Let me start by saying the following is not written as legal advice, whatsoever. I write this as a casual observer who has witnessed many landlords suffer over the years due to their own kindness and naivety. I write this to hopefully help landlords who are new to the game, figure out how to properly screen tenants so they don’t find themselves in a world of trouble by letting the wrong person into their property.
For those of you that are landlords here in California, at some point you’re going to get a tenant that is just a complete loser. It happens to the best of us. They put on a smile, give you their sob story, say their “please” and “thank you” lines pretending to be considerate and educated, all the while trying to charm their way into getting you to let them in to a property you own. In my experience, the harder a tenant is trying to convince you to let them take occupancy of the place, the more likely they have a skeleton in their closet that they haven’t indicated to you. If you’re not careful and let these people into your property, those skeletons can come back to haunt you.
Why is it so important? Because the laws in California are fucked. I use harsh language because that is the only word that really is fitting to describe the ridiculous rights that the law affords tenants, over and above the rights of the actual property owner. You know – the person that actually slaved away, put in their blood, sweat, and tears, to actually purchase the property in the first place. The way some of the laws are constructed, the poor landlord is treated like a criminal, and the law breaking, code violating tenant has more rights to your property than you. This means once they get in, it can be difficult to get them out in California. Texas on the other hand, is a great state to own real property – you can evict someone very quickly.
Perhaps this article is for the more naïve landlord out there, just getting started. You may think you’re a good people person and can tell who will make a good tenant by talking with them. My best advice to you is to SCREEN SCREEN and SCREEN some more. I welcome any of you to go off of your “gut” instinct when selecting a tenant, but let that be your very last line of defense only AFTER you’ve checked out their hard credentials. But before you turn anyone down, please review the laws here about what you can and cannot discriminate against so that you don’t find yourself on the wrong-side of a lawsuit by saying the wrong thing when rejecting a prospective tenant.
So without further ado, here is my list of non-negotiable, must haves for any tenant that you’re screening.
1. STRONG CREDIT SCORE
This is without a doubt, one of the biggest, most important elements to finding a good tenant. Whenever I ask prospective tenants about how their credit score is, I am surprised at how many of them have terrible scores even for more expensive rentals. These people will often try to diminish their score’s significance by making it seem that some unexpected event happened in their life that was beyond their control so you as a landlord should also look past it.
Don’t. Ever.
I’m not saying there aren’t people out there who have had a one off that affected their score. But it’s not your job as a landlord to worry about the circumstances of their lives. In my experience a bad credit score is the sign of a bad tenant. Period. More importantly, someone who actually has a strong credit score is someone who is responsible with more than just their credit, but other areas of life as well which are all small details which trickle down to a good tenant who will also take responsibility for your property. Even if you are getting desperate to rent, I urge you to keep looking until you find someone who has a strong score. For my rentals I will not accept anyone who has less than a 720 although due to my own experience I have become a bit tough.
2. CRIMINAL BACKGROUND CHECK
This one is for your own safety as well as your neighbors. Registered sex-offenders, and people with a checkered criminal past can cause you more than monetary problems. They can cause your problems for your neighbors when their gang-banger friends start to cause a nuisance in your neighborhood, damage your property, or in other circumstances, try to intimidate you or your family if they begin going delinquent on rent and you have to bring an eviction action against them.
There are definitely some who have been reformed etc., but why even take the chance if you don’t need to? The good thing about being in California is that there is always another prospective tenant just around the corner.
3. PROOF OF INCOME
This one speaks for itself. Just like a mortgage, you should make sure the prospective tenant has enough to pay the rent after considering the fact that their life has other expenses. As a rule of thumb, I like to personally see that the rent does not exceed 40% of their NET income. Unlike a mortgage where the bank will look to see if your monthly payment is about 33% (and sometimes up to 50%) of your W-2 gross income, as a landlord, you should be looking at the renter’s net income. Often, I have seen renters simply trying to rent a place they can’t afford.
Example: Suzy works at Target and makes $2,000/month, before taxes and other deductions. Being financially irresponsible, she looks at places that rent for $1,600/month. She is so excited about your place that she tries to convince you she makes enough money and will work even harder to be able to afford it with no problem and if necessary will borrow money from her parents.
