Real Estate Investing Forums

Real Estate Investing => Rehabbing, Fix and Flip, Rental Properties => Topic started by: johnnyg on January 09, 2007, 04:09:15 pm

Title: reasons for not selecting as tenant
Post by: johnnyg on January 09, 2007, 04:09:15 pm
I know that there are fair housing laws but do you need to inform people why they were not selected to occupy my rental? Do i need to esablish  a checklist of reasons to turn someone down and then i can say they did not fit my criteria.I dont want to break the law but i also dont want to rent to a person whos car is filled with garbage wheres gang clothing and is very intimidating.  What do i tell them my reason is with out breaking the law.

Thanks
Title: Re:reasons for not selecting as tenant
Post by: kdhastedt on January 09, 2007, 04:19:15 pm

There's a whole list of reasons that you can't deny someone housing:

Race, creed, nationality, sex, marital status, family size, etc...

But there's also a list of reasons that you can...unemployed, don't meet the income criteria, etc., etc.

You probably should contact the Housing office in your area (rules vary from state to state)...to see if there are specific rules for your area.  

Also, you need to know that there may be specific rules if you don't rent to them based on the information in their credit report!

Keith
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 09, 2007, 06:01:59 pm
Johnny,

We have a company policy concerning our tenant criteria.  That makes is very easy to deny people based on those criteria.  A written policy can also be used in court if you are ever sued by a tenant.

Good Luck,

Mike
Title: Re:reasons for not selecting as tenant
Post by: Frank Chin on January 09, 2007, 06:33:35 pm
What I do is:

- Always market my rentals at least 10% below or more so I get 50 applicants coming and at least 12 applications.  Why?? I tell everyone I wished I can rent to them, but because of of the demand 99% gets turned down.

- Treat everyone with the greatest respect, and give them no reason to suspect discrimination.

And my criteria for selecting the tenant?? Vacancies kills me financially, and I have to pick tenants that based on my experience, would stay the longest. Unfortuantely, that is not something that I can quantify.

Examples:

- I tend to shy away from the highest paid, because they tend to stay the shortest. And when I make exceptions, I have problems. Once I was forced to rent to a young fella making 110K/year, because everyone else had bad credit. He's moving in with a girlfriend he just got pregnant. I also knew he moved away from home for a year and moved back home with mom, and mom came ot see the SFH with him.

I knew he wasn't going to stay long, but are the above reasons valid to deny him a rental?? In my book yes, and he actually stayed barely a year, just as I thought. But can I put that in a policy manual for denying a rental?? In other works I don't want folks making 100K a year, who just got a girlfreind pregnant, and who saw the place with mom??

- Had a 1BR apartment, with turnover every 6 to 9 months, I was tired of young professionals with perfect credit, who always get promoted, transferred, one big reason for moving, and pretty young girls staying a few months, and found a boyfreind!! I was tired of painting cleaning, showing the place several times a year

I decided I wanted an ugly woman, in a deadend job, preferably a mature women.

I picked thru 50 applicants and found an ugly 50ish waitress that worked in the same place for 20 years. She wound up staying with me for close to seven years.

Tell me.

A rental broker asked me the type of ideal tenant I'm looking for. What do you think he would say to me if I told him I'm looking for an ugly women with a deadend job?? But that's exactly what I was looking for. And What if I tell them I don't want a good looking professional, with perfect credit, and high pay.

Think I should get locked up??

Title: Re:reasons for not selecting as tenant
Post by: johnnyg on January 09, 2007, 07:52:47 pm
mike

any chance you can share that tenant criteria with me.

thanks again
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 11, 2007, 06:31:09 am
Johnny,

We don't accept anyone who:

1. has been evicted in the past 5 years
2. has had their utilities shut off in the past year
3. has had any felony in the past 5 years
4. has had more than 2 misdemeanors in the past 5 years
5. has had ANY drug activity in the past 5 years

In addition, I look at the credit report for evidence of recent credit problems.  I do not use a score.  I also do an employment check and check with their past 2 landlords.  Finally, I judge them based on their appearance and character as Frank said.

Good Luck,

Mike
Title: Re:reasons for not selecting as tenant
Post by: Frank Chin on January 11, 2007, 07:14:17 am
Good points Mike.

I might add I check the ID's AFTER they fill out an application because people with problems often run to small property owners to rent, figuring no one would check. Most of the time, they're right.

In fact, in my last rental, had a Nigerian gentlemen filling out an application, and instead of showing me W2's, pay stubs, usual stuff that most people bring along. showed me a bank account with 80K in it.

Rather then being impressed, I asked him to bring his wife and brother, which according to the application would be living there. Says his wife won't be over from Nigeria for a few months, but will bring his brother in a few days.

When asked for his driver's licensed, claims he left it home.

