How to choose between 3 qualified tenants

Question

James Free · Answer

Send the other two my way :P

Linda S. · Answer

@Mike Dricken,

Check your state laws to see if there's anything that dictates who you should pick.

If it doesn't say anything about order, I really think you need to go with who you think is the best fit for the home.     Does the home fit their needs, both short term and long term?   How is the job stability?   Who do you want to work with if you're self managing?   While everyone might be qualified,  it's up to you who is the best fit for your home, as it's your business and who you will be working with!

Also-- I wouldn't end the others completely until I had a signed contract and security deposit!

Lynn McGeein · Answer

It's in my application that unit goes to first qualified applicant to pay full security deposit, first month's rent and sign lease.  I don't choose one, then give them time to decide.  You lose too many other good applicants while waiting for them to perform.

Ned J. · Answer

I they are all truly equal in regards to my "hard" criteria....credit, income, background check etc, then I go to my "softer" criteria...... who has a better chance of being more long term, and then my gut from talking to them. Who applied first also has some role. Then I pick one and give them a vey quick deadline to transfer $$ and sign lease....or I quickly move to the next

I've been tempted to throw out a "bidding war" but think that starts things off on the wrong foot....kind of bait and switch.

No matter how much you screen, you will never know for sure until they are a tenant for some time....you goal is to minimize risk....

Jim Adrian · Answer

@Mike Dricken

You need to define your criteria in writing and stick to it.  Create a point system or something.  Here are ones I have collected from BP.  First come first service works well as part of the process.

On time for   appointment

BROUGHT NECESSARY   ITEMS: Identification, application information, references, application fee,   holding deposit...

Filled out   application completely and truthfully

Able to verify all   of the necessary information

Able to pay full   amount of rent and deposit

Sufficient monthly   income of 3 times the rental amount

Verifiable income   and employment

Stable income or   employment for a minimum of _____ months

Financial obligation   of no more than _____% of income

Satisfactory credit   history (no bankruptcy)

Provided credit   references

At current address   for a minimum of ______months

Gave proper notice   to current landlord

Gave proper notice   to previous landlord

No prior evictions

No problems with   previous landlords

Deposit fully   returned (none withheld for damages)

No complaints or   police reports regarding disturbing the peace, etc.

No significant   violations of a previous rental agreement

No pets or is   willing to sign a pet agreement and meets additional pet criteria

Non-smokers

Has a Delinquency   Rate less than 45% based on Credit Score Analysis performed by Tenant   Background Search.

Has a credit grade   of B or credit score of 620 or higher per Tenant Background Search.

Ross Denman · Answer

@Mike Dricken we have this happen fairly frequently. I think the worst was a real estate attorney and a retired NBA professional who both wanted a house. The NBA professional was going to pay for 12 months in cash (about $36k) but would only be renting for 12 months as they were building a home. The attorney was willing to sign a 2 year lease and ended up staying for 3 years total.

Here are some things to look at:

Income. Who has the most income? If they get laid off, divorced, permanently injured, etc., who is likely best positioned to handle things in the best manner. Income may play in to this.

Credit. Do all of them have perfectly, unblemished credit? Just because they all have a 600+ credit score still doesn't make them the same. Look through the credit history and try to understand their ability to honor obligations.

Debt. Did you look at the debt of the tenants on the credit history? These can be car payments, credit cards, student loans, medical bills, etc. Ensure that they are not swimming in debt. They may make plenty of money, but it may very well be allocated elsewhere.

Rental history. Contact their previous landlords to see if they had issues with late pays, lease compliance concerns, or any other issues.

Lastly, you can make them compete. You can let them know that you have several interested parties and that you will have to figure out who best to rent to. You may find that one is willing to pay a little more or sign a longer term lease.

The most important thing is to be careful not to discriminate or violate equal housing laws (decision based on age, race, religion, etc.) Ensure that you can validate a decision in black and white if challenged.

How to choose between 3 qualified tenants

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