Screening and selecting tenant question

6 Replies

Hi, I am new to being a landlord. I got some pretty good applicants (at least on paper) on my first time showing the house. I have 3 questions:

1. I know there are some applicants they are not going to afford the house. But they still fill out the application. Do I have to verify their income/reference just because they submit the application? 

2. Among those who can afford the place, there are four types of people I categorize: a. working single guys. b. part-time working students (but there is one group particularly polite) c. stable family with two older kids. d. section 8 family with younger kids. In terms of prediction on how long they will stay there, how well they will take care of things, and other factors. Any suggestion who should I take first?

3. There is actually two units in the apt. I would like to hear some experience pairing clients. After all, less conflict would be better for me. 

Thank you. Any advise would be appreciated.

I'll have to disagree with number 1.  You pre-screen and eliminate low income tenants by phone or email and they never set foot in the rental or get an application. Establish your criteria beforehand.  Ask what their credit is like (people with bad credit will know they have bad credit), employment, income, landlord reference, etc.  All this before they get an application.  You will save tremendous amount of time and effort if you do a thorough pre-screen.

1. No, you just stated they do not meet your income requirements so what is the point in looking deeper?

2. I wouldn't base it on familial structure.  I would call their previous landlord(s) and see if they paid their rent and if they caused them any problems.  I would also go online and look for prior evictions and also ask them for proof of income.

3. I wouldn't worry about pairing for now.  If one of the tenants ends up being good and they want to refer you a friend or family member for the adjacent unit then I might consider the referral before advertising the other unit again.

#2 is a discrimination lawsuit waiting to happen.

Do you charge an application fee? We do charge to cover the costs we incur to run credit/criminal/background checks. Also weeds out the looky-loos and the ones who know they have qualification issues.  

When they say they want an application, we explain to them the income & credit criteria, tell them how much money is neede to move-in, and we also ask how many will be living in the unit, and ask what pets they have, so they can weed themselves out if they know they don't meet the criteria.

Obviously sometimes they fill the app out anyway when they don't meet the requirements, I guess hoping for a landlord who doesn't check them out.  Ask for copies of paystubs and W2's, but it's always a good idea to verify with employer. Call current and previous landlord.

If your area doesn't allow you discriminate against source of income you need to look at section 8 tenants equally.

Please read up on Fair Housing laws in your state, county, and city. Around here they send out testers to find landlords who are discriminating in violation of fair housing laws.

Originally posted by @Kexin Ma :

Hi, I am new to being a landlord. I got some pretty good applicants (at least on paper) on my first time showing the house. I have 3 questions:

1. I know there are some applicants they are not going to afford the house. But they still fill out the application. Do I have to verify their income/reference just because they submit the application? 

2. Among those who can afford the place, there are four types of people I categorize: a. working single guys. b. part-time working students (but there is one group particularly polite) c. stable family with two older kids. d. section 8 family with younger kids. In terms of prediction on how long they will stay there, how well they will take care of things, and other factors. Any suggestion who should I take first?

3. There is actually two units in the apt. I would like to hear some experience pairing clients. After all, less conflict would be better for me. 

Thank you. Any advise would be appreciated.

1. Yes, I typically get anyone interested to fill out the application. You never know, so collect as many apps as possible, unless they clearly won't qualify.  If you have a good leasing agent, they should be able to weed out prospects who have no hope in qualifying.  But when in double get them to fill out and submit an app!

2. Stable families will ALWAYS stay longer for obvious reasons (kids in school, etc.).  Singles are more transitory.  Also focus on apps who have been living locally and have lots of local ties.  You are required by law to review apps as they are handing in.

What are the sizes of your units?  If they're one bedrooms, they're inappropriate for families.  That's the reason I don't buy 1s, only complex with a good mix of 1s and 2s or SFRs.

3.  Pairing clients? What are you talking about.

@Kexin Ma

You are thinking about this in the wrong order.

Treat your investing like a business.  You're the business owner and you are providing a service.  The first question you should be asking yourself is:

(1) WHO ARE YOUR CUSTOMERS.  Who are the customers I want to serve (students, families, urbanites, yuppies, etc.)

(2) CUSTOMER RESEARCH: Where do they work?  What are their housing preferences?, etc.

(3) PRODUCT: You should be providing the product that best meets your customers needs.  You should focus on providing value...and preferably more value than what your customer's pay for.  Make sure you interact with them professionally, courteously, timely, high-quality customer service.

If you do these things, they will love you for what you provide them, and they will pay you well for it.  You will also experience low-turnover, maximizing your returns.

1-3 are critically important as the answers will have a tremendous impact on the quality of your life as an investor over the long-term.

Back to your question...If you have a provide a good product for your customer, your turnover will be low.

If you provide a bad product for your customer, your turnover will be high (ex. providing having a single yuppie tenant move into your SFR property in the burbs...likely not a good fit as they will move out in a year to live in the city/more urban environment)

Kexin, sounds like you could benefit form developing some rental criteria and an evaluation tool to evaluate applications.  Both need to be objective and non-discriminatory.  

We have our rental criteria as the first page of the applications, so that people who don't qualify often screen themselves out.

You can't look at what type of family structure they have, but you can look at occupancy standards (total people), how long they have lived at addresses, how long they have lived in your community, intention to stay can probably be a question on the application, rental history, indications of fussiness or drama from interactions and social media, and of course the other things you would normally verify and screen for - income, criminal, credit, rental history.

Decide what you want, write it down, and keep it consistent for each round of vacancies, adjusting it for the next round if needed.

Good luck!