a random conversation with a coworker and her fiance who were looking for a place) and have been renting my former primary residence to them for the last 2 years, with plans to renovate the inlaw suite and rent that out again also.
In the years I've been working here, I've heard from coworkers and neighbors about the high demand of the employees to live close to work (which also happens to be less than 10 min out from the university, as many of them are college/grad/doctoral students). I actually have a waiting list of folks who contact me every once in a while to see if I have anything available.
For personal reasons, I want to invest in this neighborhood. I also would like to only rent to employees and their families/roommates. I would also love to have properties specifically to rent out seasonally to the many interns my workplace hires. At least in this area, I would like to have a personal connection to my tenants to ease me into the world of rental properties and not feel the need to have a management company.
I only have the 1 rental property so far, and I've never had to market it. Ever since I bought the property 6 years ago, I've pretty much always had someone renting the house or the studio apartment (and many of them asked to live there...I don't really recall offering). Now I'm looking into purchasing my first additional property in the area. Rental property is rare here as it is 100% developed, mostly homeowners, and many folks here are long-time residents (25 years and up!). Any nearby apartment complexes are in iffy neighborhoods, apartments on the other side, near downtown are too expensive, and the closest, cheapest, safest apartments and houses are closer to the University which isn't far, but crosses some busy roads and interstates which makes the drive much longer and stressful; and that's the reason why there's such a demand for the employees who want to rent nearby but don't have options.
Anyway, like I said, I don't think I'd have to do any marketing past the break room, a couple of emails, or word of mouth. But my concern is if a co-worker approaches me to ask if a friend or relative can rent, could I be accused of breaking some sort of discrimination law if I insist that I prefer only to rent to employees/ interns of the organization?
Not legal advice but no, you can limit your customer base as you see fit provided you are not going against any protected classes. If you want to restrict your customers to only people that worked at McDonald's on Chester Ave between 1987 and 1992 and also have at least 2 vowels in their first name, so be it.
Your only risk there is if people you deny service to happen to fit into one of the protected classes. Even if they did not meet your other, non discriminatory criteria, they might also fit into a protected class. If that happens and they do not know about or understand/buy into your criteria, they may feel discriminated against and bring a case against you.
That said, provided you are firm on your criteria and can prove consistency in it's application, then you should be fine. In the event you end up with tenants that meet certain protected class criteria, that should serve to bolster your defense should a claim be brought against you.
Again, this is not legal advice, just my opinion.
Generally renting only to a member/employee of a specific organization would be considered discrimination. Check the specific of federal laws on down to municipality.
There are specific ways you can rent only to college students of a certain university. And I know that landlords sometimes sign contracts with companies so they reserve a space/apartment for company employees. The airlines come to mind, especially here in Boston. If you are looking to rent only to a certain company, I would sign a contract with that company that says that you are providing housing to them, and in turn their employees.
This is not a line you ever want to go down legally. Exclusionary practices are the specific target of anti-discrimination laws. With quality screening, interviews and background checks you should come up with a solid set of tenants year over year.
@EL EM If you think about it, this is how areas of the US got segregated, which didn't do anyone any good. (not that we don't have segregated areas now...)
In Massachusetts you'd better pony up about $10k for a suit with MCAD if you're seen denying anyone.
I think @Aaron Montague has it down. A contract with a company!
If you have a waiting list do you ever really need to market? Is it discriminatory to never market your properties because you have a waiting list of people that are dying to move in?
You can discriminate when you live at that premises, if the place is for a religious or fraternal organization and for employees if the employer owns the property, in such cases you don't have any offering to the public for a rental.
If you were only leasing to employees I can see that being managed, letting it be known to employees the property is only available to employees. I also see the issue of being asked as you mentioned, my question might be, what's the chance of an employee or relative or friend, by word of mouth bringing the matter to report some violation? I don't know your legal standing there, best to ask a local RE attorney.
I say the above because I don't know FL laws or local ordinances as to offering rentals to the public.
But, I know you complicate the matter by having another class of selected tenants, being students. This is somewhat a red lining issue, it's a bit of a fraternal leasing arrangement. Selection by elimination. Your selection process must be fair, uniform and consistent. It could be a problem rejecting someone just because they don't work at a certain place or go to school, if they otherwise meet prudent requirements.
OTOH, discrimination laws are addressing certain classes, race, religion, etc. so long as your selection requirements don't conflict with these areas, I'd say you're home free as students or your employees aren't a protected class. But excluding the public can be a concern.
There are also laws pertaining to waiting lists, again your attorney should advise.
In reality, you don't have to advertise rentals unless government money is involved, mortgages or HUD funding. If you have a vacant rental and hold it, there is no law against that. No law against leasing to someone you meet or know and no law against leasing before another tenant leaves. It's the advertising of units that can bite you under fair housing. :)
Bill Gulley, General Real Estate Academy | https://generalrealestateacademy.com
@NA NA, I think you need advice from a Florida attorney well versed in both state and federal discrimination laws, not from a bunch of us who are not in your state. While Federal laws are nationwide, it's normally the state who will jump in there first. The MA contingent here is coming from the perspective of MA's very strict standards, but YMMV. Talk to a Florida landlord attorney. Perhaps there is one here on BP.
Just wanted to add that you should read your state and local landlord/tenant laws and as I believe there may be exemptions for some, for example, that own no more than 4 residential properties and manage them personally, no manager or agent involvement. There are issues like advertising where you still must follow rules, but it sounds like you wouldn't be advertising.
You must be a BiggerPockets member to post on the forums
Join the world's largest, most open Real Estate Investing Community online, 100% free forever!