Inexperienced landlord here - did I do the right thing?

Question

So I set my unit up on affordablehousing.com (section 8) and got a call from a market renter. She makes 24/hour (not sure if she works full or part time, didn’t ask) and has 2 kids. Showed her the building and she seemed really nice (although she said it was a bit much that I asked for first & last months rent upfront (no security deposit) she also nit picked slightly about the apartment being dusty (no ones living there currently) but I assured her that I’d be hiring a cleaning company to clean it before she moves in.

The rent I’m charging for this 3 bedroom is 1650 including parking 1 spot in the garage. Electric & gas NOT included.

I did the math, and although she is a teacher for CPS making 24/hr, after taxes she wouldn’t be left with much especially having 2 kids… I simply asked her if she was okay to afford it & that I’m looking for a nice family to live there. I asked her if she had someone else that was going to live there to help her with rent & payments. And she went off & proceeded to call me racist and said I had no right to question her. What do you think? Am I being too picky? I just didn’t think $1650 with 2 kids and paying utilities separately that 24/hr would cut it. It’s cutting it rather close.

Bob Okenwa · Answer

Account Closed

As was stated by @Jeremy Nault, you need vetting standards. Instead of showing people the property and then playing detective, save everyone's time with a clear ad stating the requirements, then a screening phone call. Using 3x the rent as an income benchmark will help avoid people trying to force themselves into thinking they can afford the unit when they may not be able to do so. If you had done this, then this person (likely) would have screened themselves out before asking to see the home.

Linda S. · Answer

Account Closed,

First, let me say-- good job having the guts and the brains to post here!  I love BP, because when I started 6 years go, BP was my outlet for advice.

Second-- NEVER give a reason for rejecting someone, a simple "Thank you for applying, we're currently reviewing applications" is sufficient.. and once you find someone else, you say "Unfortunately, we found another applicant to be a better fit."    NO DETAILS.    You are already treading on thin ice saying "I'm looking for a nice family to live there"-- which implies, her as a single parent household isn't a nice family.  Of course she's livid!  Can you see how that's insanely offensive, and also likely illegal as it discriminates based on familial status?   I would be mad at you too!   I hope nothing was on paper, but also it's now on BP-- that's bad (remove your full last name ASAP!).         If she continues to talk to you, I would just ignore it completely.   You aren't going to rent to her, party is over.  You owe her nothing in the future.

Also, if you're doing section 8--- don't even bother talking about income, or they will take you to the plank!  Section 8 income verification is COMPLETELY different than normal 3x rent/income.    IMO it doesn't make sense, but it doesn't have to make sense if it's section 8.

When I reject people, I often state "Thank you again for applying, unfortunately, this one wasn't a good fit.   Is it okay if I save your contact information if something else comes available?" -- this way it ends it on a positive note, there might be another place that's better.   Some of our absolute BEST tenants, are ones we rejected, but found another place better.   Hope this helps!

Nathan Gesner · Answer

Account Closed as I mentioned in response to your other question, you must educate yourself, sooner rather than later, or someone is going to take you to the cleaners.

Your qualifications should be determined in advance, written down, and included in your marketing.

"Qualifications: verifiable income of at least 3x the monthly rent, credit score of at least XXX, and a Landlord reference for the past 12 months. Without these qualifications, your application will not be considered. Everyone over 18 must apply and pass a credit/criminal background plus our screening. We do not accept smokers or animals."

Something like that. Look around at how others are marketing and emulate them. Your ad should be an opportunity for renters to screen themselves and see if they want to apply or if they're just wasting time. If this woman saw your income requirement, she wouldn't have bothered you. And when she calls you a racist, you can simply point back to the ad and explain that your marketing applies to everyone and doesn't discriminate.

And when someone starts to get ugly, even one call or text message, you need to block them immediately. Don't respond and don't allow them to continue contacting you.

