The real estate market is a very competitive business. For a landlord, it is normal to receive a huge number of applications from potential tenants who are interested in renting a property. While this is great news for property owners, it can be difficult choosing the best tenant. Having a number of qualified applicants to choose from gives the owner power in being selective to rent the property for tenants who fit a list of criteria. This dilemma can sometimes become a problem for owners who get confused because of an inability to select an applicant when many fit the profile of a perfect tenant.
Complying with the Fair Housing Act
Some owners who are inexperienced in the real estate market make errors in their listings. One of the primary mistakes made by owners is that they fail to narrow down their criteria. The narrowing down of criteria should be based on the Fair Housing Act, which makes it illegal for owners to be selective based on race, color, religion, sex, or disability to name a few.
Related: 6 Landlord Laws and Concerns You Should Be Aware Of
A fair and equal qualification criterion for tenants should be based on credit score, rental history, income, employment history and criminal background. It is easy to make tenants aware of the minimum requirements set for each area by stating it in the listing website or on printed paper when viewing. An owner can also ask tenants about these areas directly if they are inquiring by phone or email.
- Credit Score: A credit score gives the owner an overall summary of a tenant’s financial situation. A tenant with a low credit score doesn’t mean that they’re unqualified to be tenants, but in order to consider one tenant with a bad credit score, the rest with a similar rating must be considered. However, owners tend to favor tenants with a good credit score because of they are more financially stable.Related: These New 2017 Regulations Could Help You Have A Good Credit Score
- Rental History: Rental history is one of the most important criteria an owner evaluates. The references a potential tenant can show to a property owner can be the determining factor of an agreement with the owner. References show that a perfect tenant can pay the rent on time, be well mannered and finally responsible in taking care of the property of the owner.
- Tenant’s Income: The required income of a potential tenant is important to establish criteria that could eliminate many undesired applications that can’t cover the rent requirements. Most owners request that the rent of a property be one third or less of a tenant’s income.
- Employment History: Having a stable job is important for a landlord because it shows that a tenant will have a source of income to pay rent. This can come in the form of a job contract or payment slips from the employer.
- Criminal History: Checking criminal history varies from state to state. Some states don’t allow discrimination against people convicted with a crime unless the crime involved violence or anything that makes them a liability to the property.
Having this list of requirements to make the selection process easier will surely eliminate many unnecessary applications for you as an owner. However, even after this screening and selection process, many people will still fit all the criteria, and the owner has to come up with a selection strategy that doesn’t discriminate.
First Come, First Serve
This is considered the easiest selection process, where the owner basically rents the property to the first qualified tenant. This selection system makes it simpler for the owner to overcome the thinking process of choosing a tenant. First come first serve is the most common method used by owners.
Related: New Seattle Tenant Law: First Come-First Served
Strength of Application
For an owner, there is always the better candidate that ticks the boxes of the requirements. The strength of a tenant’s application could be the deciding factor for the owner of the property. For example, if two potential tenants have submitted their applications and both qualify based on the requirements set by the owner, select between them based their applications. One applicant might have a stronger financial application in terms of credit score or income which makes them an owner’s perfect tenant.
The process of selecting the perfect tenant is not a very complicated for owners; but it is imperative that they set minimum requirements that will protect them financially. Choosing the tenant with a good reference from previous landlords should be a requirement. A good reference gives the owner a clear indication of the person they will be trusting with their property. But while the selection process between many applicants can be draining to think about, it is also a blessing.