You have worked hard to own, prepare, and market your rental property. You want nothing more than to find a great tenant who will love the home and pay rent on time.
Hi, I’m Becca, I make owning and managing rental properties simple and landlord life fun. Today I will show you the MOST IMPORTANT FIRST STEP YOU MUST TAKE BEFORE APPLICATION SCREENING, (and even showings) CAN BEGIN.
You must have a pre-determined resident selection criteria. (at least in my humble opinion)
What exactly is a Resident Selection Criteria (RSL)?
1) An RSL is a pre-determined set of standards that every tenant must meet to be approved to rent your property.
2) An RSL is basically a checklist that you can provide an applicant, and you can use yourself. You can tell an applicant, “if you meet these criteria, you will be approved. If you don’t, you will be declined”. No guesswork or hunches!
Why is a Resident Selection Criteria (RSL) so very important?
1) An RSL can save you from “falling in love” with a potential tenant because they seem great, and missing critical information on the application. Sometimes we really like an applicant, but if we don’t have a set criteria to measure them, we may end up with a nightmare. I can’t tell you how many times I thought I had found the “perfect tenant’, only to run the application and compare it against my RSL to realize they are total duds. It’s when really connect with a tenant that your RSL is SO important. It saves you from yourself!
Us Mamas have big hearts. But learn from my mistakes, almost every time I have made an exception on my RSL it has bitten me in the tail! Like the time I had an applicant that did not meet my required 3x’s the rent in gross income, but I approved her because she had perfect credit. I assumed that her money was tight but she was good at managing her budget. Wrong, she had just been living with family and not been paying any bills so it was easy to have great credit. When she added in rent and utilities, she could never keep up. Not good for her, or me!
2) An RSL helps you to avoid Fair Housing Claims that could cost you tens of thousands of dollars. If you treat everyone the same and your RSL does not discriminate, then you are not discriminating – simple as that.
What Should your RSL have on it?
Here are the main items you may want to consider putting in your criteria:
-timeframe an approved tenant must pay the deposit and take possession of the unit. (do you have a requirement on how soon after approval a tenant must pay the deposit, we do)
-minimum income required and what you will accept as proof of income (how much money do you want an applicant to make? Do you have standards on how they can verify this income, we do.)
-minimum credit score (is there a minimum credit score you will accept? (We have a minimum)
-eviction history (would you ever accept a tenant who has been evicted? If yes, under what parameters. Spell that out)
-criminal history (be careful! see below)
-prior landlord reference (do you want to require a reference from a prior landlord? We require it)
-pets (cats, dogs, exotics, breed restrictions, or none? Spell it all out.)
-argumentative (yes, you can deny someone because they are rude, just make sure you document, document, document)
-smoking (are you going to allow smoking in the house? How about on the property? Spell it all out.)
What should your RSL NOT have on it?
-Anything that would eliminate a potential tenant simply because they are part of a protected class (race, color, religion, sex, national origin, handicap, or familial status).
-Blanket denial for criminal records or felony without consideration of the type of crime and length since conviction. Disparate Impact makes statements like “No Felony History” discriminatory. You must take into account the type of crime, time since conviction, and risk to property and neighbors. Disparate Impact is a hot topic that is still unfolding in courts so check back here for updates!
-Denial of Service Animals or Emotional Support Animals. Want to learn more about Service Animals and Emotional Support Animals? http://rebeccap5.sg-host.com/7-super-simple-tips-to-clarify-service-animals-for-landlords/
Now that you know what an RSL is, customize your own and hold every applicant to the same standards. An RSL is your best tool to avoid discrimination suits or accidentally letting in a “really nice” tenant who is a nightmare!