A few days later, bought his brother to fill out an application. On completion, I noticed his surname was different than his brother. The explanation now is plans have changed, and this is his nephew.

Again, I asked for ID's, and the second man produced a license that's different than the name on the application. The explanation is that he use his "official name" at work.

Needless to say, the first man forgot his license again.

So, check ID's, and stories. Many times, I don't even go with credit, eviction, background checks when ID's are suspect, and stories sound fishy.

 
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 11, 2007, 07:42:46 am
Frank,

AMEN!

Here in Ohio, I eliminate about 90% of the potential applicants on the first phone call.  I find it incredible that people are that bad, but they are.  In my area, a huge percentage of the population of the lower class tenants are criminals, liars, drug addicts, drunks, and do not pay their bills.  These people make a career of living on public assistance and taking advantage of weak landlords.

I had one woman who I denied because she was a criminal.  I told her that there was an active warrant for her arrest.  She insisted that I wasn't telling the truth and wanted to have proof.  I told her to meet me at 5pm and I called the police.  They also met with us at 5pm and she had the opportunity to spend a little time reflecting on her stupidity in jail.

Mike

Title: Re:reasons for not selecting as tenant
Post by: Bluemoon06 on January 11, 2007, 08:47:58 am
She wanted to have proof.  I told her to meet me at 5pm and I called the police.  They also met with us at 5pm

LOL  she got her proof.
Title: Re:reasons for not selecting as tenant
Post by: Frank Chin on January 12, 2007, 07:32:51 am
Mike:

You're right about screening over the phone. We do a casual conversation over the phone, and interview them on site, and screened out quite a few scammers over the years when the stories didn't match.

One reason for turndown we didn't mention is "lying on the application"

But, catering to a more affluent, and a more litigious group here in NYC, I'm careful about the fair housing laws. In fact, have an acquaintance that runs a group here that hires testers to pose as renters to verify complaints. I even contribute to that goup. LOL

One common practice is to not invite minorities to show the rental, instead saying its rented. Another is to not take applications from minorities. Then, many feel that if they came first, it's lilke they took a number, and they get first crack, and if not, then its discrimination.

I normally do weekend open house showings, and just tell everyone calling to come on by. I'll be there anyway. It serves two purposes. Folks feel that they were not denied a chance to see the place, and with reasonably priced rents, the place gets crowded, and I can reasonably say to everyone "I know you'll make a great tenant, and I wish everyone is as nice as you. and I wish I got 50 nice apartments like this to rent out, unfortuntately, I have to pick ONE tenant this weekend".

If a "tester" comes by and hears this, what can he say??

Years back, being a little more naive, I let some applicants know they're the first or second ones coming by. No more. They get upset if they are not considered before others, and if they complain, might have a good case.

Not long ago, I advertised a rental that came up, and someone called 7:30AM one Saturday morning, woke me up, and asked if he was the first caller. I answered "yes, you are the first one today, but I have a few applicants already". He sounded surprised at this and said "I've been following the rental ads for a while, but this is the first I've seen your ad, so how could I not be the first??".

Actually, he was right, I lied, and he was actually the first one, but I didn't want to get involved in having to consider him, and give him a reason to deny him an apartment.

I thought quickly, and after determining his ethnicity by his name, said "Oh, I advertised in the local Chinese papers a week earlier, and perhaps you didn't see it there".

Of course he didn't

And for good measure, I told him that while I'll be showing the place from 11:00AM that day ,I made a few appointments already, it'll be crowded and if he can come by around 4:00PM." By then, I'll should have a stack of applications filled out.

He did come by, and after seeing the crowd, and applications I have on hand, said "my chances are not that great then". I nodded. I doubt he'll file a fair housing complaint.

Sometimes, I even take a stack of completed applications from a prior showing to make the case that I got applicants on hand already.

So, this is how I keep ahead of the fair housing police.

 
Title: Re:reasons for not selecting as tenant
Post by: Cate on January 12, 2007, 08:20:09 am
Mike,

You crack me up . . . I truly laughed out loud.  Can't wait to use that one and help someone 'reflect on their stupidity' . . . in jail.

Cate
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 12, 2007, 09:00:41 am
Cate,

I'm "blessed" with a lot of funny stories from my wonderful tenants and their soap opera lives.  However, as I'm sure you know, many times they aren't that funny at the time.  Right now I'm in the process of evicting a Section 8 tenant.  She's a young girl with a baby who had no criminal history when I accepted her.  Now, she's doing Herion and running a whorehouse from her apartment.  The earliest court date I could get was Feb. 6.  If I wasn't numb to all the stupidity.....   :'(

Mike
Title: Re:reasons for not selecting as tenant
Post by: henryinma on January 13, 2007, 02:51:24 am
There is that classic line that past performance is no indication of future performance so there's only so much screening that you can do to help.

