Landlord Problem-Too many applicants . . .

[gumshoe]

So, where and how do you advertise your rental to get quality applicants without attracting a horde of people? I was thinking of posting an ad on the campuses of employers close to the rental (if that is even permissible). Or an ad showing the house/neighborhood and then doing some type of pre-application phone interview to get info so that I can weed out the less desirable applicants according to their employment security/stability, renting background, etc. Or is that even legal nowadays?

The last time I advertised one of my two rentals about 4 years ago, I put an ad on Craigslist with photos, details about the house, and the date of an "open house" in which prospective tenants could stop by, check out the house, ask questions, and fill out an application if interested. The number of people who showed up and applied was overwhelming, but it was awful going through all the applications and then doing credit checks on so many that seemed equally good prospects.

Now, I am going to be renting out the other house later this year. This house has been rented to the same party for the last 20+ years, so it's been a long time since I last advertised it. This particular house is small but in a high-demand, close-in neighborhood in a city with limited housing supply. So, I'm thinking it will be much worse than the last time.

Any tips or suggestions?

 

[harley]

Raise the price. That should weed out a few of the less desirable applicants.

 

[Sunset]

Good problem to have.
Start the rent high, mention credit check and employment check in the ad - will discourage riff-raff ?
Are you allowed to ask for application fee or credit check fee from your applicants, if it's popular enough you could make $$$

 

[travelover]

I'm planning on renting when I sell and notice most landlords charge 50 bucks to apply. That surely must weed out the slightly interested or those with bad credit.

 

[Another Reader]

In most places, you can charge a reasonable fee to recover your costs. If they don't make it through the initial review to the credit and criminal history pull, you don't charge the fee.

Set a minimum credit score appropriate to the property and neighborhood. Have a minimum income requirement (at least 3 or 3.5 times the rent). Have standards for criminal history, i.e. a misdemeanor public intoxication at 18 with a clean record after that might be ok, but no felonies. Publish these to discourage people that don't qualify. Some that don't qualify will apply anyway. Verify references and employment.

Craigslist attracts flakes. Zillow is somewhat better. If you live in an area where you have a high end employer, they may have a housing office. Make sure the same requirements apply to all applicants, independent of the source.

Only pull credit/criminal for one application at a time. If they pass, they should get the property. That protects you from discrimination claims and saves time.

 

[Senator]

Raise the price. That should weed out a few of the less desirable applicants.

Actually, just the opposite happens. Quality renters see the value is not equal to the price. Low quality renters apply anyway. The market will only a market price.

I fill ~10-12 vacancies every year. My average renter stay is ~30 months. I advertise on Craig's and Zillow. 90% of my responses are by email. The actual calls I return, and request an email address.

I send a pre-screen letter, which takes ~5 seconds to cut/paste. It eliminates 95% of all responses to my ad. It lists my tenant requirements, and a few details about the area and apartment. It also has a link to a virtual tour.

Keep in mind, low quality renters move at least 2-3x as often, and apply to 2-3x as many places. So it is natural to get a 95% trash rate.

 

[Fishingmn]

Please understand your state laws regarding fair housing and landlord laws. In many states you should be processing applications in the order received. Set your requirements in writing (ex. income 3x rent, xxx credit score, verified employment, verified rental history, no criminal background, no evictions ...) and then accept the first person that passes all of the requirements.

I would never take application fees from more than 1 person but then again I don't touch the application fee as I use an online service from mysmartmove to run criminal and credit background checks and the tenant uses their credit/debit card to pay for it.

I recommend Postlets and Craigslist for advertising.

 

[calmloki]

It's a great time to be a landlord! We should all endeavor to rent in a non-discriminatory manner, and HUD is here to help us:

HUD announces landlords can't ban ex-convicts | 2016-04-04 | HousingWire

Gotta keep up on this sh*t.

BTW - calling applicants "trash" I find offensive. Lotta people in the world of all different economic status, and I know a lot of poor people who are good and giving folks. Treat people with respect or get none from me.

 

[Another Reader]

Wait until "disparate impact" is used to disallow the consideration of credit scores in tenant evaluation...

 

[Senator]

BTW - calling applicants "trash" I find offensive. Lotta people in the world of all different economic status, and I know a lot of poor people who are good and giving folks. Treat people with respect or get none from me.

