E-Renter News

Is it Legal to Reject?

If you’re a landlord, you must stay current on federal, state, and local laws that cover access to fair and equal housing. The federal Fair Housing Act prohibits discrimination against tenants based on race, religion, marital or family status, color, national origin, sex or disability. Many states also prohibit discrimination based on sexual orientation.

But what about the tenant applicants who dress or present themselves in a manner you consider inappropriate?  Certainly everything is subjective—some folks can’t have enough tattoos and others can’t stand them. But what the FHA and your local/state government considers discrimination is anything but subjective. You cannot reject an applicant for rental housing if they fall within any protected group.

So are body piercings, loose or revealing clothing, tattoos, and other personal appearance choices considered protected? No. A landlord may reject a tenant for any reason—including clothing choices and body adornments—other than those listed by the FHA and your local and state laws.

Landlords should be cautious, however: if you are rejecting tenant applicants based solely on their appearance, and they are also of a protected class, you could be asking for an accusation of discrimination.

When faced with an applicant whose appearance you just don’t like, but who passes your entire tenant screening process with flying colors, you may just have to adjust your concept of what is acceptable—especially in this market. You might just be surprised that, despite your preconceived notions, the tatted, pierced young person before you is your most pleasant and responsible tenant ever!

Choose the Right Tenants and Manage them Properly

Landlords love to commiserate on the challenges of renting property—like plumbing leaks, constant painting inside and out, flooring replacement, appliances breaking down, heat and air conditioning systems quitting.

But these are all building issues, and even though they are a big part of the rental property business, they can be managed. The even bigger headaches we hear about come from the people side of investing in rental property—managing tenants and their issues:

• Paying rent late
• Damaging your property
• Breaking leases
• Ignoring the rules
• Making too much noise
• Illegal activity in your rental units
• Eviction hassles
• Cleanliness

Most landlords we know agree that tenant problems are far and above more aggravating than building problems. Perhaps they forgot that the landlord business is first a people business. If you’re not doing a good job of managing your tenants, you might need to brush up on your people handling skills.

And most tenant problems can be avoided before they start, by following two rules: 1. choose your tenants wisely, and 2. manage them properly.

Choosing the right tenants starts with making your property attractive so that people want to call it home. Next, advertising your property with well-worded ads designed to appeal to your target market (without discriminating), and when the phone starts ringing, pre-screen your potential tenants to make sure they can afford your rent. Require a thorough application and let applicants know you always conduct tenant background checks. Screen every applicant, every time.

Once you choose your ideal tenant, communicate clearly—and often. Your lease should spell out exactly what you will and will not do for your tenants. It should also list your expectations from them. Do not let your tenants think you are a pushover, or they will test your limits. Let them know you enforce your lease and your rules fairly and consistently with each and every tenant.

Let your tenants know you are a hands-on landlord, that you will be on the property often to check on things, and that they can always call on you for emergencies or other needs. Give them incentives to stay, and take immediate action if they break the rules or are neglecting their responsibilites.

Where to Find More

What do you do when every applicant you bring in does not pass your tenant screening process? How do you fill a rental vacancy when you can’t seem to find a good applicant?

Try new ways to advertise your rental unit. Be creative. If you’ve always done newspaper advertising, try online ads. Craigslist.org has become the go-to place for landlords to find tenants and for tenants to find homes to rent. Perhaps your area has a community “trading post” type of website where you could also advertise your listing.

Blanket the area around your rental with fliers. Think about the best possible tenants, and put a poster or flier in the places they congregate. If your rental is near a university, post in areas where the teachers and professors hang out. If it’s near a hospital, post a notice in the employee’s lounge. Be sure to obtain permission first!

You can try coffee shops and breakfast places to post your ad, too. And many grocery stores, day care centers, and co-ops have community bulletin boards.

Don’t forget about signage. Put up a new, clean sign that can easily be seen from the sidewalk or street. Don’t be tempted to use a ratty or beat-up sign—if you don’t care enough to use a nice sign, you’ll attract tenants who don’t notice or care about such details, either.  And be sure your phone number is legible.

Try hosting an open house. You can show your rental unit to a number of possible tenants at once—and if your place is not appropriate for any of them, they still might tell their friends and family about it.

