how to deal with multiple applicants??

21 Replies

I'm preparing to rent out a 1977 sqft house in San Jose, target price $3300; the property has many valuable amenities, so I'm probably pricing a bit low, I think.  I'm pondering questions to include on my pre-filter email.

However, the first three responses that I've gotten are all groups of people, rather than just a family.  One is "a family of 3 with my uncle is a small business owner,i'm a manager at a billard/coffee shop and my uncle's daughter(an international student)", the other two are "I am looking for a place to live for myself and two other friends. We are all Santa Clara University engineering grads with jobs in the Bay Area."

None of these sound like "one source of income"... not to mention (without having talked to any of them) none sound like "3 times monthly rent as income".  $3300 is one *hell* of alot of money to have to come up with every month!!  (I'm so grateful I bought my house long ago).

So, I'm wondering how to proceed... I *could* just disregard these messages and hope for better catches later... if I *do* go with them, How do I really measure income??  All of the college students will likely fail the "reliable job history" test.  As far as the income test, how do they or I measure "reliable income" ??

For now, I'm inclined to disregard these and hope for better catches later, but if I *don't* get such, I might have to fall back on such as this, and figure out how to evaluate the situation...

Originally posted by @Daniel Miller :

 the other two are "I am looking for a place to live for myself and two other friends. We are all Santa Clara University engineering grads with jobs in the Bay Area."

None of these sound like "one source of income"... not to mention (without having talked to any of them) none sound like "3 times monthly rent as income".  $3300 is one *hell* of alot of money to have to come up with every month!!  (I'm so grateful I bought my house long ago).

So, I'm wondering how to proceed... I *could* just disregard these messages and hope for better catches later... if I *do* go with them, How do I really measure income??  All of the college students will likely fail the "reliable job history" test.  As far as the income test, how do they or I measure "reliable income" ??

For now, I'm inclined to disregard these and hope for better catches later, but if I *don't* get such, I might have to fall back on such as this, and figure out how to evaluate the situation...

The 3 Engineering Grads with jobs sound promising.  Personally, I would definitely consider them.  If they have good credit scores and solid jobs, then they should have no issue paying your $3,300 month of rent.  I would aggregate their 3 incomes to see if they meet your income test.  I would think 3 engineers would earn over $120k per year when aggregated together.  I rent to a lot of recent graduates and I have had no issues with these tenants when they share a place.  I do require a 600 or higher credit score for each tenant and positive references from prior landlords, though.

As a side note, in order not to break any fair housing laws, you will need to consider all tenants that inquire and give them a chance to apply at which point you can deny them if they do not meet your defined rental requirements.  It is dangerous to ignore inquiries and not respond to them.  

One of the things I do to ensure I don't have lots of unqualified prospects applying is clearly state my requirements in my ads.  Then, when the prospect contacts me to schedule a viewing of the property I go over my requirements again and ask them if they meet these requirements.  I explain they are still welcome to put in a formal application, but if they don't meet the requirements they will be denied.  This cuts down on a lot of unnecessary applications to sort through. 

@Michael Rogers; 

The last time I was asking questions here (late 2012) I had one "applicant" which was a group of college students, and I was uncomfortable with them because it wasn't clear who I would consider responsible for managing the property.  I no longer have copies of the discussions that resulted, but they were extensive, and many folk here expressed concerns about who is responsible if there were problems; if the highest earner moved out, what happens then??  There were many other points brought up, I wish I could refer to them now.  That is making me anxious about renting to a group of people whose only connection is that they are friends...

On a related question, if I accept initial applications from multiple applicants, do I *have* to accept the first one who qualifies in any way??  

It seems to be that I should be able to choose what I think is the most qualified... for example, someone who has been on their job for 10 years, has been at previous residence for years with excellent reference, and plenty of money in checking account (I'm describing the previous tenants).

I understand.  That is a potentially tricky issue you have to work through when it happens.   However, I will note that married couple get divorced all the time and you are in a similiar situation when they split up when you have a joint lease.  Who keeps the place, how does the new lease work, etc.

What I do is make sure my contract and my conversations with the tenant outlines that they are jointly and individually responsible for the lease and any damages that are incurred.  I also let them know that I require a minimum one year lease and they are all (and individually) locked into that lease even if one of them decides they want to move out.  After they have completed the one year lease I give tenants the option to renew another one year lease or a month-to-month lease.  At that time, tenants can move out and shuffle tenants if one wants to leave and another come into the property.  I do also let them know ahead of time that any new tenants will have to go through my screening process.

