Tenant selection (picking the correct tenant for the house)

18 Replies

I have a SFH that I am helping my partents rent out. We have each potential appilcant fill out a general application ( contact info, work history, previous landlords, number of teants, and number and type of pets).

In the past I have gone through the applicants and based on what I think is correct for the home ( I don't want a family of 5 renting a 2 bedroom, 1 bathroom home ).  

I realize denying applicants based on protected classes is illegal and immoral.   If I have 3 applicants that have similar work history, clean backgrounds, and similar credit score, then is it okay to choose an older single person over a younger couple.

I should state that the most recent tenant I did a terrible job of choosing and after just a year we threw the carpets out and filled two dumpsters with house and yard trash.  So this time around I am looking for a "low impact" tentant.

Bigger Pockets has been a great treasure trove of information.  

Thanks for all the help.

Nope, I would not have age, familial status etc be a part of it at all. If you choose the applicant with the cleanest car, the nicest dressed when they met you, the best maintained current apartment, the stronger company they work for, it's one thing. Choosing the older single person.... bad juju.

Screening and selection of tenants is part of the risks we take when investing in real estate. There is not one solution as it is on a case by case basis. Of course you should not discriminate by age, race, religious or gender, even age. But if you have several applicants meeting your criterias just pick the one you met and felt he/she would be a good fit for your property.

What you need to do now is set screening standards and write them down (make sure they don't discriminate). your standards should include things such as credit score minimum, income requirements, occupancy maximums (you have a legal limit, but you can set a lower limit if desired), as well as some rules such as: no prior evictions, no felonies, etc. I'm sure you can find someone here who has posted their standards and you can use as a guideline.

By having a written policy you protect yourself when someone inevitably complains. For example, if one couple complains because you chose the older single person, you show them how they did not fit according to your written standards, or why the single person was the better choice according to your standards. never make a decision based upon a tenant being a member of a protected class, but never be afraid to deny an applicant who is a member of a protected class because you will have documentation to back up your decisions. (Save all applications along with notes if necessary surrounding each round of applications)

I would be careful putting this quote on a public forum. "In the past I have gone through the applicants and based on what I think is correct for the home ( I don't want a family of 5 renting a 2 bedroom, 1 bathroom home )." This number of occupants is allowed according to the Fair Housing Act and disqualifying someone based on this is not allowed.

Originally posted by @Anthony Hurlburt :

I would be careful putting this quote on a public forum. "In the past I have gone through the applicants and based on what I think is correct for the home ( I don't want a family of 5 renting a 2 bedroom, 1 bathroom home )." This number of occupants is allowed according to the Fair Housing Act and disqualifying someone based on this is not allowed.

 Landlords are allowed to set their own occupancy limits.

Landlords are absolutely not allowed to set their own occupancy limits. There are many local, state and federal laws and guidelines on this subject. If your city only allows 5 people max for a two bedroom apartment you certainly are not allowed to set your own occupancy limit of 10 people for a two bedroom. Likewise if the city allows 5 people for a two bedroom apartment and you discriminate against a qualified family of five in favor of a couple with no kids you are in violation of the Fair Housing Act.

Originally posted by @Andrew B. :
Originally posted by @Anthony Hurlburt:

I would be careful putting this quote on a public forum. "In the past I have gone through the applicants and based on what I think is correct for the home ( I don't want a family of 5 renting a 2 bedroom, 1 bathroom home )." This number of occupants is allowed according to the Fair Housing Act and disqualifying someone based on this is not allowed.

 Landlords are allowed to set their own occupancy limits.

Not in Illinois they are NOT.  The town I invest in has occupancy limits,  meant to maintain the health and safety of the infrastructure. I CAN NOT set a lower limit,  that is automatically discriminating based on family size,  a protected class.

I have two tiny condos of only 520 s.f. each.  Naperville says two people can live there over the age of one.  Tenants got pregnant,  they had to leave when lease was up  cause baby makes three.  But I could NOT legally say only one person can live there.  (although I personally could never share such a small space.)

Not sure how any different law in your area (if there is one)  could be allowed since it would violate federal law.

I checked local FHA laws and occupancy limits are allowed.


Half of the applicants have 4 or more occupants.  We would prefer to keep the human occupants to no more than 3 and pet applicants to no more than two.  If we create our procedure now, then should we be okay to let everyone know of the max 3 occupant rule or do we need go through work history, then credit and criminal background checks first?

I am pleasantly surprised at how quickly all of you have repsonded to my questions and appreciate your help and guidance.

"if you wan to go fast, then go alone.  If you want to go far, then go together"

Picking a single older person over a young couple is a violation of Fair Housing laws set forth and enforced by HUD. This is discrimination based on familial status. Part of familial status discrimination is choosing a tenant because there are less people in that familial group.

Further, limiting your 2 bedroom to 3 occupants also violate familial status. Limits on occupancy is a little gray with HUD. Traditionally, there was a 2 person per bedroom rule. However, HUD came out with a memo in the 90's that stated that a living room could be used as sleeping quarters, therefore that would be 2 per bedroom plus one. There is further language in the memo about the size of the rooms and how many people that might influence the number. Extremely gray, but limiting 3 people for a 2 bedroom is definitely illegal. The only saving grace is if your municipality puts the limit at 3. That may keep you off the HUD radar.