You obviously have never had a bad tenant....

 

[rodi]

I did an open house for showings - I let every applicant know I'd verify employment, previous landlord, and credit check.

I use experian connect for credit checks. The person pays for their own credit check then shares it with you. They can share it with multiple landlords so if they're applying to more than one place -that can work for them.

Experian Connect - Credit Report and VantageScore for Consumers and Small Businesses

I verify employment with the HR department of the employer. We're close to a high tech center and most of my applicants last round worked for big companies like Qualcomm... I figured a background check had been done when they were hired. My current tenents work for a biotech company and a defense contractor.... I'm hoping they never move.

 

[gumshoe]

Calmloki: I didn't see anyone on this thread calling applicants "trash". "Less desirable", yes, but not "trash". I would venture to say that most landlords looking to rent their house want someone with a reliable employment history and personal background that reflects on their character and responsibility.

Back in the mid 1980's, I rented to a guy that seemed "okay" and didn't do a credit check or background on him because he was recommended by the prior tenants, who were excellent. Well, what a mistake that was! I got a knock on the door one day and a neighbor who lived next to the rental told me that the door to the rental house was wide open and some windows broken. I drove there immediately and found a mess: dog poop on the floor, rotten food on the stove, large burn stains on the wood floor, and all the electricity was routed to the basement where almost every square inch was covered with a dirt-filled pot that obviously had MJ plants sprouting. The electricity was for the grow-lights, and he was apparently selling the stuff out of the home. The cops had obviously confiscated the plants, but it took me 3 truckloads to get rid of the pots. And 3 months to clean, repaint, repair, replace windows, re-wire the house, etc., not to mention no rent during that time and lots of $$$ to fix the damage. If the guy wasn't a felon or criminal before I rented to him, he most certainly was after. Maybe if I had done a check, I would've found something and not rented to him.

Now, I don't have anything against someone that has reformed from past criminal activities. And I don't like discrimination in any form. But, seriously, would a landlord choose a felon over a non-felon, everything else being equal? Is "Felon" now a protected class? If HUD wants to mandate a rule that says I have to rent to a felon over a non-felon, I would have no problem if HUD can guarantee they will compensate me monetarily should I run into anything like the aforementioned. Small potatoes landlord takes all the risk, and HUD doesn't care. Do landlords no longer have any rights to exercise reasonable discretion in renting out their personal property??

 

[calmloki]

You obviously have never had a bad tenant....

"Keep in mind, low quality renters move at least 2-3x as often, and apply to 2-3x as many places. So it is natural to get a 95% trash rate".

In over thirty years of of owning and renting, reaching a high of 52 units, mostly one bedroom, mostly very affordable - you bet I've had bad tenants. A few of them were just plain bad - most of them I could see why they did what they did and normally it had to do with a lack of money. Poor does not equal trash.

The latest HUD decree, section 8 regs, Oregon's liberal service animal laws - they all make my stomach churn, no doubt. I'm closer and closer to selling them all and taking this landlord out of the game. Until then though tenants and applicants will be treated with respect.

 

[PamInCA]

I only have one rental and use a management company since it is almost an hour from me. When I first rented it and didn't have a tenant in one month I myself put an ad on Craigslist and the contact as the management. Apparently they got a lot of response because the management co. wasn't pleased. Well... I didn't really care if they were pleased or not.

I read just yesterday that there is a proposed (?) law that "discriminating" against felons is racist because African Americans and Hispanics are the highest numbers of convicted criminals. Ridiculous. Just wait until you're forced to rent to a rapist and then get sued by a female tenant he assaults.

 

[Major Tom]

I have been acting as a leasing agent for my landlord for the past 5 years or so. He has no idea how to screen tenants, and used to get some very bad ones as a result. He charges well below market rate for his units, and I find it particularly easy to get good tenants with only a modest amount of work, by setting high standards, and having a narrow set of criteria for acceptance.