To summarize, the 2 things that have helped me work well with these types of leases are:

1. I want good tenants with 600 + credit scores, solid employment, and positive prior landlord references.  Each tenant needs to meet these requirements

2. I go over all of the potential issues that can come up and make sure each tenant understands the exit strategy and consequences before the lease is signed.  I like to have these in the lease and also go over them in person and let them know I don't budge on these.  

Using the above criteria, I've done all right with these types of arrangements.

Good luck!

Short of discriminating against a protected class (race, religion, national origin, etc), you can pick anyone you want. You don't have to pick your first applicant, or any applicant for that matter. I wouldn't put anyone in one of my rentals that I was uncomfortable with for any reason. I would rather have a vacant place than trouble. 

For the record 3 starting engineers in the bay area would gross well over 200k annually. Very typical housing arrangement in the area for young professionals.

I too would go with the 3 new grad engineers. In SJ a new grad will be pulling in at least 60K/year so the aggregate salary is fine. You need to decide how to write the contract. Are they all held responsible as a group so if 1 party bails the other need to make the rent? That should be the way.

As far as multiple applications I usually accept 3 maximum then take the one that has the best financials & history. But, I also go with gut feel and will sometimes take someone making less then the best. To me it doesn't matter who gave the 1st application.

Oh my!!  Yes, that's exactly it, thank you @Steve Babiak !!!

I've now bookmarked it for future reference... huh... and it never even *occurred* to me to see if those counters below my image were clickable... now I know!!

Okay, I understand and accept this wisdom... I'll go ahead and send initial queries to all who applied, and see how the open-house goes... 

That's really the second test, I think; if they agree to be at the house at a given time, but don't think it means they have to be there at that time, this also gives me useful insight.

Originally posted by @Daniel Miller :

@Michael Rogers; 

The last time I was asking questions here (late 2012) I had one "applicant" which was a group of college students, and I was uncomfortable with them because it wasn't clear who I would consider responsible for managing the property.  I no longer have copies of the discussions that resulted, but they were extensive, and many folk here expressed concerns about who is responsible if there were problems; if the highest earner moved out, what happens then??  There were many other points brought up, I wish I could refer to them now.  That is making me anxious about renting to a group of people whose only connection is that they are friends...

I went back and read the thread you reference above.  Thanks to Steve Babiak for posting.  

I agree with your concern about renting to 2 unmarried couples (4 individuals).  There is a higher risk of an issue or move-out in that case.  I am always a little more wary of renting to boyfriend/girlfriend couples vs. married couples or just 2 standard roommates.  In the current thread, you mentioned 3 recent engineering graduates that are fully employed.  To me, this is a different scenario than what was noted in the last thread with the "boyfriend/girlfriend" situation.  

At the end of the day, you need to be comfortable with who you are renting to.  So if it makes you nervous to rent to multiple unrelated individuals, I'd just stick to your criteria so you sleep well at night.

With the roommate situations, one thing you can check into is whether they have roomed together previously and for how long. If they have been roommates for a few years, you know they get along and have a set of "house rules" that works for them. So the biggest uncertainties that might lead to a split then are loss or change of job, getting married, and health issues for them or family. And even then, if those who remain are really happy there, they can each pay a bigger share or they will recruit a new roommate for your approval; I have had both of those happen. 

Whatever you deicide I would make sure in order to avoid any Fair Housing or Discrimination violations you should make sure that your qualifications are presented to all potential applicants and if they fit your criteria I would be very cautious why you turned them down. It is very easy to say you discriminated against them and you unfortunately are guilty and wrong until you prove you did not (Especially in the country of California).

The ones that do not get the place inevitably are the ones that turn you in and file a complaint not the ones that did get the place. Make sure you also send a denial letter every time your deny someone.

Just remember that when you have a rental property the people applying have many many rights, and if they choose to exercise those rights, whether they are just or not could cost you a lot of money in legal fees defending your position.

And yet, no matter how I approach this rental, the reality is that only one applicant will be selected... for all the others, it's not a matter of "why I rejected you", it's a matter of "I chose the best-qualified applicant"... 

