How should I choose between multiple qualified applicants?

How should I choose between multiple qualified applicants?

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While many owners struggle to find qualified tenants for their property, a distinct few may be fortunate enough to have multiple applicants willing to rent their unit. While almost all owners would agree, having multiple qualified potential tenants is a good problem to have; many owners don’t know the exact protocol to follow in order to comply with the Fair Housing Act.

So you have multiple applicants willing to rent your property, what is the first step in order to determine who to rent the property to? First of all, you must create a qualification criteria and apply it equally to all potential tenants. This may be a minimum credit score and minimum income requirement that you will require from your tenants. In addition, you may require documentation of rental payment, as well as one positive reference from a past landlord. The most important aspect is creating a standard and applying this to all applicants.

What if multiple candidates exceed the minimum qualification requirements? In the event that multiple applicants exceed the criteria you have set, you will need to create a fair method to determine the tenant you choose. An example would be selecting the tenant that exceeds the qualification requirements the most. This may be the tenant with the highest credit score, longest documentation of timely rental payments, and/or the most positive references from past landlords. Another example would be selecting the first qualified tenant that was interested in the unit. While there are pros and cons to each, whichever method you choose, be sure to remain consistent and apply to all properties you rent.

Once you determine which applicant you would like to enter into a lease agreement with, be sure to provide written notice to all other applicants. This should include the reason for not renting the unit to the applicant. As long as the reason for denial is not correlated with the applicant’s status in a protected class, you should be in compliance of the Fair Housing Act. In the event it was based on information contained in the applicant’s credit report, you must state this as notice of the denial per the Fair Credit Reporting Act.

The Fair Housing Act can be very confusing and a costly mistake if an owner does not comply.  If you would like to learn more about the Fair Housing Act or if you would like assistance in managing your investment, please consider hiring FRE Property Management. We are the premier property management company in Utah and will provide the peace of mind knowing that your investment will be taken care of. Contact us today at 801-673-5692.

Income and Employment Verifications, What Utah Landlords Need to Know

Income and Employment Verifications, What Utah Landlords Need to Know

Fact: renting a property in Utah always costs money. Sadly, few Utah landlords actually take the time to conduct a comprehensive income and employment verification on their prospective tenants. Typically, these are the same landlords, who after a costly eviction, find themselves asking “What happened?” Well, this article is designed to help both new and experienced landlords conduct a thorough income and employment verification.

 

Step 1: Have a criteria

We recommend all Utah landlords have a predetermined rental criterion in order to avoid an expensive fair housing violation (You can always view our rental criteria as an example). Part of a good criteria should be some type of triple rent rule, meaning the applicant must not spend more than one third of their monthly household income on housing. So if rent is $1,000, the applicant’s combined monthly income should be at least $3,000. Why one third? Well, most financial institutions and personal finance experts recommend you never exceed 40% of your income.

 

Step 2: Call their employer

Make sure your application requires prospective tenants to list their current employer’s name and phone number. Contact this employer and ask if the applicant is currently employed, to verify the amount they are paid, if their employment is temporary or long term and finally if they are full or part time.  This should give you an idea of how risky the applicant is.

 

Step 3: Always require documentation

If you are unable to reach an employer or the applicant is self-employed, ask to see income documentation in the form of pay stubs, monthly bank statements, or annual tax returns. In fact, you should ask to see it anyway. Reviewing these types of documents will provide you with the information you need to make a good decision on the creditworthiness of your prospective tenant.

 

Remember, verifying income and employment is one of the most important things a landlord can do and it is in no way illegal to refuse to rent to people who can’t provide such documentation.