Also another book I was reading says that that you never deny anyone, just say that you need further information to process their application and according to the author, they usually never get back to you in time or know that they lied and don't follow it up.

Another way to discourage applications is to charge an application fee, say $20-$30 to run the credit check. Non refundable. Lots of people take applications but then won't fill it out. You can also have a section that asks them how much money they have in the bank. If they don't have adequate reserves, you can then say they don't meet one of your guidelines.

Oh yeah, my most recent story that was somewhat "funny" was a tenant who said " I forgot that Feburary was such a short month". As I seem to recall, February has always had only 28 or 29 days max. How do you forget that?
Title: Re:reasons for not selecting as tenant
Post by: ElephantNest on January 13, 2007, 08:04:56 am
Does anyone have any apllications they could share with me? I have what I feel to be a fairly solid Lease, and Drug Addendum, but no applications.

Thanks so much.

Steve
Title: Re:reasons for not selecting as tenant
Post by: kdhastedt on January 15, 2007, 09:07:16 am

...check your e-mail.

Keith
Title: Re:reasons for not selecting as tenant
Post by: ElephantNest on January 15, 2007, 12:08:06 pm
Thanks so much, Keith. I really appreciate it.

Steve
Title: Re:reasons for not selecting as tenant
Post by: kdhastedt on January 15, 2007, 12:44:17 pm

Does that work for you?

I moved away from Louisiana (Shreveport-Bossier) in September...summers there are just too freakin' hot!

Keith
Title: Re:reasons for not selecting as tenant
Post by: rlack72 on January 15, 2007, 01:11:23 pm
Credit score alone can eliminate 90% of my applicants.
Title: Re:reasons for not selecting as tenant
Post by: ElephantNest on January 15, 2007, 01:46:19 pm
Looks like a great start, thanks a ton!

What about credit score? How do I get a score from a potential tenant? What about background checks? How do I get those done?

Thanks


And I know what you mean about hot, it's mid January and it's almost 80 degrees today. ARG.

My day job is owning a landscape/lawn company, so I know all too well how miserable summers are. Hopefully, with a few smart investments, and a little time, I can move more towards full time investing, and get away from the grind of dirt work. 24 years of it, I'm ready for a change, lol.
Title: Re:reasons for not selecting as tenant
Post by: kdhastedt on January 15, 2007, 02:05:36 pm

I use www.tenantcredit.com -- they will sell you the credit report and background check relatively inexpensively.  Never rely on a tenant to provide you with a credit score!  

Louisiana is actually pretty good for REI...i was buying for $40 - 75K and renting for $650 to 850-900.

Keith
Title: Re:reasons for not selecting as tenant
Post by: rlack72 on January 15, 2007, 02:14:53 pm
I use www.mrlandlord.com. On the left hand side under Landlord services/tenant credit reports.
Title: Re:reasons for not selecting as tenant
Post by: Bluemoon06 on January 16, 2007, 03:53:45 pm
I just got a new one 20 minitues ago.  A lady called me and said she was sitting in front of my house and wanted to see it.  I asked her when she wanted to see it, and she said she was sitting in front of it right now.  I asked her if she wanted to make an apointment to see the inside and she said "well I am sitting in front of it now".  I asked her and she actually said 3 different times that she was in front of the house now.  That is a prime reason to NOT rent to her.
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 16, 2007, 05:36:04 pm
Blue,

So True!  If a person has to rent it today, they aren't worth a nickle!  I had some moron call yesterday that was being evicted BY HIS OWN PARENTS and needed an apartment by Friday!  Do you think he would make a good tenant?  I had another one today that needed a house right away because she was being evicted from another local landlord (for non-payment of rent)!  I swear that I'm going to publish one of those Who's Who books.....Who's Who of Morons in America!  I'm in the process of meeting them all... one applicant at a time!

Mike

Title: Re:reasons for not selecting as tenant
Post by: Serio on January 16, 2007, 07:32:08 pm
Mike,

I know that your requirements for tenants and that you get rid of most of your tenants on the phone, but what do you say to them to end the call?  "Sorry we don't accept tenants who have been evicted in the last 2 years."

Something like that?
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 17, 2007, 06:56:59 am
Adam,

Yes, I am very direct with the applicants, whether in person or on the phone.  I simply tell them that we don't take anyone who has been evicted in the past FIVE years (or whatever the reason is).

Mike
Title: Re:reasons for not selecting as tenant
Post by: Frank Chin on January 17, 2007, 08:00:29 am
It's almost what I do.

In the initial phone call, most ask about my criteria, and the usual answer is "we do background, credit, employment and eviction checks" Without being very specific, I would add "if you have any problems in these areas, the chances are low due to the volume of people seeing it".

