Four Easy Steps on How to Use Your Rental Criteria

Creating a written rental criteria helps you screen out bad tenants. It also serves as a guide in how to treat any rental applicant who contacts you in a fair and unbiased manner.  Moreover, having a copy to hand out or read from over the phone, can help dispel nervousness, and it may prevent you from saying anything that could be perceived as discriminatory when talking to your applicants. Examples of a landlord's rental criteria would be "all applicants must have a credit score of 625 or higher, two and a half to three times rent to income ratio,  no evictions in the past five years, and no outstanding collections of more than $1,000." Effective criteria should be impartial; it should not discriminate against any specific group. Sound business practice demands it. So, where do you start?

Take A Fair Housing Class 

Many organizations such as professional associations and government agencies offer these classes for free or for a small fee. Check with your local real estate clubs, professional rental  associations, or the local Housing and Redevelopment Agency. Make sure the class includes laws that not only include federal housing laws but laws specific to your state. Attending the class first will help filter out criteria that you may assume is okay but is not. For example, if your rental is a vacant  upper and lower level duplex, you cannot steer the applicant to view only the lower level because she has very young children. You also cannot discriminate against an applicant's type of income.

Have An Attorney Review Your Rental Criteria

It may seem redundant and costly to have an attorney review your rental criteria, but it is money well spent. Lawsuits can arise from a careless statement and provoke a anti-discriminatory investigation from housing authorities.  Don't use the attorney who does your taxes either; hire someone who specializes in landlord-tenant law and fair housing issues in your state. Ask other real estate investors to refer you to an attorney they use.

Provide A Copy of Your Criteria To Every Applicant 

Whenever you are dealing with an applicant- in person during a showing or emailing them an application- attach a copy of your rental criteria. Doing so not only ensures that you present the same criteria to every applicant but also helps screen out tenants who are habitual late payers (low credit score), who fail to pay their rent (record of evictions) or who don't meet the income requirements. 

Use Your Criteria As A Guide

Let your criteria serve as a guide, but don't be afraid to bend it a bit.  For example, you may not want to rule out the applicant with a lower than required credit score simply because his paid off collection remains on his credit report. He may have an income four times the monthly rent and be willing to put down a higher security deposit to account for the additional risk. 

Once setting your criteria, you may want to expand it to include what is acceptable to you for pets, for example. But whatever rental criteria you use, when in doubt, write it out.

What criteria have you used to screen your tenants? Did you have to remove any criteria because you were told it was discriminatory? All comments are welcome!