Originally posted by @Daniel Miller :

It seems to be that I should be able to choose what I think is the most qualified... for example, someone who has been on their job for 10 years, has been at previous residence for years with excellent reference, and plenty of money in checking account (I'm describing the previous tenants).

 Having lived in the bay area most of my life, I think you'd be hard-pressed to find anybody who remains at the same job for 10 years and stays in the same rental for a long time.  The M.O. in the bay seems to be in and out in a few years.  At least that has been my experience.  In fact, this is the first time in a LONG time that the address on my DL is my actual address!

Also, about five years ago, I rented a home with two members of my family.  We were all on the lease and all responsible for the home.  I ended up leaving before the lease expired, but I was still responsible for the rent and I paid my share until I found somebody to take my place.  Most rental leases are only a year and those go by fairly quickly.

Like everybody else says, the three engineering students sound promising.  Also, if they go to Santa Clara University, they have money or their family has money.  You should be fine.

Aye, I attended Santa Clara U also, got my Master's there.  Excellent school, but one definitely doesn't attend there unless you have plenty of cash.  I'm going to be showing the house to them.

Hi Daniel,

I wouldn't let the 3 recent grads living together deter me, they likely make pretty good money together.

I used to do first come, first screen, but found that might not get me the best applicant.  So I switched to accepting apps over a period of time then choosing the best one based on a number of factors- income, length of lease desired, credit history, employment stability, etc.

Kelly

The main reservation I have about the SCU grads is that they likely don't have an established employment history; I already know they were at different rentals every year during their studies (which is common for college students, including myself back then).

But no matter, I'll collect data from all applicants and pick the one that looks and feels best (as @Kelly N. and others have suggested)

@Daniel Miller , with how hot the Bay Area economy is and with how low the vacancy rate is everywhere you should be able to post an ad on Craigslist, hold a 2 hour open house, and walk away with half a dozen qualified applicants.  Check references, credit history, employment, income, etc. and just pick the best one.  

You are under no obligation to tell any of the other applicants why they did not get the place unless it was based solely upon their credit score/history.  If they press you just say you had numerous qualified applicants and only one house to rent.  

If you like you may add to the bottom of the rental application that if rejected they may inquire in writing as to why they were rejected and invite them to mail you said inquiry. None of them will.  

@Daniel Miller

As I said in the last thread if you are still having issues let me know and I can link on my internal network.

a few suggestions based on my experiences as a LL in SF. 

1- the email prescreen is the only way to go in a market like ours. I'm assuming you have a 3BR place. You'd be surprised at how many 4-5 groups of people may apply!  I'd cap it at 3 separate individuals. I just don't respond to large groups. Don't let the fair housing law scare you. As long as you're not discriminating on obvious race and gender issues, you're very low on anyone's radar. 

2- roomies, couples or married folks?  That's the question, and I can't say there is an obvious better choice. I've had all three, and it really depends on the people and life situations. Married is stable, but kids add to wear and tear, noise, etc. couples break up (happened to me 2x :(. Roomies, you can find some nice folks out there. The thing to keep in mind is that they get boyfriends and girlfriends. I'm strict about not letting them add any additional people, but of course the GF or BF can hang out, stay a weekend, the usual stuff, so you need to accept that. Good roomies control that and still take good care of the place. 

3- look at the CAR standard realtors rental lease. Google it and PDF and you can score it free. It a good lease IMO and already accounts for all renters are responsible for the entire rent, restricts subleasing w/o owner permission, etc. I also point out that no tenant can airbnb/VBRO their room short term. You'd be surprised how enterprising some folks are, and if you don't make a point of this, they may legitimately not know. It goes without saying that allowing tenets to airbnb introduces a major clusterf*ck of liability and randomness that a LL would be wise to do without!

4- with tech roomies, usually combined income is no problem. I prefer them a couple/few years out of college so they are more mature and have an inkling as to where the hell they want to live :). I'll screen for partiers, although most are past that phase- but with a SFH I'd make sure. Small get togethers are kosher, but leave the keggers for the bear gardens is what I say. I've had good luck with this category as a whole; usually nice kids, all bright eyed and bushy tailed as they seek their piece of the tech gold rush. Not a bad place to be as a 25yo :)

Hope that helps. 

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