Screening| Applicants with no ID/Social | Disabled | Responsiblit

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Screening| Applicants with no ID/Social | Disabled | Responsiblit

Luke H.
Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes

Hello team,

Hope all is well and that everyone had good holidays.

I believe that the screening process is the best tool I have for getting quality tenants in my house and avoiding future headaches. I wanted to get some general feedback and direction on the following situations:
1) I am renting my house out and currently accepting applications.

2) To be fair and honest. I tell everyone that I process apps 1 at a time,  in the order received and do not process 1 until I finish with another one. If I don't process their app, I send them their application fee back.  The fee covers the background checks.

2Q) Is there a better way to do this? I don't mean going online as some applicants don't have computers or emails. I mean, what works for you.

3)I often get applicants that do not have ID or SS# (Houston, Texas).
3Q) Should I even accept an application from them?
3Q)Should I accept an application with passport number and ITIN (Individual tax payer number)?

4) I have an applicant that tells me her husband is disabled and her son will help them build whatever ramps or things they need.
4Q)Feedback on this? As a landlord will the city require ME to handle any special needs or special requests they might have? What if they build a ramp and the city deems it is not up to code, could I get into legal issues here?

5Q)If I don't like a potential tenant, how can I decline them renting the property? I want to make sure I am covered legally, be fair to everyone and follow best practices. Maybe there is some inconsistency in their app or let's say they have all the paperwork but I get a bad gut feeling? Example: I had a tenant I thought might be on drugs (the erratic behavior), but they qualified so i rented the property.  Now, I smell drugs when I go into the house.

Please reach me with any question to help clarify and your feedback is much appreciated.

Thank you

1Reply
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Glenn McCrorey
Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
9y

I rent almost exclusively to special needs tenants but through companies that provide assistance to them.  You do have to allow them to make reasonable modifications but like @Kim Meredith Hampton said, you can require they put the property back to its original condition when they move out.  Since it can be tough to find a wheel chair accessible house for example, they don't like to move once the modifications are completed... so less vacancy and turn over for you.

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  • Nikolas Ferreira
    Flipper/Rehabber · Boca Raton · Member since 2015 · 231 posts · 81 votes
    9y

    following this as well!

    1Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    First forget about being fair and honest. Your first priority is to yourself and your business. Do not even think of applicants as people.

    Wait till you get a few applicants, do the initial interviews and then process them based on the best appearing applicant first.

    You can accept applications without ID or SS# passport etc, but other applications will be better qualified and those will be dropped. Never accept a tenant without a SS# as you can not take them to small claims court.

    Never agree to allow any tenant or family member to do any work on your property. Avoid special needs and welfare tenants by accepting the more qualified applicants based on you screening standards. High screening standards will eliminate most "special " applicants.

    Decline any applicant you choose, never provide a reason, simply tell them their application has been denied. If I don't like a applicants attitude or demeanor I reject them. No one lives in my property that I do not want for any reason. You should have rejected the junky.

    1Reply
  • Luke H.
    OP
    Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
    9y

    @Thomas S.

    Thank you for your input. I appreciate your no non-sense/ strictly business approach.

    Question, I explain that the fee is non-refundable. If I don't process their app for whatever reason should I keep the fee for (driving out to show the property, talking to them, etc)? I have a feeling I already know your answer. Feel free to DirectMessage me your answer

    I usually don't accept apps without SS# and will continue to do so.

    Question. "Never agree to allow any tenant to do work".  If a potential tenant says I will build a wheelchair ramp just say, "No thank you. Sorry, we aren't doing any extra work to the property. Thanks for your interest."
    What if they are already in the house and want to paint a room or add shades to windows?


    I'd would be very interest in any reading materials you suggest, audio, websites, or any processes/forms you can share.

    True story: Tenants that broke my lease to leave early asked me to prorate the rent for the month they were leaving in and asked me if I would return their deposit. I haven't even taken the property back yet when they asked.  When I told them I couldn't answer them, they told me, "I didn't have a heart and it was all business with me." Shake my head!

    0Reply
  • Kim Meredith HamptonBusiness Member
    Real Estate Broker · St Petersburg · Member since 2014 · 2k+ posts · 2k+ votes
    9y

    @Luke H.

    I felt a need to chime in and help with regard to your questions;

    First, either way of processing applications is fine and legal as long as your are consistent across the board and you let all applicants know the process, even better if you have your resident selection criteria with their application. I like to be transparent.

