Tenant selection is perhaps the most important thing a landlord can do. You have heard the saying “One bad apple spoils the bunch.” Well one bad tenant spoils a landlord’s life. Bad tenants will not pay you, will destroy your property and will generally be a thorn in your side and to your other tenants.
So you want to weed those bad tenants out before they get into your property. But, you must be careful with your selection in order to avoid a potential discriminatory claim. To do that you need to establish a set of criteria that you use to rank all applicants. You want to find tenants who can pay, who will pay and who will take care of your property.
What are those criteria? Let’s first discuss what they cannot be. You cannot base your tenant selection on the eight federally protected classes. These are: race, color, national origin, religion, sex, disability, familial status. That means you cannot disqualify someone because they are black, or Jewish or female or because there is a child involved. These criteria in no way affect anyone’s ability to be a potential renter, so do not even think of using these criteria. It is just wrong and it will get you in some serious trouble.
So, back to the question, what criteria can you use to select your tenants? Frankly, it could be almost anything except those criteria listed above. But here are some of the more common items used:
- Enough income to cover rent, utilities and living expenses. Many will use a standard of a monthly income equal to three times the amount of rent.
- A steady work history with good references.
- Decent references from past landlords.
- A decent credit score.
- A history of prompt bill payment.
- No recent bankruptcy or evictions (last 5 to 7 years).
- Criminal or arrest history.
Using the above criteria, you should be able to determine fairly well if an applicant can pay the rent, will pay the rent and if they will take care of your property. Is it 100% effective? No, nothing is when dealing with people but it does work pretty well.
Some will include other criteria based upon their own personal experiences. I know of landlords who will not rent to lawyers. Lawyers like to sue. They are not a protected class and you can discriminate against lawyers as long as you are consistent. I know another who will not rent to people with motorcycles. Their experience has been that the motorcycle will end up in the living room dripping oil come winter.
You will most likely need to tailor your criteria to your particular circumstances. Depending on your location, your tenant pool may not have decent credit scores, or bankruptcy may be very common. Whatever criteria you do decide upon, be sure to write them down and be sure to evaluate everyone against those written criteria. Keep a record of your evaluation process. If someone ever does come back on your screaming discrimination, you will have records showing otherwise.
