Turning Down the Applicant for Your Rental Property
Why is it one of the first words we learn to say quickly is “no?” Then, why is it so hard for people to accept when someone says “no?” Whether an owner finds it difficult or not, there are times to say “no thanks” to a prospective tenant.
A Solid Foundation
Most property owners or managers rent to applicants based on credit, income, and rental history. This usually provides a solid foundation on which to approve or deny an applicant. However, many owners are not aware of the many “land mines” there can be when denying an application. Complying with Fair Housing is the primary reason to be on concrete footing when denying an application.
Here is an example of discriminatory practice. Mr. Smith met with two different couples, the Bellagio’s and the Myrtles, at his property separately but on the same day. He had the usual rental application with him and distributed it to both parties; both couples were Caucasian and in their mid thirties. However, Mr. Smith, without even looking at the facts, liked the Myrtles couple better. He offered them a reduction in the security deposit that he did not offer to the other party and allowed a small dog when he had informed Mrs. Bellagio that he would not accept any animals at any time.
Both parties put in applications and Mr. Smith selected the Myrtles application without even contacting their landlords, verifying income, or checking credit on Mr. and Mrs. Myrtle. The Bellagio couple learned of the reduced security deposit and that Mr. Smith did not check any references on Mr. and Mrs. Myrtle. However, he had obtained the Bellagio credit report, which did not reflect any negative problems. They promptly took Mr. Smith to court and won a large settlement because he did not did not treat each applicant equally.
Knowing “what discrimination is and what is not” is often difficult for owners. The Fair Housing laws do cover a vast area, but no property owner is required to rent to applicants with pets, to those who are abusive, and to someone who has poor credit, lack of income, or bad tenant history. However, Fair Housing means that you do not have “separate rules for separate parties.”
Fear often contributes to a landlord making a bad decision. Property owners can be afraid to say no because of a long vacancy and they are losing money. They can be afraid just to face an angry applicant and therefore are willing to accept someone because they intimidate them. Fear of retaliation is another factor in today’s world when people do not always get what they want and can become violent.
The right documentation
The right documentation gives power to the reasons for saying no and reducing the fears.
Ms. Stone declared to Mr. Morse that her credit was impeccable and was quite forceful about renting the property immediately. She was willing to pay any rental price. Mr. Morse denied the application. The credit report revealed unpaid bills, collections, and two previous evictions. Ms. Stone had counted on Mr. Morse to simply “just rent” to her because of her behavior, but when Mr. Morse actually ran the credit report, she had no choice but to accept his decision.
Realizing the benefits
Realizing the benefits of saying “no” can make it easier to deny the applicant when it is necessary. Learning that someone has bad credit means the probability is high that the rental payments will be a problem. Contacting an owner and finding out that they took poor care of the property can save having to spend unnecessary money on future maintenance and rehabilitation. If the applicant is pushy or aggressive, denying their application can mean avoiding future confrontations and unreasonable demands. If an owner has to say no, it helps to look at the entire picture.
Denying an applicant is never easy.
However, saying no can reduce future difficulties and financial loss. As your property management company, we know that at times it is necessary to say no, based on sound criteria, to “Protect Your Investment.”
To learn more about methods of professionally screening and choosing tenants, check out our website at www.alhpodland.com or give us a call at 44-937-1850.
Marina Shlomov, a managing partner at ALH|Podland Realty & Rental Homes Property Management is the author of many articles on Landlording, Property Management, and Real Estate Investing. A residential builder in the state of Georgia since 1999, Marina is an investor herself. Her property management company is intended “For Investors” and “By Investors” for a simple reason – she knows what investors’ goals are and she works hard to reach their goals. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out at www.alhpodland.com. You can find Marina’s articles and comments at @rentalhomesatl on Twitter, on Facebook, Google+, Blogger. and YouTube, Bigger Pockets and REI CLub and LinkedIn.