    2nd and probably most importantly, never tell a qualified handicapped applicant that they can't rent or they can't do any modifications to the property, and you can't ask for a higher deposit from them either. If they (not you) want to install a ramp, grab bars in the shower, widen the doorway, they are allowed to do so. After they vacate, if the modifications they did are a burden to the next renters or deemed to awkward to re rent, then you can ask them to put back to original condition. 

    Please be careful with Fair Housing, this can trip up the best of us

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    1Reply
  • Fred Heller
    Real Estate Agent/Property Management · Houston, TX · Member since 2014 · 1k+ posts · 827 votes
    9y

    @Luke H.   Following the above advice from north of the border will likely end with a Fair Housing action against you.

    For your own sake, you should familiarize yourself with the Fair Housing Act and the reasonable accommodation requirement of same.

    You should also familiarize yourself with the adverse action notice requirements of the Equal Credit Opportunity Act and the Fair Credit Reporting Act. You can't "never explain" if your decision to decline an applicant is based on information you received from a consumer reporting agency.

    1Reply
  • Glenn McCrorey
    Investor · Cedar Rapids, IA · Member since 2013 · 494 posts · 407 votes
    9y

    I rent almost exclusively to special needs tenants but through companies that provide assistance to them.  You do have to allow them to make reasonable modifications but like @Kim Meredith Hampton said, you can require they put the property back to its original condition when they move out.  Since it can be tough to find a wheel chair accessible house for example, they don't like to move once the modifications are completed... so less vacancy and turn over for you.

    2Reply
  • Brian Pleshek
    Investor · Hamilton, OH · Member since 2016 · 272 posts · 77 votes
    9y

    @Luke H.

    #2.  This works well and is fair.

    #2Q. You can process their app yourself,  Some background check places allow both tenant and landlord to run the screen with the results going to the landlord.

    #3. You have to be careful with this one.  There is a sub-class of people without SSNs that you can't discriminate against.  For example, those on Student Visas.  See this.  An ITIN number can be used in its place.

    #4.  You can't discriminate against those with disabilities and are required to make reasonable accommodations at the tenant's expense.  A wheelchair ramp would be an example of a reasonable accommodation.  They would have to pay for the installation and removal afterward.

    See this article at the HUD website.

    #5. There are a number of reasons you can get in trouble under the Fair Housing Act.  You should learn what you are and are not allowed to discriminate against.  I put in my requirements that they must have a 640 credit score and at least $xx,xxx of income(35x monthly rent) and non-smoker, and so on.  If they meet all your legal requirements, you should rent to them.  Now there are a few loopholes that you can use but make sure you're not using them to substitute for a protected class.  If they have a messy car, for example, you could determine not to rent to them as that is likely how they will keep your place.  If they are beligerant, condescending, or other bad attitude traits, you could use those as a way to disqualify them.  Make sure you keep records of all applications and reasons for declining their application for at least 2 years(check your local and state laws) so that you can prove why you disqualified a candidate if they bring a discrimination lawsuit against them.

    Good Luck,

    Brian

    1Reply
  • Lynn McGeein
    Real Estate Agent · Virginia Beach, VA · Member since 2012 · 2k+ posts · 1k+ votes
    9y

    I used to try one at a time in order, but ran into issues where they want x hours to sign lease and pay deposit, then don't follow through, while I've lost other, stronger applicants who went elsewhere while waiting. So I gave that up.  Now, they are all told that the first qualified, approved applicant to sign the lease and pay the amounts due at lease signing gets the unit.  After anyone submits my application (which lays out requirements in detail), I send inquiries to employers and previous landlords myself (no fee).  If/when that checks out, I set them up to pay Smartmove directly so I don't have to touch application money as it is too much of a pain to account for and possibly return, anyway.  I do let them know that any delay caused by their employer or landlords getting back to me can hurt their timing, so if they are extremely interested, they should alert all concerned to looking for and replying to my inquiries.  While I have had a disgruntled applicant or two, at least I'm not the one jumping through hoops and losing potentially good applicants while waiting for someone to sign a lease.  Works better for me that way.  And knowing they aren't in the running until I have received landlord and employer responses greatly reduces applications from those who wouldn't pass those tests, anyway.      

    2Reply
  • Thomas S.
    Member since 2016 · 13k+ posts · 12k+ votes
    9y

    I operate in the most tenant friendly nanny state jurisdiction, comparable to CA, and have no issues what so ever in selecting whomever I wish as a tenant without issues. I, unlike your business associates, fully understand my business environment and how government operates. 

    It is quite clear to me that landlords in your state live in fear of both tenants and the government. This is most likely ingrained in their brains and can not be changed. 