I advertise the units on Craigslist, with good pictures and a detailed description of the property and leasing terms. The wording of the ad contains a paragraph specifying that only applicants with truly excellent credit will be considered. It also mentions that while we don't run credit checks, we do expect applicants to provide a copy of their full credit report. Within 10-15 minutes of the ad going online, the phone starts ringing. I talk to callers in order to pre-qualify them. An important part of that conversation involves asking them what their credit is like and, as with the answers to the other questions I ask, listening carefully to the answers. People often give themselves away if you ask a few pertinent questions, then give them plenty of time to talk. After an hour or so, I always have more than enough people, and can delete the ad. I try to pre-qualify folk on the phone, and show the units to as few people as possible. I try not to give out an application unless I am fairly sure the person will qualify. Why waste my time and theirs?

Although it sounds a bit draconian focusing so heavily on the credit report, I usually find that if I am having any doubts at all about a potential tenant, their credit is usually less than stellar, giving me a good legal reason to refuse to rent to them.

I don't do a lot of this, but have taken on around 30 tenants in the last 5 years. Every single one of them have turned out well. I have turned down a few folk I suspect strongly would have made good tenants, due to thin or non-existent credit reports. It's tough saying no sometimes, but the upshot is that everyone I have said yes to has been fantastic. My landlord commented that he has never had so many tenants who paid their rent on time and didn't make trouble - he didn't think it was possible.

 

[Senator]

"Keep in mind, low quality renters move at least 2-3x as often, and apply to 2-3x as many places. So it is natural to get a 95% trash rate".

In over thirty years of of owning and renting, reaching a high of 52 units, mostly one bedroom, mostly very affordable - you bet I've had bad tenants. A few of them were just plain bad - most of them I could see why they did what they did and normally it had to do with a lack of money. Poor does not equal trash.

The latest HUD decree, section 8 regs, Oregon's liberal service animal laws - they all make my stomach churn, no doubt. I'm closer and closer to selling them all and taking this landlord out of the game. Until then though tenants and applicants will be treated with respect.

Perhaps I could have used a more "politically correct" term, but if you have any sort of tenant screening criteria, many more tenants will be rejected than are accepted. Call them what you want. They may be good people, but are not good tenants. Maybe due to no fault of their own.

If you are a successful landlord, you decline tenants that are in desperate need of a home for their family. You evict tenants that may not have alternative choices. You force people out that might have terminal diseases and cannot afford rent because they are not working. I have evicted a stage-4 terminally ill tenant that died six months later. My bank would have done the same.

Tenant screening is the key to being a successful landlord. My 25 rentals are all 3 BR units, many in the same neighborhood. I started in my main rental area wearing a bullet proof vest.

I use a combination of credit score and income as my number one criteria. I have a hard cutoff of 625 as a credit score criteria. An income requirement that an applicant pays no more than 30% of their income in rent. And similar to mortgage guidelines, I make sure that the tenant can also afford a few future rent increases with their current income. Criminal is my third criteria, and I rarely take into account last landlord references unless they are bad. If I have 100 tenants, screened by 100 screeners, the end result should be the same. I have successfully rented many apartments without ever meeting or speaking with the tenant. I just used emails and texts.

HUD is moving towards a non-screening requirement at some point in the future. If everyone screens the same, the entire renter population can disperse evenly without regards to criminal history, and eventually income. Even with housing developments, there is a larger focus on eliminating zoning laws, where multifamily high-density housing can be built in any neighborhood. It is unclear how this will impact the old adage of real estate of 'Location, location, location".

 

[Another Reader]

HUD is moving towards a non-screening requirement at some point in the future. If everyone screens the same, the entire renter population can disperse evenly without regards to criminal history, and eventually income. Even with housing developments, there is a larger focus on eliminating zoning laws, where multifamily high-density housing can be built in any neighborhood. It is unclear how this will impact the old adage of real estate of 'Location, location, location".

Yep. Your property rights are being stolen from you right under your nose.

If the trend continues, there will be no single family rentals in decent neighborhoods. It will not be profitable for the small landlord. All residential rental real estate will be in the hands of or controlled by the folks in Washington and their friends. I have come to the conclusion that it is time to exchange out of residential into commercial/industrial properties.

 

[ERD50]

... Poor does not equal trash. ....

Senator did not equate economic status with 'trash'. Why are you?

Look back at his post, he said "Keep in mind, low quality renters move at least 2-3x as often, and apply to 2-3x as many places. So it is natural to get a 95% trash rate."

He used 'trash' to describe low quality renters. As he added later, maybe a harsh choice of words, but though I'm not a landlord, I've seen what some 'low quality renters' have done to places, some have 'trashed' them. So I don't think the description is so out of line in that context.

