Difficulty Getting Applicants that Meet our Standards

[Amber Arsenault]

My husband and I have jumped into the world of real-estate! We have done a lot of reading, found a property where the numbers checked out, and are currently screening potential tenants for the multi-family unit that we have just purchased. Two questions: 

1. We have set qualification standards, but it seems that the majority of people in our area do not meet them. The units have been listed for two weeks, and we have had a lot of interest in our online add. However, when pre-screening, I have had many people hang up on me or choose not to move forward since they know that they do not meet our requirements. Is there a time period after which we should lower these requirements? Currently we require 600 credit score, 3x rent for monthly income, background check, no evictions or unpaid judgments, and positive references.

2. We do have one prospective tenant who has been very communicative and punctual thus far. She just applied and meets MOST of the qualification standards. Her income is not 3x the rent. However, she has a good credit score and references from past landlords. Would it make sense to accept her with certain conditions? Maybe requiring automatic payments or something along these lines? Or are we being too emotional with this decision and ultimately she does not meet the requirements?

Any feedback is appreciated - thank you!!

[Nathan Gesner]

Your requirements are pretty standard, but I don't know your market, price, or quality of rental.

Question: what is the point of screening?

Answer: determine the level of risk presented by the applicant.

Question: can someone be "risky" and still turn into a good renter?

Answer: Yes.

Question: can someone meet or exceed your requirements and still stop paying rent or leave the home damaged?

Answer: Yes.

My point is that you are determining how risky the individual may be, but that doesn't guarantee they will perform at that level. I rent to people quite often that are "high risk" but I find ways to mitigate that risk. I started by creating a score sheet where the applicant is awarded up to three points for each category (length of employment, income:rent ratio, credit score, # of collections or judgments, etc). The lower the score, the higher the risk. If someone has low credit, only three months at their current job, and a collection against them, they may score a 17 because of the risk, but I mitigate that risk by charging them a deposit equal to two months rent. Some walk away, but the ones that pay that much to move in are 99% of the time good tenants. But even if they turn bad, the double deposit has always been sufficient to handle the cleaning and maintenance.

You don't have to use a score sheet, but try to find a way to lower your standards a little, but mitigate the risk through other means.