Word of mouth is the best form of advertising—so don’t be shy about telling everyone you come into contact with about your vacant rental unit. Your dentist, barber, hairstylist, or the person who waits on you at the hardware store might know the perfect tenant for you.

Just because times are tough and it’s more difficult to find quality tenants does not mean they’re not out there. Be patient, increase your efforts, and keep trying—and you’ll fill every vacancy with quality tenants.

Cash, Check, or Charge?

“Show me the money!” is a mantra many landlords employ. But do they really mean “show me the check?” What is the best tender for landlords to require from their tenants?

Accepting cash for security deposits or rent is not a good habit for landlords. Cash can make you a target for crime—especially if you are known for collecting rent yourself. Carrying around large sums of money is just not the way you want to conduct your business. Besides, do you want the type of tenant who must pay their bills in cash?

Still, you may have good tenants who prefer to pay bills out of a cash account, or who are rebuilding their credit. It is reasonable to ask for rent payment in the form of a money order—which takes the risk off of you and puts it on the tenant. Keep in mind, though, that stop payment orders are available for money orders, too—in case they are lost or stolen. Don’t allow a new tenant to move in until the payment for their security deposit and first month’s rent has cleared your account.

Desirable tenants are stable, have regular income, and bank accounts. They are accustomed to paying their bills by check. While accepting personal checks can be risky, smart landlords always conduct tenant credit checks, so they are aware of any bounced check situations. Again, it’s best to wait until a personal check has cleared your account before handing over the keys to your rental property. Or, you can take the check to the bank it’s written on and have it certified. That way, you know the funds are available and are actually held until the check clears.

Online rent payment is becoming more popular. Some of your tech-savvy tenants probably cannot remember the last check they wrote. They pay their bills and do their banking exclusively online. Rent payment service providers allow landlords to set up accounts and receive tenants’ payments online through credit cards or e-checks.  While convenient to both parties, landlords should evaluate the return on the investment—since these services are not free. But if you're trying to fill vacancies in this competitive rental market, then offering online rent payment is one way to differentiate yourself, while attracting the best tenants.

Important Guidelines

It is vitally important that landlords and property managers apply objectivity when choosing tenants.  The law establishes that people have the right to live where they choose. At the same time, you have the right to run your business in a way that makes sense--and makes you a profit. As a landlord, that means you can choose to rent to tenants who fall below your criteria for affording your rent, taking care of your property, and not breaking laws or your lease agreement.

But you cannot apply different criteria to different groups of people; for example, you cannot run credit checks on one group and not others. To be objective, landlords must handle each tenant applicant as though they did not know  their race, gender, family situation, religion, or disability status.

Valid and objective reasons for turning down a tenant applicant include:

• Bad credit history

• Lack of solid job history

• Insufficient Income

• History of evictions

• Lack of references

Invalid, subjective reasons for turning down an applicant include:

• Don’t like the way they look

• Tattoos and/or body jewelry

• They have children

• They dress differently than I do

• Had a bad experience with another tenant from their country

• They don’t speak English

Remember, establish your requirements before you ever see a prospective tenant—or you can risk discrimination accusations. And, if you must turn down an applicant who is a minority or otherwise protected by the Fair Housing Act, document the tenant screening procedures you followed—and make sure they are the same you apply to every potential tenant!

Don’t be Fooled by False IDs

Identity theft is a growing crime in the U.S.  Thieves steal another person’s identity for financial gain or to access a good credit rating. Most landlords and property managers require their tenant applicants to provide identification, but how do you know that the driver’s license or state ID that your new tenant provides is genuine?

Landlords beware: just because the photo on Jane Doe’s ID matches the face of the applicant in your office, it doesn’t mean it’s legitimate. Mary Smith, the identity thief, could be pretending to be Jane Doe, the financially responsible, long-term employee with a stellar credit rating, who actually lives several states away and has no idea that her identity has been stolen.

A typical scenario: professional identity thieves rent your property and skip town in the middle of the night, owing you months of rent or even stealing appliances, fixtures, or other property. When you attempt to track down the tenant, you discover the person who lived in your rental unit was not the person on the application.

These days, landlords and property managers must protect their interests, using every tool available. Identity checks should be a standard part of your tenant screening process.

The Pros and Cons of College Rentals

If you own rental property in a college town, it’s up to you whether or not you choose to lease to students. Knowing what to expect can be very helpful!