She sounds like a great candidate, right? Hell no! First of all, after taxes, her total income at best will be the entire rent. She still has to pay for food, gas, maybe a car payment, and other necessities. That’s nice that she says she’ll work more hours, but as of today, she can’t afford the place you’re renting. Oh yeah, and for those people that say they’ll borrow money from friends or family, that still means they can’t afford it. In rare situations, you could demand that the parents or family act as co-signers (assuming they themselves can prove their income), but in my experience you’re just setting yourself up for problems either way.
One of my clients once had a guy that had zero proof of income – no tax returns, no W-2s, no paystubs, no 1099s, not even a bank account statement. He was pathetically begging my client/landlord to rent to him. This particular loser was desperate – even showing up to the showing appointment in a U-Haul truck carrying all of his stuff (red flag). It was obvious he had either been evicted from somewhere else and had to quickly move his stuff, or alternatively was such a poor planner that you wouldn’t want someone that irresponsible in your property in the first place (who the hell looks for a new place to live AFTER their other lease has expired???).
Clearly, you never want to allow someone in that can’t even prove how they’re going to pay the rent. Most of the time people living off the radar like this already have judgments against them in the first place which means they’re screw-ups and avoiding collections from other parties that have successfully sued them. You may feel sorry for them, but I assure you, they will not feel sorry for you when they stiff you on rent and you have a mortgage to pay. Moreover, if shit hits the fan and you need to file an eviction against them, how are you ever going to collect against them if they have no bank accounts to levy or paystub to garnish?
4. REFERENCES FROM PREVIOUS LANDLORDS
I am always surprised how applicants will conveniently leave off information about their current and/or previous landlords on my application. If a prospective tenant does not fill in this information despite the fact that they are currently renting somewhere else, then just deny their application due to it being incomplete. A tenant I had a couple of years ago conveniently left off information about his last two places of residence. When I called him out on it, he admitted that he didn’t have a good relationship with his current and previous landlords due to noise complaints so didn’t want me to call them. He finally gave me the information at which point the previous landlords actually said he was a decent tenant so I let him rent. Ultimately, he ended up being a noisy tenant always blasting music and having low-end, gutter kind of people over. Learn from my mistakes!
Make sure and check out previous landlords asking them if rent was paid on time, if there were ever any 3-day notices issued, if the eviction process was every commenced, if there were any complaints from other tenants, and very important, ask the previous landlord(s) the condition in which the tenant left the previous place when they moved out! People overlook this one when they vet references, but the last thing you want to be stuck with is replacing a carpet that cost more than the security deposit.
5. EDUCATION
I cannot attest to the legality of declining someone based on their education, but as a landlord, it is definitely a big plus if the person you are renting to is well educated. In some cases they can be slightly higher maintenance tenants, but on the other hand, they pay rent on time, and I have found them to be more meticulous. Of course I’m generalizing, but this has been my experience.
6. FRIENDS
One of the biggest indicators of a problem tenant are the friends they keep. In my own experience, I’ve noticed it’s the tenant’s friends who cause more problems than the tenant – since they have zero interest in the property, they use the place like a garbage dump, damage things, block toilets, you name it. After all, once they leave it’s not their problem. Tread carefully with this one so that you don’t have an issue with violating any of the house discrimination laws.
This is a tough one because you can’t ask to interview the tenant’s friends before they sign the lease. Sometimes if you’re lucky however, the prospective tenant will show up to see your property with their friends. Take a close look at them and how they behave. In at least two instances, I’ve had a landlord notice certain things about the prospect’s friends that didn’t sit well with him. In one case, five friends showed up during the showing, tattooed from head to toe (not necessarily a bad thing unless they look prison or gang related), cursing, rambunctious, and commenting on what a great place it will be to party. The actual tenant seemed clean-cut and responsible (proof of income at $9k/month), so the landlord let him in. You can guess what happened next – the property became a hangout for thug-like people, constantly playing very loud music, and damaging the place.
So that’s my list…partially. There are more things to watch for and we’ll cover that in another article. I can’t stress enough to read the list of things that you cannot use to disqualify a tenant. You may read this list and think that some of my list violates some of the laws – remember, I am not suggesting you disqualify people for such things as being affiliated with people that have friends who are tattooed up from head to toe – I am suggesting that you keep a mental account of a variety of things when considering a tenant and when and if you do reject the applicant, make sure it is for a reason which is in fact legal.
Here are a few resources:
http://www.hrc-la.org/doc.asp?id=14
http://www.dca.ca.gov/publications/landlordbook/discrimination.shtml
http://www.dca.ca.gov/publications/landlordbook/discrimination.shtml
http://www.dca.ca.gov/publications/landlordbook/discrimination.shtml