And it just might mean that you need to 'throw out' 95% of applicants, just like you 'throw out' the 'trash'.

I'm sure we all know some kind-hearted, wonderful people who, for whatever reason, are in the low socioeconomic rung.

-ERD50

 

[MichaelB]

The choice of words could have been better, but how about setting it aside and getting back on topic, eh?

 

[haha]

"Keep in mind, low quality renters move at least 2-3x as often, and apply to 2-3x as many places. So it is natural to get a 95% trash rate".

In over thirty years of of owning and renting, reaching a high of 52 units, mostly one bedroom, mostly very affordable - you bet I've had bad tenants. A few of them were just plain bad - most of them I could see why they did what they did and normally it had to do with a lack of money. Poor does not equal trash.

The latest HUD decree, section 8 regs, Oregon's liberal service animal laws - they all make my stomach churn, no doubt. I'm closer and closer to selling them all and taking this landlord out of the game. Until then though tenants and applicants will be treated with respect.

Bravo calmloki. Some people we would rather be around than others, but we are all fellow sojourners in life.

Ha

 

[haha]

The choice of words could have been better, but how about setting it aside and getting back on topic, eh?

Whoops mi'lord, we cross posted.

Ha

 

[tmm99]

Senator's 625 FICO score cutoff seems quite low to me. I was expecting at least above 700, but what do I know? (I am not a landlord..) Tom, what is your FICO score cutoff?


Sent from my iPhone using Early Retirement Forum

 

[Senator]

Senator's 625 FICO score cutoff seems quite low to me. I was expecting at least above 700, but what do I know? (I am not a landlord..) Tom, what is your FICO score cutoff?

625 is low, but starts to separate the wheat from the chaff (is that an OK term...?). It also starts to reduce undesirable personal behaviors that come with low credit scores. Domestic abuse, property insurance claims, loud parties, etc. Each landlord will have their own risk tolerance based on their financial condition and the value of their property.

Understanding credit score distribution is the key. Someone with a low score typically has been lying to and cheating the other people they owe money to. It is also one of the most objective criteria that there is. It passes every Fair Housing test that there is. I do not create the score, I do not affect it, 100 people will make the same judgment as I will. A person makes or breaks their credit score, on their own.

I charge $40 for my background checks, but if a person passes, I put that money towards the move in funds. So the check is free if you pass.

There are many different flavors of credit score, I use FICO. Excluding people under 625 eliminates about 25% of the population. Many of these people would make great renters, but the risk of lower profitability gets higher with lower credit scores.

If you use the 'gut feel' approach, you are very likely violating Fair Housing Laws.

Advertising in certain areas, like a company bulletin board, church bulletin, lawn signs in front of the rental, are also potential violations of the Fair Housing act.

You need to use internet advertising that is available to everyone, not just the people who read the areas. If you only use a yard sign, you only attract people from that neighborhood, which almost by definition, is discriminatory.

 

[calico1597]

We sold our three rental houses a couple years ago. We've had good, bad and ugly renters. Some were so bad, I really think I could have taken a gun and shot them (but I didn't!). I didn't want to spend my retirement years cleaning up messes. I have less tolerance for people as I get older. If you want to live like a pig, do it in someone else's property. Seems like when the mortgage rates dropped years back, that's when it became harder to find good renters. They had all bought their own houses.

 

[kgtest]

Actually, just the opposite happens. Quality renters see the value is not equal to the price. Low quality renters apply anyway. The market will only a market price.

I fill ~10-12 vacancies every year. My average renter stay is ~30 months. I advertise on Craig's and Zillow. 90% of my responses are by email. The actual calls I return, and request an email address.

I send a pre-screen letter, which takes ~5 seconds to cut/paste. It eliminates 95% of all responses to my ad. It lists my tenant requirements, and a few details about the area and apartment. It also has a link to a virtual tour.

Keep in mind, low quality renters move at least 2-3x as often, and apply to 2-3x as many places. So it is natural to get a 95% trash rate.

Ding, ding, ding. And you don't want to get demoted from landlord to slumlord... I like the properties that are transitional properties for people...you can almost tell the ones that are trying to move up the ladder, from those that could care-less...don't rent to careless people.