    The difference between me and the landlords advising you to "fear the system" is that I know where as they simply assume. I understand how regulations are enforced as opposed to assuming how the fair housing police operate. You will not get a single first hand report of a personal experience of a negative reaction to tenant screening from authorities yet they will continue to spread the fear. This is normal human behaviour brought about through association with others 

    I suggest you adopt the approach to business other Texas landlords advocate as it will be impossible for you to operate otherwise without having to swim up stream. You are in a environment where landlords operate their business out of fear, regrettably, due to lack of knowledge and as such you will have no resources to draw on the make your job easier. 

    Disregard any previous advise I provided.

    2Reply
  • Luke H.
    OP
    Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
    9y

    @Kim Meredith Hampton

    @Kim Meredith Hampton
     I do my best to do what I believe is fair and correct/right. Good to know a bit about what they can do in my property. I’ll review the Fair Housing Act information.

    @Fred HellerLet's say the credit report shows serious delinquency, and public record or collection filed. Do I just say, "The application was declined due to delinquency. thank you for your interest.”?

    @Account Closed
    #3-I will review the link but most screening service require a SS#.
    #4-Will review the site.
    #5- - Let's say the credit report shows serious delinquency, and public record or collection filed. Do I just say, "The application was declined due to delinquency.  thank you for your interest.”?I don’t have a ‘requirements’ form. Will you send me a copy of yours please? Do you give this requirements with the app?

    @Lynn McGeeinI think I will switch to this. It just causes me stress to keep them in order and worry about sending their money back. I don’t have a ‘requirements’ form. Will you send me a copy of yours please? Do you give this requirements with the app? I saw smartmove, but the majority of applicants don’t have an email.

    @Thomas S.
    Your candor is appreciated. I’d like to run my business as smoothly and stress-free as possible.

    1Reply
  • Brian Pleshek
    Investor · Hamilton, OH · Member since 2016 · 272 posts · 77 votes
    9y

    @Luke H.,

    Yes, I would tell them that the application was declined due to the background check.  Many areas require that you provide the applicant a written explanation.  If you are denying them because of information on their credit report, the Fair Credit Reporting Act requires that the you send the applicant an "adverse action notice" advising them that they have been denied rental due to information obtained from their credit report.  You might want to do one anyway even if they are not being denied due to the credit report because if you can provide them with a truthful and legally valid reason as to why they are being denied, it might make them less likely to assume that you have done so based on a discriminatory factor.

    Here is a sample ad I just made up on the spot, but my new property will have something similar:

    House for Rent in Cincinnati, Ohio.

    The house at 1234 Main Street is available for rent. It is a 3BR/2BA ranch style house with a fully finished basement. It features new floors, updated kitchen, two car garage, shed, fenced in back yard and 1950 sq ft of living space.  Appliances included: Stove, refrigerator, microwave oven.  Washer and Dryer hookup in basement.  All utilities are paid by tenant(Gas, electric, water, trash).  Tenant is required to put utilities in their name prior to move in.

    Rent is $1450/month

    Security Deposit is $1450.

    Pet friendly! Conditions Apply. Additional Deposit and rent required.

    {Pictures}

    {Pictures}

    {Pictures}

    {Pictures}

    All applicants will submit application form with $40. The money is used to perform a credit report, criminal background check, and eviction records check from TransUnion. Applications will be processed in the order in which they are received. If the check was not done due to another candidate being selected, having been submitted prior to yours, the money will be returned. If everything checks out, you will have 24 hours to sign the lease and pay the security deposit. After 24 hours, the property may be leased to another party.

    Requirements

    Non-smoker.

    640+ credit score.

    Verifiable gross income of $50750 per year or $4230/month.

    No previous evictions.

    No convictions for violent, drug, or property crimes.

    Good references from all previous landlords.

    Fair Housing/Equal Housing Opportunity

    1Reply
  • Luke H.
    OP
    Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
    9y

    I have an applicant that had an eviction 6 years ago. How far back do you look? Would you be willing to charge more in a case like this?

    0Reply
  • Brian Pleshek
    Investor · Hamilton, OH · Member since 2016 · 272 posts · 77 votes
    9y

    @Luke H.,

    If you have a policy, you need to stick with it or it can be labeled discriminatory.  Your disqualification criteria needs to be objective, not subjective.  If you want to say, "No evictions in the past 5 years", then use that criteria.  But if you have "No evictions ever" as your policy and you accept someone who has one, then you have subjectively decided that you know better in this case and that can get you into trouble with the Fair Housing Laws.

