Choosing the best tenant to live in your real estate investment is a critical decision for your real estate business. After all, you need a tenant who not only makes timely rent payments but can also take care of your rental property.
In this article, we at RentEasy VA will take you through how to set up a tenant screening process and what factors are important when choosing a tenant. We'll then look at Fair Housing Laws as even the most well-intentioned landlord can make mistakes throughout the tenant screening process.
Make a List of Your Tenant Requirements
Tenant screening is a great way to get your property rent ready, but it is only as effective as the rules you set. So, here are the minimum requirements we at RentEasy believe landlords should use to avoid troublesome tenants:
- Can they afford to pay rent?
- What about job stability?
- Do they pay rent promptly?
- Any criminal records?
Based on the parameters described above, you have the legal right to accept or refuse a tenant.
Other more subjective characteristics are more difficult to assess. Landlords routinely miss important steps in the tenant screening process, such as failing to do a credit or background check.
Obtain Important Documents
Once you've determined the criteria your prospects should fulfill, you'll need to get a rental application from any interested applicants. This gives you with basic information about them, such as their rental and employment history.
We also recommend obtaining a credit report and a background check from all prospective tenants to gain a better idea of the kind of tenant you'll be accommodating in your rental property.
Be Consistent and Follow Your Screening Criteria
Maintaining consistency is critical to avoid disregarding critical information about a possible renter. If a tenant refuses to consent to a portion of your screening procedure, halt the process immediately.
By ensuring that you are fair to every tenant who applies for your property, you can avoid a Fair Housing violation. Tenants are protected from discrimination under Fair Housing laws, requiring one possible tenant to authorize a background check but not another could be considered unfair treatment and discrimination.
Adhere to Federal and Local Fair Housing Laws
To manage a legitimate rental business, you must follow federal, state, and municipal housing codes. But even the most well-intentioned landlords must occasionally deal with costly Fair Housing Act accusations.
The Federal Fair Housing Act states that you cannot screen or deny tenants based on any of the protected classifications listed below:
- Familial Status
Some states have additional housing laws that expand the criteria to include:
- Marital status
- Gender identity
- Political ideology
- Veteran status
- Sexual orientation
- Prior convictions/criminal record
Understanding Fair Housing Laws are critical right from the start when creating a rental property listing. You may not advertise preferences for specific sorts of tenants or in any way that is discriminatory.
Focus on the unit and its features when writing your rental, and avoid using discriminating language.
Again, the tenant screening criteria you use should have uniform standards for all applicants. Avoid making changes to the income-required bracket or the late fee regulation based on who is applying.
If a disabled candidate requests reasonable accommodations, you must comply with their request. You also cannot terminate a tenancy for any discriminatory grounds based on the protected classifications listed above once you've signed a lease.
Be Fair During Tenant Screening
To comply with Fair Housing Laws and attract quality tenants, the best strategy is to avoid all forms of discrimination. A landlord is said to be engaging in discriminatory practices if they:
- Decline to show an available rental unit to a certain candidate.
- Stipulate different standards for identical rental units.
- Persuade a possible customer that a unit "isn't right" for them
- Inform a potential client that a unit is not available yet it is still on the market
- Refuse to accommodate a valid request for someone with a handicap.
- Direct certain renters to a specific unit or neighborhood based on their age, gender, color, or any other protected class
- Establish unfair rental arrangements, such as agreeing to rent to someone provided, they do them a favor.
During the tenant screening process, inquiring excessively, or asking improper questions including whether someone is married and how many children they have is also discriminatory.
It is worth noting is that even some of the questions you classify as most innocent questions can be discriminatory, so avoid them if possible.
You have the right, however, to inquire about the number of people who will be living in the unit and the lease should include a list of everyone who lives in the unit, including children and pets.
To establish a successful rental investment in Hampton Roads, a landlord needs a variety of skills, tools, and advanced software. In addition, property owners typically lack the experience required to conduct a comprehensive screening procedure.
One way to avoid such a scenario is to hire a property management company to take over your business like ourselves at RentEasy.
We focus on managing a variety of Hampton Roads real estate, including standalone residences, multi-family homes, and high-rise complexes or apartments, at RentEasy.
Take comfort in knowing that regardless of what your portfolio entails, we can handle it. Contact us today!