Round Rock Property Management Blog

Qualifying your renters is probably the most important aspect of managing your properties. If we really do it right at the beginning, it will keep us less stressed during the time the renters are occupying the property. But, is automatically eliminating a potential renter, due to a low credit score, the way to do it? I think not! There are many amazing, qualified, responsible people out there with low credit scores. I’ve come across many in my 18 years of experience in property management. So here’s my take. Of course, ALWAYS make sure you actually do a credit/background check on EVERYONE. You know fair housing law, so you must do the same thing for everyone. Yes, you must do a check for the cute little grandmothers, as well. What we look for on a credit report will very much tell you how responsible a person is. • Have they ever been evicted before? • Did they neglect to pay a utility bill, such as power, water, cable, or even a cell phone bill? • Did they file bankruptcy not too long ago (before they started charging up credit cards again)? • Did they recently go through a foreclosure without even trying to short sale the home because they liked that free rent for the past three to five years? • Having a medical bill collection could be OK, but do they have multiple medical bills in collection that would indicate that they may not be capable of committing to a full lease term without having more health issues? • Do they have 15 accounts all rating 9 (bad debt or a collection)? • Of course, we ALWAYS verify residency. On the application it will ask for a present address and previous address, generally if at present address less than two years. Getting the landlord’s information is essential and before you call to verify the residency, you ALWAYS want to check the actual owner of the home. Is the person they wrote down the owner of the home or is it their Aunt Mary, pretending to be the landlord for the potential renter. • Is the social security number they provided the correct number? This will usually cause a report to state “No credit on record.”• A very important part of qualifying a potential renter is verifying the income, whether it is a job or retirement/pension, etc. The standard criteria is income that is three times the amount of the rent. If it’s a job, you want to verify the amount they gross, but then, that goes right back to the credit report. If they do make three times the amount of the rent, but went out and bought a Maserati, this changes the rent to income ratio. Some people will try to live beyond their means. They will certainly risk an eviction before losing that Maserati. • Another very important aspect is the stability in their income. Generally, you would want to see at least six months working at a job. If they are just starting a job, you may want to consider their previous job to see if there’s a pattern of changing jobs. So, that covers the basics of getting qualified renters. But, what if there are extenuating circumstances, such as great credit, but just starting a job or lousy credit, but has been working at the same job for several years. Maybe the credit is marginal, they are just starting a job, and they’ve never rented before. These can be situations where collecting additional rent would be a great idea in order to give good people the chance to rent the home they deserve. There was talk at the 2016 Florida Conference regarding changing laws for advance rent payments. Of course, you always want to do a background check. It’s quite understandable that we would not approve a felon within the last seven years of conviction or ever. A felon is currently not a protected class under HUD. The Fair Housing Act prohibits discrimination because of specific class: race, color, national origin, religion, sex, disability and the presence of children. Some States have additional State protected classes. Know your State laws and local ordinances. If you ever feel that the person is so nice that you don’t need to do a criminal background check on them, please reconsider. The people you least expect or you feel are just the nicest people will surely amaze you. Considering someone if they’ve not been convicted in the last seven years is pretty common. We all were young, and not so smart, at one time or another.

People do grow up and change. But, what if you have a person with the greatest credit, the landlord verifies they’ve been an outstanding renter for the last two years and has had the perfect job for the last six years, and just last month was arrested and charged with possession of marijuana? Is this a crime that will affect the safety and wellbeing of the neighborhood of the rental you’re managing? What if you have the same person that was charged with dealing drugs, domestic violence or disturbing the peace? You certainly would not want to take them into consideration! We cannot always be perfect in choosing our potential renters. There are people with the greatest credit, a superb verification of residency, great stability in their job, but things will happen in people’s lives, such as the death of a family member, a terrible accident, or diagnosis of an illness, etc. It’s really about taking the time, consideration and patience of looking at the whole picture,

Article Content Originally Posted by: Hulzing, Monica. (April.2016). “Qualifying Your Renters It’s Not All About the Score!” The Residential Resource. Retrieved 31, Aug. 2016 from: http://www.narpm.org/docs/members/magazine/2016/Apr_2016_lo-res.pdf

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