    Personally, I wouldn't accept the eviction from 6 years ago.  Not even 10 years ago.  Why?  One, people don't usually change their habits.  Two, This might have been the only time they were caught.  What I mean by that, is they stop paying, they give excuses to a timid landlord who gives them extra time and extra time and then finally move out when the notice is placed on the door.  Guess what, no eviction happened.  This could rinse and repeat many times in the 6 years since their last one.

    Brian

    1Reply
  • Brian Pleshek
    Investor · Hamilton, OH · Member since 2016 · 272 posts · 77 votes
    9y

    Also, I would put your criteria in writing so that you have a checklist.  That way if you ever pass off your criteria to a property manager, they can use your checklist.  Then when you deny an applicant, just circle the item on the list and make notes/add documentation as to why they failed #Whatever and keep it in your file for 3+ years.  Here is a sample one:

    Sample Screening Criteria

    Brian

    1Reply
  • Matt W.
    Rental Property Investor · Los Angeles, CA · Member since 2016 · 57 posts · 34 votes
    9y
    Seriously, get a written qualification list going. Most of the time applicants that don't qualify will not submit an application. Employer and previous address references should be required. On time payment history and employment verification if they are working should be done. Learn what to ask, and how to ask it to ensure the applicant's friends are not providing those references. 1. Do you accept evictions? If so, how far back? 2. Do you review for criminal background? If so what is or is not acceptable. (Careful with this one, HUD is starting to issue guidelines saying we cannot blanket discriminate by saying "no felonies accepted" and state attorney generals are now suing owners/management because felonies are creating a disparate impact on certain sections of the population. 3. Rent to income ratio? 4. Minimum FICO score? How many positive lines do you require? How many negative lines or collections will you tolerate? 5. Smoking, pets, musical instruments, etc etc etc. You can group or one at a time then, but if you group, what makes one applicant "better" than another if they both qualify for your requirements? The Fair Credit Reporting Act requires a written adverse action letter as far as I know if there is credit run and a denial takes place. Look into this and your local laws. Charge a holding fee (if legal in your state) so the tenant can't back out penalty free and apply it to their deposit balance on move in. The more procedures you have in place the easier decisions will be for you and the more informed your applicants are, the better the pool you are likely to draw from.
    1Reply
  • Amber Gonion
    Real Estate Broker · Hugo, MN · Member since 2016 · 688 posts · 596 votes
    9y
    Someone advocating ignoring fair housing laws on a public forum! How long before a disgruntled tenant or applicant finds this post and reports? It sounds like the person that says they speed 20mph over the speed limit all the time and never get caught because I am not afraid of cops. Fair housing is the law of the land if you don't want to follow it get out of real estate investing or be prepared to lose a lot of money, check your states Secretary of State enforcement actions to see how high the fines that are imposed. The Feds will be there too not to mention a totally legit lawsuit. I think many of the laws are not fair to landlords, but we follow them because it make good business sense. I understand being ignorant of the laws, but just disregarding them is looking for trouble.
    1Reply
  • Luke H.
    OP
    Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
    9y

    @Brian Pleshek, thanks for the screening criteria. I spent a few hours yesterday creating a new rental application from 3 different ones. Includes screening criteria.

    @Account Closed, 1-i do not accept evictions, but this house is in a rough area and the applicants I'm getting are all getting declined.

    2-Yes, criminal background. Usually anything within 5 years. No one with arson.
    3-I only do on high end rentals. no low income. they switch jobs too fast.

    4-FICO (from learning here) will now be +620
    5, no smoking, music, get together, as long as it is within law and I'm not getting calls from neighbors (and I encourage my neighbors to talk to me).
    Yes, I send the Adverse Action letter.


    0Reply
  • Luke H.
    OP
    Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
    9y

    Guys,

    finally found a tenant. took a while, but they had all the paperwork and qualifications.  Happy, even though they have expressed that they are looking to buy a house in 2 years...

    thanks everyone

    0Reply
  • Adam Roberts
    Investor · Fort Worth, TX · Member since 2012 · 209 posts · 37 votes
    9y

    Great info here... in effort not to create a duplicate post, has anyone had luck processing a background & credit check with only a Tax ID number?  I did put a call into smartmove and they do not handle anything but SSN.  I've heard some folks go to a police station and get background checks with a full name and DOB...  but haven't seen evidence of credit/criminal with Tax ID #.

    1Reply
  • Luke H.
    OP
    Real Estate Investor · Dallas, TX · Member since 2013 · 388 posts · 174 votes
    9y

    @Adam Roberts, I was gonna try, but the applicants work verification failed so I didn't get a chance.   If you come up with something please reply to the post.  I'm just asked the online screening service I now use and they said yes, with applicants name, date of birth and current address. if you need their service message me please.  

    1Reply
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