How many tenants is too many?

5 Replies

I had a prospective tenant showing of a 2 bed 2 bath Townhome with a very small walled courtyard. The online questionairre indicated there would be 3 adults a 2 dogs. After speaking with the woman who showed up, she asked why all us landlords descriminated against felons. She goes on to explain she wanted he boyfriend and 2 brothers to live with her there along with 2 dogs one large and one medium sized. She goes on to explain one brother is a level 1 sex offender because of trouble he got into at 18 and he is now 25. I was reeling from the sex offender ramifications but trying to get 4 adults and 2 dogs in 1000 sf town home on 2 levels seems like a lot of wear and tear. I have no doubt people have seen worse but I thought I better wait for a better tenant than get desperate to rent to this group. Any thoughts?

The number of tenants is a judgement call to some degree...just be consistent with your policy (and ideally have it in place beforehand for future prospects). 

In this case, you're probably better off basing a denial on their criminal record, sex offender records, or pets (consistent with fair house laws and state/municipal law). 

You have to check your city legislation for what is the amount of tenants you can have in a 2 bedroom apartment.  Some states will state 2.5 people per bedroom others say 1.5 per bedroom.  Some states have different rules for those landlords who live in the house as opposed to those who live in another.  For example, in NYC if you have a 4 family you can discriminate only if you live in one of the units.  You cannot if it is commercial.  However, I believe you can deny renting to a child sex offender if the building is near a school.  If you do rent to sex offenders you are supposed to report it.  Not renting to sex offenders or excons is not discrimination. Discrimination only protects sex, sexuality, race, religion, income, age, national origin, marital status, disability.  Sometimes there are leeways for religion, age and sex but normally that is for organizations that own property for example Senior housing, Women in Need Battered women, or male Veteran housing.  

For occupancy limits, you are pretty safe if you use HUD standards which allow 2 people per bedroom plus 1. We choose to set our occupancy limit at 2 people per bedroom and that's fine to do in our jurisdiction. Take into consideration the number of bathrooms and what the sewer system can handle. Also consider the square footage of the home and available parking.

The key is in establishing your rental criteria before you even begin to advertise. It must be compliant with non-discrimination laws applicable to your jurisdiction.  If you communicate your rental criteria well, most people who wouldn't qualify will self select themselves out of the running and won't even apply.

In some jurisdictions it's becoming harder to discriminate based on legal history. Be clear about your criteria. We accept some people with legal history, but are careful in our screening process. Our criteria rejects the worse offenders, but is flexible enough to accept minor offenders. We build in extra security when the risk is higher via larger security deposits.

Dogs/cats/etc. that are pets may suddenly become "companion animals" or "emotional support animals" or "assistance animals" or "service animals" if their owners decided to jump through the hoops and/or buy certification certificates online. Beware of those faking a disability to sneak a pet in. Have a good pet agreement and a service/assistance animal agreement prepared in advance for when you might need it.

I uploaded our rental criteria into the BP marketplace for those who want to see an example of a policy that has some flexibility built in but still screens out most problematic prospective renters. To see any of the documents I've uploaded, go to: Tools > File Place > Other Documents > and look for items with my name as the author. There are several documents of mine there, the first of which was uploaded in 2014.

Good luck!

I have personally set my limit at two tenants per unit. Simply a personal preference to keep ware and tear as well as noise levels to a minimum. I target seniors primarily to keep my management level to a minimum.

Honestly to me it's not the number of people that's a red flag, its the type of people. Number one it's a boyfriend and brothers? That's a temporary arrangement. One already has a record, so their not dedicated to keeping a clean record because to be honest, it's already screwed. An eviction on their record is not gonna top sex offender.... I'm sure you can do better. Give it 2 weeks. Trust me, they're not going anywhere.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here