If you’re reading this post, this situation is probably familiar:
You started marketing one of your properties, and lots of prospective tenants called you and/or came to the showing. Several tenants seemed interested, and out of those, a few applied to live in your property.
Then, you realized something. All of the applicants seem like they would be great tenants.
While this can be seen as a good problem to have since it’s better than having no applicants at all, it still puts you in a difficult spot. If you’re facing it right now, you’re probably asking yourself:
How am I supposed to decide between multiple tenants who seem like a good fit, and how can I do so without being accused of violating the Fair Housing Act?
Read on, because today we’re going to go over everything you need to know to make a good decision and avoid landing in legal trouble when choosing which qualified tenant will live in your property.
Tips for Choosing Between Multiple Qualified Tenants
Revisit your written list of criteria.
As a landlord, you should have a written list of criteria you use to determine whether or not a tenant is a good fit to live in your property.
If you don’t already have one, you create one based on the requirements you have for every tenant you place in one of your properties. Here are some of the things you might include:
- A minimum acceptable credit score
- A requirement to have never been evicted
- A minimum acceptable monthly income amount (for example, you might require the tenant to make 3x more than the monthly rent amount)
- A required number of good references
Of course, you’ll want to customize your list based on your property and preferences. You can learn more about what to include on your list here.
Once you have your list, make sure each tenant you’re considering meets your criteria. You may be able to eliminate a tenant or two based on your list alone, which will help you narrow down the pool of qualified tenants.
Using a written list of criteria when you make decisions about which tenants to choose is important because it can help you avoid discrimination lawsuits. Just make sure your list of criteria is compliant with the Fair Housing Act. That means you can’t choose a tenant based on race, religion, and other specific qualities.
Also, make sure you’re consistent about the criteria you require. If you make an exception for one tenant but not for another, you could easily be accused of discrimination.
To learn exactly what you can and cannot legally do under the Fair Housing Act, check out this page.
Check all references.
We’ve already established that your written list of criteria should include a specific number of required references. But are you calling and interviewing those references every time a tenant applies to live in your property?
If not, you should start doing so right away. Interviewing a tenant’s references can help you figure out how that tenant will really behave while living in your property, regardless of how qualified they seem on paper.
Here are a few good questions you should ask every potential tenant’s references:
- Were there any late rent payments? If late rent payments were a regular issue in the past, they will probably be a regular issue in the future too.
- Did the tenant receive any noise complaints? The last thing you want is a noisy, disruptive tenant who trashes your property and annoys the neighbors.
- Was the property well-maintained by the tenant? If severe damage occurred in the past, watch out – the tenant will likely treat your property poorly too.
You’ll also want to ask the reference whether or not they’d rent to your prospective tenant again in the future. If the reference says no, you should avoid renting to that tenant.
Don’t be swayed by money alone.
Maybe you’re considering two tenants but feel faced with a dilemma due to money. The first tenant can move into your Montgomery County property this week but only barely meets your minimum qualifications and has paid rent late a time or two, while the second tenant is extremely qualified and has a stellar rental history but will need to wait a month before moving in.
Which tenant should you choose in that situation?
If at all possible, you should choose the second one. Yes – you might miss out on some quick money due to not renting out the property immediately, but the better tenant will be worth the wait. That’s because you’ll feel confident knowing your property will be well-maintained and rent will be paid on time every month, making your job as a landlord much less stressful.
The lesson here is this:
You should prioritize long-term benefits to your career over quick cash. You’ll thank yourself later when you have high-quality tenants in your properties who make your job easy and enjoyable.
Decide on one selection method if multiple tenants are truly equally qualified.
For example, you may want to pick the tenant who has the highest credit score since good credit typically means the tenant is responsible.
Or, you could take a “first come, first serve” approach and rent to the qualified tenant who submitted their application first.
Whatever method you decide to use, make sure it’s fair to your prospective tenants and compliant with the Fair Housing Act.
After you decide on a tenant, protect yourself.
You need to document why you picked one tenant over the others every time you make a decision. That way, you can protect yourself from lawsuits.
Make sure you pick one selection method to use consistently when you’re faced with multiple qualified tenants. That way, your documentation is consistent and it doesn’t look like you made unfair exceptions for specific tenants.
Also, send a letter to the tenants who applied for but did not get the rental property. If they failed to get the property due to their credit score, you must let them know because of the Fair Credit Reporting Act. If they were denied for other reasons, explain those reasons in your letter and clearly state the criteria used to make your decision.
If you have any doubts about whether or not you’re compliant, you may want to consider consulting a local Montgomery County attorney or further researching the laws that apply to you. This might take some time and effort on your part, but it will be well worth avoiding a lawsuit or tenant conflict.
If you’re feeling overwhelmed just reading this post and would rather avoid the tenant screening process altogether, consider partnering with Bay Management Group. We help landlords in Montgomery County and the surrounding areas eliminate unwanted responsibilities and get the best possible return on their rental property investments. Contact us today to learn more!