Jeremy Nault · Answer

Hi Account Closed  you started off by saying you listed it as section 8 housing.  Does she also have a section 8 subsidy?  If so that would help her with the rent payments.  While I have yet to deal with section 8 I have heard that people swear by it as it is guaranteed by the government as long as they follow all of the required stipulations. Again I am not an expect in Section 8 so you may want to look into exactly how it works in your area.  As far as an income requirement for your rental, I recommend setting a standard that you follow in order to help combat any potential fair housing issues.  I personally use 3 times the monthly rent when vetting potential tenants.  I hope this helps and good luck with your investing journey!

Jim K. · Answer

Account Closed

I'm not going to pile on, Serene. I suggest you get a couple of books on landlording, weather this storm and learn what you can from it, and move on. But I would suggest you should start learning about your local eviction laws now rather than later. Best of luck.

Jason Andler · Answer

@Serene Alhalabi

1. She doesn't make 3x rent after taxes (general financing guideline)

2. She is trying to withhold payments before even signing the lease.

3. She has already complained about the condition of the unit

And these are only what I can gather from your post.. She will be a problem tenant that takes a lot of your time and likely will be short/late payments.

You cannot make a decision based on number of kids and many other factors or you can face issues with fair housing laws.

Don't try to put yourself in her shoes to determine what they can afford. See #1. Most people have no clue how to manage a budget and that is why they rent.

I understand you're trying to work with her but you shouldn't change your criteria for anyone. Once I let someone rent from me who was making less than 3x rent because they were "close" and claimed to do some work off the books for cash. They stopped paying after 5 months and left the house a mess. I had to do cash for keys and was lucky to not have to evict.

Jonathan R McLaughlin · Answer

@Serene Alhalabi you asked if u made a mistake…I think u did by making the kids and her budgeting ability the centerpiece of the conversation.

It implies—whether you meant this or not—that you might know better how to parent and how to budget. That will get someone’s back up pretty quick.

Rule of thumb is gross is twice hourly so she makes about 48k. If she is a teacher she has insurance, FSAs etc. With two kids she probably doesn’t have too much tax liability. Union contract in a public school. She may or may not want child support to be included on her income profile but that’s a possibility too.

She would be at about 4k a month with hourly income which leaves her about 2k a month for everything else. Not easy, but by no means rare, and she might be justly proud of dealing…can you see how your approach would read poorly in those circumstances?

The conversation you can have with YOURSELF can incorporate all these variables against your pre existing criteria

Rumen Mladenov · Answer

How do you know she makes $24/hr but don't know if it's part time or full time? Just asking an applicant how much they make per hour is not going to always give you a truthful answer, and if you actually requested and saw paystubs, it would be evident whether she works full time or part time.

I require paystubs covering 2 recent months, so I can calculate how much the gross monthly income is. And then I divide it by the rent amount and see what the ratio is - I look for 3x ideally, although I have approved applicants who are slightly under. I never ask about marital status or kids - as long as there are fewer people altogether than the property can accommodate (2x per bedroom +1), I don't want to know until they are either approved or denied. No point in exposing yourself to a potential housing law violation lawsuit.

Paul De Luca · Answer

Account Closed

You've received a lot of good advice here. In short, whenever you get a lead:

prequalify ---->show the unit & get to know them better (if qualified) -----> application & further due diligence----->approve or deny

Kilby Browne · Answer

I am a real estate agent in NYC and New Jersey and without going too deep please be careful.  Individual owners, especially if you live on site are held to different standards. In NYC we use 40X as a general rule of them. What applies for one candidate applied to all. I run credit reports and there are services like NTN that produce a meets. does not meet or conditional meet. This is a combination of credit score and income. There are so many fair housing violations for realtors that I can't go into. Family, source of income, race, etc.In NYC all we can do is ask if the voucher covers the rent. If it does we really can't run credit and try too qualify on income.

I'm happy to chat offline of you would like to connect. But please be careful.

Inexperienced landlord here - did I do the right thing?

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