Placing quality tenants is one of the most important aspects of renting your home. The goal is to find qualified tenants who will pay rent on time, follow lease terms, and take care of the home to avoid damages to the property as well as being respectful of the neighbors. While you may feel in a hurry to place a tenant to begin collecting rent, placing the RIGHT qualified tenant is more important. The non-qualified tenant is far more expensive than the cost of vacancy.
An important aspect of tenant placement is to have a solid set of application qualification guidelines. Applying these guidelines consistently ensures that every application is reviewed in the same manner and each applicant is held to the same standard of qualification. This practice will protect you as the landlord in making sure you are following all Federal Fair Housing Laws as well as any additional state and local laws.
Each landlord or management company may have slightly different standards, but should generally be reviewing the following:
While a low credit score does not necessarily mean the applicant will be a bad tenant, there are certain factors to consider
- Set a minimum credit score for all applicants
- Review the amounts and types of debt on the report
- Look at the overall history of the accounts and what is affecting the overall credit score
A strong rental history is often a sign that the applicant will be a qualified tenant
- Ask for the current/previous landlords contact information to do a rental verification
- The number one red flag is a previous eviction, which will likely disqualify most applicants
- Check for a history of late filings
- Always check to see if the applicant owes money to a previous landlord
You want to make sure the qualified tenant has verifiable income to be able to make their monthly rent payments
- Applicants need to submit proof of income: this can be their two most recent pay stubs, most recent tax returns or sometimes a verifiable offer letter from a new employer
- Minimum combined household income should be no less than 3 times the monthly rent
- Consider the applicant’s other financial responsibilities when considering their ability to pay
Keep in mind that having a broad policy of denying housing to a prospective tenant with any type of criminal history would be considered discriminatory under the Federal Fair Housing Act. Things to consider:
- Length of time since conviction
- Number of offenses
- Would the applicant put other tenants/neighbors at risk?
- Would the applicant put the property at risk?
- Does the conviction influence the applicant’s ability to pay?
Bay Property Management Group’s dedicated team of application processors ensure that each application is thoroughly reviewed in accordance with Federal Fair Housing Laws, State and local laws, as well as BMG policy. Additionally, we ensure that applicant information is kept confidential and secure in accordance with the Fair Credit Reporting Act. As a property owner, you can trust Bay Property Management Group to search for the most qualified renter to protect your investment.