Property Mnanagers- select tenant with or without owner approval?

Question

Looking for some insight from both owners who have used property managers and those of you who are property managers. We manage a portfolio in LA that is very boutique, mostly mom and pop landlords. We have given owners final say on applicants but it can result in a lot of back and forth and extended process. We are considering cutting that out of the process and telling them we will select and approve moving forward to streamline things. What are your experiences having been on either side and what were your policies? We are also anticipating owners could select different criteria for approval to their property than what our current company standard is.

Mike Giallanza · Answer

You're the PM, the expert, the one with experience renting homes out year in and year out. No owner involvement in the decision process. If you need another reason, you set yourself up for a Fair Housing violation when you involve a client.

Percy Matsunaga · Answer

@Christina Russo

I have a property in CA and we have a property manager in place. We elect not to be involved with the final say. The property manager has done a superb job getting the right tenant and we feel that they know there business. In my opinion, I would let the property manager do their job. That’s what we pay them for so we can enjoy the rest of the day without interruption. Good luck!

Bjorn Ahlblad · Answer

@Christina Russo back when I had a PM there is no way I would have gotten in the way of their processes. They screened applicants, approved the tenants, signed leases, inspected the units, collected rents, arranged mtce and repairs, etc. I never met tenants or even knew their names. I had a portal I could look at anytime and they sent me a 1099 at year end.

Today all my units are within an hours drive and we self manage.

Adam Martin · Answer

I currently self manage but as I scale will be hiring a property manager.  When I do it is because I would want to be hands off and that is something I expect they take care of for me.  I would however expect to know what guidelines they use up front and would be upset if they lowered them without my knowledge.

Christina Russo · Answer

Some really great feedback all! Thank you! It is looking like the owners should definitely be out of the decision making process.

Dick Rosen · Answer

I would never allow property owners to approve or disprove any applicants! You are endangering both yourself and your clients to Fair Housing violations. You are the professional that should understand the fair housing laws so it's your job to make those decisions for the owner.

Slightly different criteria from owners is tolerable such as pets or no pets, income 3 times rent or 4 times rent, as long as these things are spelled out in writing with the property listing and on the rental application.

Mike McCarthy · Answer

As an owner who doesn’t currently use a PM, I would want to trust the PM to make the decision. BUT I would want some way to verify or understand that they are making good decisions.

If I were designing your process, I would want an email sent to me (as the client) saying ‘we placed a tenant for property x on date x. Per our screening: credit score 650+. Verified 2 references. Background check is clean, security deposit collected, etc...

No personal details about the tenants, and it’s things I’m sure as a good PM you’re doing anyway. But it’s a level of accountability stating that you’re doing what you said and you’re not just shoving someone into the house to get your commission. I think this would separate a good PM from an average or questionable one.

I know a bit off topic, but hope it helps!

Austin Mountain · Answer

The only time I have the property owner take a look to approve a tenant is if they are going to be self managing the property and I am just placing a tenant for them.

I don't bring the applicant to them until after I have done all my due diligence through the application process and am ready to approve and offer them the apartment/house.  It is more of an introduction to here is your new tenant and all of their relevant information than it is me seeking their approval.  If they've managed to get my approval then they'll certainly get the owner's approval.  Part of that is clear communication with the owner from the beginning about our standards and expectations of a tenant.

Anna Sagatelova · Answer

Any landlord or PM needs to have clear rental application and screening criteria. It must be uniformly applied to the properties you manage. When you involve clients, the problem is that they will not be consistent - one client will be ok with a lower credit score, for example, than another. Furthermore, the same client may be inconsistent with respect to their own property if they get multiple unqualified applicants... for example, they may reject anyone with a credit score less than 620, but after 3 rejections, the 4th applicant has a score of 605 and they decide to accept. There is far too much potential for Fair Housing violations and claims (even if there is no outright violation, you don't want a claim).

Bridgette Delva · Answer

@Christina Russo I don't have experience as a PM but as a property owner, I can say that I would 100% trust the process of my PM and not expect to be bogged down with hand picking tenants.  That defeats to point and counters the process our PM has in place.  I would totally support a PM firm who told me that they do manage the entire process from soliciting through to securing a tenant and I don't see any reason you shouldn't make this change to your practices unless it's just unheard of in your market.  Go for it, do what's best for your business and maybe figure out a way to ensure your client's requirements are met even through the new hands-off process.

Property Mnanagers- select tenant with or without owner approval?

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