Once you have gotten past that first phone call from a prospective tenant, you need to then think about how you will determine whether or not that person will make an acceptable tenant. To make that determination, you need rental standards that measure a potential tenant’s qualifications. What are some rental standards that a smarter landlord should and should not use?
Landlords Have Got to Have Their Standards, But…
There are some standards that you cannot and should not use. Using them can get you in a lot of hot water. Avoid using any sort of rental standards that are based upon a person’s physical or cultural characteristics. Using such standards is wrong and often illegal.
What are these types of standards? Standards that are based upon a person’s race, sex, religion, national origin, children, marital status, sexual orientation and disability are a few. The fact that someone is black, or female, or unmarried or has three kids does not have any bearing on that person’s ability to be a good tenant. Therefore rental standards that are based upon such criteria just do not make good policy and can end up costing you expensive fines and legal fees.
Rental Standards to Use
Landlords need to focus their rental standards on criteria that will actually affect their landlording business. Such standards that do not limit your applicant base and reflect a person’s ability to pay, stay and respect your property. These standards are not set in stone, and can be tweaked and refined to reflect your business and market conditions. Here are some suggestions.
Income
If a potential tenant does not make any money, how are they going to pay you rent? Going further, it is not just about making money, but about making enough money to afford your property. The thing to understand is that people not only need housing, but that they also need to eat, stay warm and have a bit of fun. All of that costs money. You as a landlord do not want a tenant that has to make a decision between food and rent. So you need to verify that they have enough income to afford both your rent and other necessities. It does not matter where their income comes from (unless it is from an illegal source), just that they have it. Making two to three times the amount of your rent is often a good standard to use. For example, if your rent is $1,000 per month, your rental standard might be a gross income of $2,000 to $3,000 per month.
Rental History
Does your potential tenant have a rental history? If so, what does it show? Did they pay their rent in full and on time? How often were they late with payments? Do they move every year or do they tend to stay put for a while? We like to see stability and promptness. Of course what exactly “stability and promptness” means to you will vary depending on your market and business style. A college town may tend to have a lot of turnover and thus such a standard will be different from mine. Something along the lines of one late payment every two years and not moving every year may work for you.
Evictions
This is an item you absolutely must check. Has the person applying ever been evicted? A recent eviction is often a standard for immediate disqualification. But an older one with a demonstrated and improving rental history can be different. Again the exact standard will vary depending on your business and market.
Criminal History
Violent offenders are out. If an applicant has been in jail for a violent offense, then the answer from us is no thanks. Not all criminal convictions are the same however and you may not want to give them all equal weight. Does possession of a few joints equal spousal abuse? It is up to you. You can come up with your own standards here as again they will vary depending on the market you serve.
Attitude and Appearance
Attitude means a lot. Being rude and disrespectful often means instant disqualification. If they are going to be rude to you now, imagine what they will be like once they move in. Again, no thanks. Appearance counts as well. A car filled with trash or people with food spilled all over them are major red flags. That filth will move in with them and eventually become your problem. Define standards regarding rudeness, lateness and cleanliness.
Advice From Experience
The above is not an exhaustive list. You as the landlord can add additional standards, such as work history, as you see fit. The key again is to use standards that will demonstrate the ability of a potential tenant to pay, stay and respect your property. Whatever rental standards you decide to use, write them down and keep them handy. Every once in a while someone from the government may want to see them. You will need to be able to show them. Want more great advice like this? Order the book, Advice From Experience today!
What rental standards have you used? Please share with your comments.