Some may still ask "can I still see it"?? My answer is "you're welcome to come, but if you have many places to look, decide if you got the time".

The trick is, I never turn any one away.

The tricky part is some people ask about the racial makeup of the area, and my answer is "it's a good area, I see all types of people coming and going, and generally, it's a very safe area, the schools there are very good"..

Since I don't discourage everyone from coming, I let them disqualify themselves if during the interview, if the applicant doesn't sound right to me, I would say "no problem with you leaving an application with me, but since the chances are low as I have quite a few applications on hand (show them the stack I got) I wouldn't suggest you leave all that personal information you have to provide laying around here.

Most of the time they would agree and say "you'r right".

Rarely do I have someonse insisting on my processing an application as I make it clear I have dozens received. Usually, if I say "the other people we're looking at came by first", that does the trick.

Once I did have someone complaining about the neighborhood after driving around and said "you said it's a nice neighborhood, and I see all THOSE PEOPLE walking around".

Since I treat everyone one coming by as a tester I said "I'm sorry you feel that way, but THOSE PEOPLE didn't bother you, did they"??

Bottomline.

One should be aware of "fair housing laws", but not paronaid about it if everyone coming by is treated with dignity and respect.
Title: Re:reasons for not selecting as tenant
Post by: propertymanager on January 17, 2007, 08:51:57 am
Frank,

I agree with you.  That's why we have written screening criteria and I tell all the applicants our screening criteria.  If a tenant wants to accuse me of discrimination, they won't have a case.  I can point to our written criteria and say "Joe wasn't accepted because he was evicted 3 years ago and our written policy is to disqualify anyone who has been evicted in the past 5 years".

In addition, we charge a $25 non-refundable application fee.  Most people will not spend $25 when they know they are going to be denied.  However, there are enough people who will that the application fees can be a nice source of lunch money.  I have had as many as 8 people plop down their $25 before finding someone who met our criteria, even though they were clearly told what our criteria was before they placed their application.  

Mike
Title: Re:reasons for not selecting as tenant
Post by: henryinma on January 17, 2007, 11:10:17 am
I think the application fee is the way to go. The only problem with saying you have a stack of applications is that sometimes you don't when the market is slow and then what do you do when they call back a couple of weeks later? They don't always remember who they called so it could be awkward if you say that and it's not true.

Also you should never say it's a safe area. Just a big liability issue. If someone were to break in, you could be sued because saying it's safe is seen by courts as a warranty. I'd say if they were worried about crime, check with the police department, they have the most current statistics.
Title: Re:reasons for not selecting as tenant
Post by: Frank Chin on January 17, 2007, 02:51:39 pm
Actually, I ran into a slowdown only two out the last 25 years, and when it happened I had to improvise.

There's been times when I had no candidates under consideration, but with applicants who submitted applications wanting to know about their status.  What I did was I lied and told them that we are processing a (non existent) applicant, while waiting for qualified people to call.

We also ran ads the following week, and the week after, and applicants who follow the ads want to know why we're still running ads. The story we told was several applicants are under consideration. and while we're waiting for more info from them, and our normal procedures are to continue running ads when no one is yet approved.

Usually this works

It was only one time that even this didn't work. We had no qualified applicants and only one applicant who wanted it badly. called every day, and we were not able to establish grounds  not to rent.

A tattoed motorcyclist, with no real job, is moving in with the daughter of a billionaire industrialists owning several businesses in Brazil and the USA. She has a trust fund, plus an allowance form dad, and her documented monthly income is several times that of most working people.

And trust fund money is even better than "employment income", and I can't find any arguments against it.

Neither she nor here boyfriend had bad credit, in fact she had excellent credit, never been evicted. Our only objection is this guy is out of place in the neighborhood, and the tenancy may only last a few months, as it's obvious he's mooching off a rich girlfriend.

Finally, I concluded that it made no sense to hold the rental open looking for the ideal tenant who'll stay for a few years. I explained to this couple we were processing the other applicants, because they were family with children and would stay a few years.

As I said, these families didn't really exist.

The boyfriend said "Oh no, you're wrong, I plan to be here a few years". I shook my head and said "no, you won't last a year". We wound up renting the place to them.

I went by to collect the rent each month, and each month he laughed at me saying he's still there. On the tenth month he made a bet with me he'll be there over a year. I thought I was stupid of me taking on the bet.

Well. what do you know, his girlfreind threw him out on the eleventh month, and I went by with a smirk on my face to collect the bet. As he was moving, I explained to him that I know more about when and if a tenant would move better than the tenant himself.

She moved soon after.

After they left, the market improved, and I was able to get my usual "stack of applications". But you're right, from time to time, there's a slowdown.