Your Rental Criteria and The Power of Three

Think of your rental criteria as frequently asked questions for those applying to rent your property and are they written down?

By David Pickron

Early on in my investing career I flew by the seat of my pants.  I had no real policies or guidelines; I relied on gut reactions to situations as they surfaced.  As I travel and meet with different real estate groups across the country, I always ask this critically important question;  who here uses a detailed criteria?  Rarely do I get many hands raised.

In fact you may be asking right now, what is criteria and more importantly, how do I make one?

Like any business, your rental criteria can function as your rental policy, lining out your rules and regulations.  It covers questions like:

• Can I smoke on the property?
• Do you rent to people with criminal history?  If yes, what kind of history would disqualify me?
• How high does my credit need to be in order to qualify?

Think of your criteria as an FAQ for those applying for your property.  I love the fact that I have all my requirements written down for the world to see.  No surprises!  And best of all this helps me treat everyone the same and avoid even a hint of a fair housing violation.

One other important note is I always have a unique criteria for each property in my portfolio.  Factors like location, square footage, and age or condition of the home all go into the creation of the criteria.  I may require a lower credit score, less down payment, the inclusion of pets, or other things that are unique to that property.  With that being said, I give every person that views that property the same criteria for that unique property.

While having your criteria is crucial, sharing it is even more important.  I like to share with my potential tenants throughout our interactions in the following three ways.

1. Share your criteria on your listing. Isn’t it a waste of everyone’s time to look at the listing, consider, schedule, and show a property when the applicant doesn’t even meet the criteria?  Though I would encourage you to let everyone apply, giving them your criteria in advance allows them to read it before they reach out or see the property.  If an individual reviewing your listing has three dogs and is able to  see that this property doesn’t accept pets, chances are they will move on to the next listing.  This saves you time from responding to someone who will never qualify under that properties criteria.
2. Provide and review a copy of the criteria at the time of showing the property. Once again, if you do not allow smoking on that property, your applicant will have heard and acknowledged that, so even if you forget to mention that in the walk through, you’re still covered.  A detailed criteria lets them know you are a professional and those trying to get away with something will move on.  On the other hand, if they still apply and you have to deny them for something on the criteria, you know they took the chance, hoping you would not find out or they flat out lied to you.  Either way, this is not an individual you want to enter into business with anyway.
3. Before you invite them to apply, the Rent Perfect system I use will attach the specific criteria for that property to the link I send them. It’s just one more chance for them to see the rules of that specific property in advance.  Simply put, if they  cannot pass my rules, they will be declined and I’ll move to the next applicant.

As a landlord, I give them three separate times to acknowledge and understand my rules before they pay the application fee.

I would rather have the tough conversations before they apply and become my tenant.

Catching a renter smoking after the fact while they are living on the property is a much more difficult (and far more expensive) situation.  By being open and sharing your criteria, you can treat everyone the same with a well-documented process if there is ever a fair housing complaint against you.  Remember, you are hoping to make this individual your business partner for the next few years.  Taking this small but critical step is just one way to help you get the right tenant the first time.

About the author:

David Pickron is President of Rent Perfect, a private investigator, and fellow landlord who manages several short- and long-term rentals.  Subscribe to his weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.