Prospective tenant says 3x income requirement is not legal

[Dan McGrew]

Had a prospective tenant share the article below. This seems bogus but wanted to see if others had similar thoughts:

https://boundlessestates.com/new-law-starting-july-1st-landl...

[Russell Brazil]

Quote from @Dan McGrew:

Had a prospective tenant share the article below. This seems bogus but wanted to see if others had similar thoughts:

https://boundlessestates.com/new-law-starting-july-1st-landl...

 Well first are you in California? That article references California.

2nd, I believe it's a misinterpretation of the new California security deposit law which limits security deposits to 1 months rent. So previously if someone needed 2 months security deposit, plus the 1st months rent, they would need 3 months rent to move in. This is completely different from needing to make 3x the monthly rent in income to qualify.

[Theresa Harris]

I can't speak to whether it is legal or not illegal (very different), but as Russell said it refers to California.  The article does say " Alternative Assessment Methods: Consider looking at a potential tenant’s credit score, rental history, and references. These can give you a good idea of whether they will be reliable and responsible."  So you can find out what they were paying for rent previously, if it was paid on time and go from there.  

For some people it comes down to spending-some people can make 3x their rent and still be short money, others could make 2x their rent and always pay on time.

[Lynn McGeein]

@Dan McGrew so in Virginia, for example, source of funds protection means that if they have a voucher or funds come from something else besides employment, you can’t say 3x income for whole amount. More states are changing their laws to accommodate assistance programs. We used to just say we no longer participate in Section 8 program but new laws eliminate that option.

[Dan McGrew]

Quote from @Dan McGrew:

Had a prospective tenant share the article below. This seems bogus but wanted to see if others had similar thoughts:

https://boundlessestates.com/new-law-starting-july-1st-landl...

Thanks Russell. Where did you see it only applies to California? The start of the article says it’s coming to rental markets across the country. I read it again and didn’t see it mention California anywhere. 

[Russell Brazil]

Quote from @Dan McGrew:

Quote from @Dan McGrew:

Had a prospective tenant share the article below. This seems bogus but wanted to see if others had similar thoughts:

https://boundlessestates.com/new-law-starting-july-1st-landl...

Thanks Russell. Where did you see it only applies to California? The start of the article says it’s coming to rental markets across the country. I read it again and didn’t see it mention California anywhere. 

It was legit the first sentence in the article...and the article as been now changed I kid you not. 

Yeah that article is trolling people. There's absolutely not any federal level housing law on this. 

[Dan McGrew]

Thanks Russell! That’s what I thought. Pretty silly. 

[Jim K.]

@Dan McGrew

No offense, but I think you're just too gullible for real estate. You should accept it and move on. I have been both formally diagnosed and medicated in the past for paranoia, and I feel I'M BARELY PARANOID ENOUGH for real estate.

[Jay Hinrichs]

Quote from @Lynn McGeein:

@Dan McGrew so in Virginia, for example, source of funds protection means that if they have a voucher or funds come from something else besides employment, you can’t say 3x income for whole amount. More states are changing their laws to accommodate assistance programs. We used to just say we no longer participate in Section 8 program but new laws eliminate that option.

what I have done with the few rentals i have ( which are A class new builds) we have a fico score requirement of 720.  that seems to work for us.. very few if any folks on public assistance or other means have those type of credit scores. takes us a month or two to find a suitable tenant.  Can you do that in Virginia ?

[Theresa Harris]

Quote from @Russell Brazil:

Quote from @Dan McGrew:

Quote from @Dan McGrew:

Had a prospective tenant share the article below. This seems bogus but wanted to see if others had similar thoughts:

https://boundlessestates.com/new-law-starting-july-1st-landl...

Thanks Russell. Where did you see it only applies to California? The start of the article says it’s coming to rental markets across the country. I read it again and didn’t see it mention California anywhere. 

It was legit the first sentence in the article...and the article as been now changed I kid you not. 

Yeah that article is trolling people. There's absolutely not any federal level housing law on this. 

 I read the same are Russell-so they have changed the article from California to the entire country.  Goes to emphasize, not to believe what you read online-go to the state website and see if changes are coming...I doubt it.

[Jill F.]

There is no federal rule disallowing an income requirement as a multiple of rent and the state of Ohio allows this as does Akron and all surrounding cities where I operate.

[Lynn McGeein]

Quote from @Jay Hinrichs:

Quote from @Lynn McGeein:

@Dan McGrew so in Virginia, for example, source of funds protection means that if they have a voucher or funds come from something else besides employment, you can’t say 3x income for whole amount. More states are changing their laws to accommodate assistance programs. We used to just say we no longer participate in Section 8 program but new laws eliminate that option.

what I have done with the few rentals i have ( which are A class new builds) we have a fico score requirement of 720.  that seems to work for us.. very few if any folks on public assistance or other means have those type of credit scores. takes us a month or two to find a suitable tenant.  Can you do that in Virginia ?

 Yes, I have other "typical qualifications" that applicants must meet, just the 3x income issue is problematic.  I also have updated my application with a section where they can address variances to my "typical qualifications," where they can explain things like an old criminal background record (still states absolutely no evictions) or a divorce that wrecked their credit score.  Haven't been legally challenged on it yet, so no idea how legit it is, but seems to have worked well. I've approved one with a medical judgment, so far, so good, and I've allowed a co-signer where a divorce wrecked their credit.  Otherwise, haven't had to stray from my requirements.  

[James Wise]

Quote from @Dan McGrew:

Had a prospective tenant share the article below. This seems bogus but wanted to see if others had similar thoughts:

https://boundlessestates.com/new-law-starting-july-1st-landl...

 I'd just ignore the tenant and move on to another one.

[Luka Milicevic]

I've seen several versions of this article. I haven't found anything on a credible source and I also haven't seen much chatter about it in the real estate world which lead me to believe it's probably not true. 

[James Hamling]

Income requirements in underwriting a lease is NOT a housing item, it's Commerce. 

So, to ban this, is to ban the measure for underwriting. 

Do you see anyone given an auto loan, mortgage, boat, without confirming financial viability to perform on the conveyed financial burden? 

It's funny how nobody demands regulation to make Escalades more affordable....... 

[John Clark]

Some localities have anti 3x laws ( Cook county Illinois? Chicago?) or have considered them. 

Being fiscally sane is not needed to get elected.

[Henry Lazerow]

I am in Chicago and my brokerage manages over 1300 units in area. The only time you can't require a specific 2x or 3x income is if the renter uses subsidized vouchers. Then you need to qualify off their out of pocket portion ratio/their credit, you can also ask for past landlord references, etc. If you don't want a subsidized tenant they can usually be legally denied by credit.

P.S. For ratios in Chicago on my own units I just go off 2.5x+ and have never had to give a late fee or any issues on the north side units. I also require 2 past landlord references which I call and make sure these are easy going trouble free tenants before signing. The calls are huge and if any pushback on giving me the past landlord contacts I deny them. 

[Colleen F.]

@Dan McGrew every now and then when I advertise a unit I get an email similar to this saying a requirement is illegal, and it is not.  Keep track of your local laws and just ignore these people.  If an actual tenant tells you something that impacts them directly you can explain it to them but I haven't had that happen.

[Jonathan Klemm]

Hey @Dan McGrew - That article looked spamming the second I opened it up!  

I suggest talking to other landlords in your area or up-to-date on the current landlord tenant ordinances

Here in Chicago (Illinois) there is no limitation on income stipulations for screening and as other said, there’s no federal stipulation either.

Like @James Wise, I would move onto the next tenant without blinking an eye!