I have read hundreds of pages of cases where HUD brought legal action against landlords who discriminate. Although a lot of reasoning by landlords at the time seemed fair in their minds, this reasoning was deemed illegal by the presiding judge. Best case scenario if you get targeted by HUD, you win the lawsuit, but you are out hundreds of thousands of dollars that you spent on attorneys. Worst case, a seven figure fine.

Also, HUD employs "shoppers" who check for this sort of thing. It is best to think you are talking to a HUD representative every time you deal with a prospect. I have been shopped a few times.

What David S. said.  I want to see a local law that supersedes Federal law.

Now pets,  who aren't support animals,  you can limit.  Which might be your out but you should have stated these limits in advance or it can come back to bite you.

Don't make people pay for background checks when you have no intention of renting to them.  That's just wrong.  (But of course your intentions are also likely to get you into trouble.)

I personal always choose the applicant that would be the best fit for the unit in question. You do not want someone that you know is a bad fit.

You need to exercise good judgement and not be afraid in making your choices. Remember this is your property not the governments.

In your example if you believe the older individual is a better choice based on their personality and how that may impact your property you are in fact not selecting them based on age at all. It is only coincidental that they happen to be older. 

You are confused as to why you are choosing one over the other. Your choice has nothing to do with age, you made it about age in how you posed your question on the forum. You choose the individual that will have the lowest impact, coincidentally in this case it just happens to be the older applicant. Next time it may not be.

If you decide to choose the younger couple out of fear, both applicants being equally qualified, this will result in age discrimination against the elder applicant. There is no way to be right aside from choosing the one you believe is the best fit.

Do not allow fear mongering to influence what is best for your investment. 

Direct quote from HUD.gov, stating that owners and managers may set reasonable occupancy limits outside

governmental limits. Of course your limits cannot exceed governmental regulations. It further goes on to state that if there is a case of discrimination brought, and you do have nongovernmental occupancy limits, they will determine id it is done to unreasonably limit or exclude families with children (protected class).

Of course, this is federal and your local laws may differ, and in fact, there is some states that have laws making it illegal to set your own occupancy limits. Its good form to assume any advice given on here may nto comply with your local laws until you check.

"On the other hand, there is no basis to conclude that Congress intended that an owner or manager of dwellings would be unable to restrict the number of occupants who could reside in a dwelling. Thus, the Department believes that in appropriate circumstances, owners and managers may develop and implement reasonable occupancy requirements based on factors such as the number and size of sleeping areas or bedrooms and the overall size of the dwelling unit. In this regard, it must be noted that, in connection with a complaint alleging discrimination on the basis of familial status, the Department will carefully examine any such nongovernmental restriction to determine whether it operates unreasonably to limit or exclude families with children."

Link below to fact check me. Its on page 7257 (the third page of the linked PDF)

https://www.hud.gov/sites/documents/DOC_35681.PDF

All of this occupancy limit discussion is invalid.

The OP's question is "can I choose the single older person over the younger couple". Unless you are setting a 1 person per bedroom limit and it is only a 1 bedroom SFR then it is irrelevant.

Members of Illinois REIA, including me, use Rent Perfect for tenant screening. They perform a nationwide search for the following: credit score, evictions, prior addresses going back a decade or so, criminal history and so much more.

First you set up an account with Rent Perfect. We give our members a link so the one time cost is only ninety-five cents ($0.95) you then can set up rental requirements for your unit and the software tells you if the applicant meets your requirements or why they don't. If they don't qualify all you need to do is check the box and Rent Perfect sends out the denial letter for you.

The applicant pays $35.00 direct to Rent Perfect and requests their own tenant screening. The applicant agrees to let Rent Perfect share this information with you. When they do this it is considered a "soft pull" and does not impact the applicants credit score.

If your municipality does occupancy permits they will set the maximum number of occupants in a unit. You can then tell potential renters that the city will only permit X number of occupants and that they would not get an occupancy permit from code enforcement.

What I have heard some landlords do is set the rent based upon the number of occupants. Such as Base rent is $500.00 for 2 adults and 2 children and $50.00 a month for each additional occupant. I have never done this myself.

When choosing among applicant's always time stamp their submission. Then you should choose the first qualified applicant instead of cherry picking.

Set your rental criteria up front and stand fast. Don't give in cause it has been empty to long.

Originally posted by @Thomas S. :

I personal always choose the applicant that would be the best fit for the unit in question. You do not want someone that you know is a bad fit.

You need to exercise good judgement and not be afraid in making your choices. Remember this is your property not the governments.

In your example if you believe the older individual is a better choice based on their personality and how that may impact your property you are in fact not selecting them based on age at all. It is only coincidental that they happen to be older. 

You are confused as to why you are choosing one over the other. Your choice has nothing to do with age, you made it about age in how you posed your question on the forum. You choose the individual that will have the lowest impact, coincidentally in this case it just happens to be the older applicant. Next time it may not be.

If you decide to choose the younger couple out of fear, both applicants being equally qualified, this will result in age discrimination against the elder applicant. There is no way to be right aside from choosing the one you believe is the best fit.

Do not allow fear mongering to influence what is best for your investment. 

well said. Additionally when you manage your own property you need to be able to work with that tenant.