One of the hardest parts of filling your rental vacancy is choosing an applicant. Too many choices can be a great problem to have, but it also means that you’ll have to reject some of the applicants. Here’s what you need to know about accepting and rejecting applicants.
First of all, it’s important to treat all applicants the same. In other words, use the same criteria to make your decision and follow the same process. After you have some solid leads for your property, your next step is to gather information in order to make a decision. It’s a good idea to have your applicants (anyone over the age of 18) fill out a rental application and follow up by screening them. Screening reports can contain valuable information that can help you make your decision.
Another powerful tool is the rental showing. Most prospective tenants will want to see the property in person to make sure that is is as advertised. You’ll want to take advantage of the face-to-face meeting to get to know your applicants and find out if they’re a good fit. If you’re not sure what kinds of questions to ask, take a look at our article, Tips to Interviewing Rental Applicants.
Reasons to Reject an Applicant
- Smoking Habits – Tobacco smoke can cause lasting damage to carpets and walls. Smokers are not a protected class, so you do not have to rent to them if you have a no-smoking unit.
- Pets – Remember, there is a difference between pets and service animals, so keep this in mind when interviewing. If you thinking about allowing pets at your rental, take a look at our article, What Landlords Need to Know About Pet Policies
- Bad Credit Report – Most recommendations say that a credit score of 620 is a good indicator of stability, but be sure to take a look at the full report in order to take all the financial indicators into account. Need help on reading a credit report? Take a look at our guide.
- Insufficient Income – You’ve probably heard of the 40% rule when it comes to a renter’s income.
- Lack of Quality References – Be wary if your renter can’t provide references.
- History of Evictions – It’s important to see how recent past evictions occurred, as this could be an indication of current stability.
Classes protected by Fair Housing
The Federal Fair Housing Act protects people from discrimination when they are renting, buying, or securing financing for any housing. Landlords and property managers cannot discriminate against applicants for the following reasons:
- National origin
- Familial status
- Check your local laws for additional protected classes.
Rejecting is hard to take, and it’s not so easy to give out either. As a landlord, it’s always good to have clear, prompt communication with all of your leads. When meeting with prospective tenants, make sure that they know that you are meeting with other people, as well. If they understand that there are many applications to choose from, then they will not be surprised if they are not chosen. Don’t hoard applicants.
If you are denying an applicant based on something that you found in a screening report, there are a couple of things to keep in mind. The Fair Credit Reporting Act ensures that consumer report information is as private and accurate as possible. The act has guidelines for how landlords should notify applicants when they are denied based on information obtained in a credit report. You can read more about this here.
In April, the U.S. Department of Housing and Urban Development issued a statement and provided new guidelines on how information about an applicant’s criminal records should be fairly used. While people with criminal history are not a protected class, there are questions about whether or not rigid rental policies that disqualify any applicant with a criminal charge are discriminatory. It’s a complex topic and there will undoubtedly be more discussion about it. You can read more about it here.
Once you know your obligations as a landlord, then you can embrace the power of “no.”
Now comes the fun part! Once you’ve found your new tenant, reach out to them as quickly as possible. Keep in mind that they have probably been checking out other rentals, so it’s better to hold off on turning away any runner-ups until you know for sure that your first choice is ready to sign the lease.