by Andrea West
Posted on 2016-02-09 14:08:57
When you consider renting your property, it is smart to first consider your criteria for prospective residents looking to live on your property.
While Smart Housing isn’t able to give specifics of who you should or should not rent to, we thought we would provide some general ‘best practices.’
Maximum Occupancy - You will want to decide what your highest acceptable occupancy rate will be. Anyone with more than your criteria would be considered unqualified. Also look at what zoning laws in your area allow.
Criminal History - It’s a smart practice to reject prospective residents who have been convicted for any type of crime that is considered a serious threat to your property and others living in the area.
Credit History - A renter’s credit is a representation of their character. It is common for prospective residents to be denied if they have filed for bankruptcy within the past eighteen months. If the resident has declared bankruptcy, any charges must have been discharged at least one year from when the credit report was run. On top of each of these criteria, it is also important that all collections accounts are shown as having been paid in full.
Rental History - There’s a helpful quote that says, “The best indication of the future is how someone behaved in the past.” If someone has a troubled tenant history in the past, it is not wise to invite that person to live on your property. If a resident has had a history of evictions, defaults on lease agreements, untimely rental payments, or outstanding balances, this would be considered a resident who is high risk. Make sure you do a rental reference check.
Income Requirements - A good rule of thumb is look at the monthly gross income of the potential resident and if the amount is three times higher than the monthly rent then this is a good indication that they will be able to make their payments. If the ratio isn’t quite so favorable, you may want to consider requiring a larger deposit amount up front.
Employment Requirements - We strongly recommend verifying employment before allowing a tenant to move into one of your properties. It is also smart to collect information of previous work history for the last six months minimum. If a resident is a recent college graduate, we recommend receiving proof of enrollment or graduation. For self-employed residents, ask for a current CPA-prepared financial statement or their most recent tax return.
Identification - All prospective residents over the age of eighteen should provide identification at the same time they submit their application.
$25 Non-Refundable Application Fee - An application is usually associated with an application fee. Some landlords/managers forego this practice. It’s up to you. However, it can help you know which applicants are seriously considering your property if they are willing to pay the application fee. We call it ‘putting some skin in the game.’
Overall, we want to emphasize that every landowner/manager should be committed to equal housing opportunity. It is illegal to discriminate a prospective resident for any of the following reasons-
Source of Income
Your property is yours to protect. The criteria highlighted in this article should give you some ideas of how to protect your property from violent and/or financially irresponsible individuals.