Tips for Landlords on Selecting Qualified Tenants for Rental Property

While selecting the perfect tenant from qualified applications may seem a simple exercise, it has its landmines that might just blow you up with unexpected lawsuits. There is a raft of criteria that the Fair Housing Act makes illegal if deemed to have been used in selecting one or declining any other qualified applicant in the rental process. 

The Fair Housing Act addresses the sticky issues of apparent discrimination based upon an applicant’s color, race, religion, gender, nationality, disability, or family status. Before you walk this minefield, look at the following tips to help you in selecting a qualified tenant for your rental within the law.

Set the screening criteria

Set the screening criteria at the beginning of the process and let all applicants know before the selection exercise what to expect. You can engage an experienced Boulder rental property management company for this job. Evernest, Flex Realty and Corvias can help you set a criterion that is compliant with both federal and subordinate housing laws. Following selection criteria strictly and consistently ensures fair play for the applicants and a good pick for the landlord.

Typical qualification criteria will review an applicant’s minimum credit score and monthly income for credit risk and financial ability. A tenant’s rental and eviction history is another element in the screening process that helps determine their rating and reliability in future property lease obligations. The landlord must also do a background check on the applicant within state law guidelines to avoid those with violent criminal records or drug convictions before contacting the landlord and professional references.

Abide by the law

Before you start sifting through the qualified applications, familiarize yourself with local ordinances, state law, and the Federal Fair Housing Act. Following these statutes strictly in the selection process will protect you against unexpected discrimination lawsuits from unsuccessful applicants and ensure fair play to all. Take care not to exclude an applicant based on their nationality, race, color, religion, gender, disability, or family status.

Ensure consistency in whichever method you use to select from multiple qualified applicants and treat everyone equally in the process. It is recommended to document every reason for declining each application for future scrutiny and reference in case any tenant raises a discrimination complaint with authorities. At the end of the exercise, send out letters to all unsuccessful applicants explaining specific reasons why their bids failed against the selection criteria used for the selection.

Prioritize good credit

An applicant with a good credit rating demonstrates the financial responsibility and stability that a landlord looks for when selecting the perfect tenant. As a landlord, you will want to verify the applicant’s income and run a credit check to confirm their ability to pay rent timely and consistently. A call to the tenant’s employer can quickly confirm further details such as monthly pay, attendance record, and duration of employment with certified copies of pay stubs.

The tenant’s income must be at least three times the expected monthly rate as a confirmation of the ability to pay comfortably without suffering financial stress. However, an income that is three times the expected rent is not proof the tenant will pay or even afford to pay without stress. Establish the applicant’s debt to income ratio to evaluate their ability to pay and even go a step further to check past evictions, any bankruptcies, or civil judgments against that may affect their credibility.

Check rental history

The only way to check an applicant’s rental history is to talk to past landlords and preferably not the current one. If the applicant is a difficult tenant, the current landlord could be anxious to get rid of them and as such, may not want to disclose this fact to you and scuttle the move. History always has a pattern – what happened before will repeat itself – and that is why a landlord must gather as much as possible from the applicant’s past rental records.

However, every tenant starts somewhere, and you may encounter a first-time renter with all the right boxes ticked. In this case, if in doubt, request for a rated co-signer to the lease that could be a relative or even the employer. Always write down all the questions you deem necessary before calling previous landlords and references.

Criminal background check

You do not want to compromise the security of your tenants, or if it is the only rental, you do not want it used for criminal activities. It is incumbent upon you to carry out a thorough background check on shortlisted applicants to protect yourself and your property as well as your neighbors from possible criminal threats. Criminal data is a public record at any courthouse and contains all categories of offenses.

The main sources for these records include the Federal Court, Statewide, County, Department of Corrections, and sexual offender database searches. These searches could be extensive and time-intensive, requiring the help of a professional tenant screening agency for faster results.

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