Here are some considerations if you own or are thinking about purchasing rental property in a college town.

The Pros:

• You have a captive audience. Students have to live somewhere, and most of them will be around for four years, giving you a large pool of applicants to choose from.
  
• Student housing is often in short supply. Depending on your location, there could be great demand for your property.
  
• Not all students are poor. Many parents foot the entire bill for their kids’ college, including housing. If your tenants’ parents have deep pockets, the rent should be paid on time every month. Put the parents on the lease as co-signers.
• Not all students are partiers. Many actually like quiet. If you’d rather rent to the studious types, you can—just do your due diligence and screen carefully.

The Cons:

• Many students are messy. It doesn’t matter if they’re boys or girls—mature or not. Younger people often put cleaning their apartments or homes at the bottom of their to-do lists, especially if they are busy with school, work, and studying.
  
• Students often have parties. However, you do not have to allow loud parties on your property.
  
• Students might not care for your property as well as older people and families would. But you might be surprised. Some landlords report fewer problems with damaged property from students than from other categories of tenants.
  
• Students might not inform you of plumbing, electrical, or other structural issues immediately. Keep the lines of communication open, inspect your property often, and never assume your younger tenants will take the initiative to inform you of problems.
  
• Summer means vacancies. Assume ten months of rent when considering your profit/loss, and if you can rent over the summer, it’s a bonus.

Renting to students is not much different from other tenants— your tenants will treat you and your property exactly as you allow them to. Proper screening, move-in / move-out procedures, and complete documentation are musts. And remember to always let your tenants know the rules, along with the consequences for breaking them, right up front. It’s up to you to set the expectations from the very beginning.

How to Target Your Efforts

It makes sense that, as a landlord, you want the best tenants you can possibly find. But that’s not an easy task. Targeting your efforts will go a long way to placing the best tenants in your rental unit.

First, write a compelling ad. Attract attention with terms like “amazing,” or “quiet,” or “upscale.” Promote your rental unit’s most desirable features. Mention the neighborhood, school district, and any unique features, such as hardwood floors, a fireplace, decks, or patios—these are all must-haves for your ad. Be creative!

Your ad should state the rent, plus the number of bedrooms and bathrooms, any parking information, and whether the unit is on a bus line, part of a complex, duplex, or single family residence. Do you accept pets? Say so in your ad! More and more landlords are allowing their tenants to have pets in their homes. Whether you do or not, state it in the ad. Each of these details will help narrow the pool of prospects down.

Make sure you indicate there will be a credit check and background screening as part of the application process. This will help eliminate those applicants who know they won’t pass the background screening.

Once you have your ad written, then what? It depends on the location of your rental and the demographics of the tenants you want to attract. If there is a neighborhood grocery store or coffee shop, place a flier with the ad information on their bulletin board.

You can submit your ad to Craigslist.com, or your local newspaper’s online edition—or both. You can have it printed in the paper, as well. Many landlords enjoy the ease of using Craigslist, for the option of having interested parties contact you through the site’s secure email or your phone. Responding to online advertising indicates your prospective tenants have internet access. This is desirable for many landlords.

Signs on the property often work really well, since many people drive through neighborhoods they like in search of “for rent” signs. Be sure they look nice, are easily read from the street, and make it easy to contact you.

The right advertisement can help you attract just the tenants you really want!

1. Reduce Tenant Turnover: Keeping a good tenant is much easier than finding a new one! Pre screening can help save you the time, trouble, and expense of eviction—and prevent empty rental units.
   
   
2. Reduce Your Risk: Landlords must do everything possible to mitigate risk. Knowing whether or not your new potential tenant has a criminal background is essential. Avoid potential litigation by other tenants or neighbors by preventing convicted criminals from occupying your property with tenant screening.
   
   
3. Increase Your Profit: Pre screening helps you avoid tenants who pay late, have poor rental history, or previous evictions on their records—all of which can adversely affect your profit.
   
   
4. Improve your cash flow: Only lease to those who can actually afford your rent. The only way to know for sure is to do a tenant credit check!
   
   
5. Sleep Better at Night: Knowing you have a tenant with good credit and sufficient income, who hasn’t caused previous landlords any problems, and who will take good care of your property far outweighs any expense associated with tenant background screening and credit checks. Your peace of mind is worth it!