Tenant Qualification Scorecard

[Brian Volland]

tl;dr Soon to be newbie self managing. I'm scared to death of lawfully having to choose a borderline acceptable tenant over a highly qualified one. Made a scorecard to pick most qualified; pick it apart.

So as I start closing in on my self set date to buy my first residential multifamily, my biggest fear is with tenant screening. I've read through many of the books, blogs and threads regarding screening tenants and picked up a lot of good info along the way. 

My biggest fear overall is getting an applicant who meets our minimum criteria and has paid for their background/credit check but I KNOW will cause me a headache. Or have one applicant be significantly better than another, they both meet minimums, but the lesser of the two turned in their application first. Some of you make rejecting or picking the better applicants look easy. From a legal standpoint, I haven't been able to find a way to do this, but I did pick up the idea of having a "scorecard". 

Keeping in mind that this will likely be a class "C" property (A-E scale), we've tried to lessen the risk of getting bad tenants or having to pick a worse tenant just because they turned in an application first by making it policy to only show on weekends and implementing the below scorecard. Hopefully this will allow us to legally "rate" all tenants who turn in paperwork on a given day.

If you have any tips, I'd love to hear them. If you have the time to be able to do so, please look over the scorecard below and let me know what you think.

Minimum Qualifications

• qApplicant MUST be 18yrs or older
• qApplicant Must Have A Minimum Credit Score of 580 From All Three Credit Reporting Agencies
• qApplicant Must Have Verifiable Income and Make At Least 3x Rent Monthly (Joint Income if Married) (Proof of Income Required)
• qApplicant Must Have Good Reference from Current/Past Landlord(s) (or Supervisor if previously Owned Home)
• qApplicant Must Have NO Current/Past Evictions, Judgements, Collections, Or Liens from Current/Former Landlords.
• qApplicant Must have valid, non-expired state-issued photo ID
• qApplicant Must have A Social Security Number
• qApplicant Must Possess an Open Checking Account
• qApplicant Must Not Have Been Convicted of Felony/Violent Crime/Drug Related Crime Within the Past 7yrs
• qApplicant Must NEVER Have Been Convicted of A Sex Crime or Be On Sex Offenders Registry
• qTotal Occupancy Must Not Be in Excess of 2 Persons Per Bedroom

Disqualifiers:

• qRuns a Business From Home (Online Sales of Art/Crafts exempt)
• qNo Employment or Employed Less Than 2 months
• qSection 8
• qIncomplete Application
• qIllicit Drug User
• qHas More Than Two pets
• qHas Exotic and/or venomous pets

Positive Qualifiers

• q(+5) Has Credit Score between 580 and 619
• q(+10) Has Credit score 620+
• q(+10) Has Rental History of 1 year and Landlord Had/Has No Issues/Complaints
• q(+15) Has Rental History of 2-4yrs and Landlord Had/Has No Issues/Complaints
• q(+20) Has Rental History of 5yrs+ and Landlord Had/Has No Issues/Complaints
• q (+10) No Late Payments Over Rental History
• q(+10) No Broken Leases Unless Health/Safety Issues [Exercising Military Clause Okay]
• q(+5) Same Employer 1yr
• q(+10) Same Employer 2-4yrs
• q(+15) Same Employer 5-9yrs
• q(+20) Same Employer 10yrs+
• q(+10) Current Manager/Supervisor States Only Good Things About Applicant
• q (+5) Has Checking and Savings Account
• q(+10) Will Pay Online
• q(+5) Will Pay Via Money Order
• q(+10) Has Renters Insurance
• q(+10) Has Total Move-In Funds Available Today
• q(+10) Positive Valid References
• q(+10) Vehicle Interior and Exterior Clean

Negative Qualifiers

• q(-5) Is a smoker
• q(-10) Currently Owes Back-Due Child Support
• q(-10) Currently Has Delinquent/Negative Accounts
• q(-20) Has Filed For Bankruptcy Within Past 2yrs
• q(-20) Current Employer Raises ANY Concerns
• q(-20) Asked for Upgrades/Changes/Modifications Prior to Acceptance
• q(-20) Has Lied to Prior Landlords/Property Managers
• q(-20) No Prior Rental History

[Matt W.]

Nothing seems out of line to me, and I don't think anything in your list is discriminating against a protected class. Just from personal experience, we have gone to a pass/fail model where our criteria will determine if an applicant is approved, and then their factors of credit score, collections, pets, etc will determine the security deposit amount. That way there is no discrimination/deciding between 2 applicants at all, and we can protect ourselves by charging more deposit for what our criteria perceives as higher risk applicants.

Your chart lists a lot of points to add and subtract which is a lot of work. You also run into the issue of picking an applicant that you 'like' better but maybe has a lower total score after all is considered. How will you chose if they have the same final score, or are 5-10 points apart?

Also, are you going to be able to look into every applicants car to see how clean it is? What happens if you deduct 20 on one app but can't see the other applicant's car for whatever reason?

Finally, deducting for someone asking for modifications doesn't work for me personally. I'd take it as an opportunity to negotiate a higher rent or better lease terms overall. Certainly deduct if they are really pushy or don't agree to an increase in price, but deducting just for asking seems a little harsh to me.

YMMV of course.