Posts

It’s Time To Review Tenant Screening Criteria | Orlando Property

It’s Time To Review Tenant Screening Criteria For Your Orlando Property

/0 Comments/in /by

In a recent survey by Zillow Research, half of the real estate and economic experts who responded said they expected another recession to begin in 2020, while 35 percent said they believed a recession would likely begin in 2021. Unlike the Great Recession that started in late 2007, this predicted recession will probably see factors other than the housing market as its primary cause. Because of additional regulation in the mortgage industry since the Great Recession, today’s homeowners and investment property owners are generally in a better position with more equity and more solid ability to repay the mortgages on the property they own. If you own residential rental property, now is an ideal time to review your tenant screening criteria and make adjustments that will help you maximize tenancy and keep your income coming in steadily, even if the future does hold a recession.

Why Now Is The Best Time To Adjust Your Policies

Establishing and applying a consistent set of criteria by which you judge applications for each of your income properties is the best possible defense against future discrimination claims. By looking ahead, you can make adjustments to your tenant screening criteria now and establish a consistent pattern of applying them before a recession hits. This also means that you’ll start now to fill your vacancies with tenants who are most likely to be able to continue renting from you through an economic downturn. Consider criteria like the length of employment, in addition to income and credit score. It’s also a good time to establish policies covering when and how you might consider renting to tenants who don’t meet all of your primary criteria. For example, might you consider renting to a tenant whose income or credit score don’t meet your desired minimum if they provide a co-signer or a larger deposit, or pay increased rent? If so, be as specific as possible: If your minimum desired FICO score is 670, might you consider renting to a tenant with a FICO score of 640, if they gave a larger deposit? How much? Would you consider renting to a 600 FICO score if they had a cosigner with a 740+ FICO score?

Get Professional Help With Tenant Screening In Orlando

Tenant screening can be a complicated issue because of many federal, state, and local laws that may apply. When you work with the experts at Belmont Management Group, you’ll get sound advice on compliant tenant screening, and money-saving help with maintenance, marketing, and every other aspect of managing your investment property. Call or contact us online for a consultation and we’ll help you make a sound plan for today and the future.

 

Note: Please keep in mind that this is an overview of the important points, but by no means does it constitute a prediction of the economy, nor of the impacts it may have on the residential rental market.

Protect Yourself With A Comprehensive Tenant Screening Process

Protect Yourself With A Comprehensive Tenant Screening Process

/0 Comments/in /by

There are a number of federal, state, and local laws that pertain to tenant screening and selection, and they can get confusing. The most important step for Orlando property owners to take is carefully planning a tenant screening process that covers all the legal requirements, then implementing that process and following it consistently. A well-documented tenant screening process and records demonstrating that you follow that process every time can be a powerful defense against a claim of discrimination from a prospective tenant. Since the U.S. Department of Housing and Urban Development (HUD) civil penalties for a Fair Housing Act (FHA) violation start at nearly $20,000 for a first-time offender, it’s an issue no property should ignore.

Make A Plan And Make It Public

Establish a fixed set of criteria you’ll use to judge each application. If you own more than one property, each property might have its own set of criteria, but you have to be consistent in applying the same set of criteria to every application for a given property. Your criteria can and should include things like a minimum credit score and income; standards for issues like bankruptcy or eviction (number or length of time since filing bankruptcy or being evicted, for example); criminal history, when allowed; length of prior tenancies and/or references from previous landlords; or length of employment. Be sure to include something like a decision tree for matters where you might accept a tenant, but only with a co-signer, extra deposit, or increased rent. These are called adverse actions, and you need to have established policies for when you will take these actions, and when you will simply reject the application.

Once you’ve established your selection criteria and verified that they are compliant with applicable laws, you can shortcut a lot of potential trouble by publishing your criteria on your website, or another outlet where prospective tenants can see them before they apply.

Be Consistent And Follow Through

Don’t be tempted to bend the rules for an applicant, no matter how much you may wish to. The value of establishing this process lies in being able to demonstrate 100% compliance with your own process. If you need to take an adverse reaction on an application, you’ll need to provide the applicant with a written explanation of the reasons. If you’re ever faced with a discrimination complaint, this documentation is your first and strongest line of defense.

Compliant, Defensible Tenant Screening In Orlando

Defending against a discrimination complaint can involve hefty legal fees on top of the civil penalties if you’re found to be in violation. The most effective way to prevent such costs is to create a tenant screening system that builds a defense as you go about your business. The Belmont Management Group helps Orlando property owners with all aspects of residential property management, including tenant screening. Call or contact us online for a free consultation.

 

Note: Please keep in mind that this is a general overview of the important points, but by no means does it constitute or cover all of the requirements of a compliant tenant screening program.

Is Your Tenant Screening Process FCRA & FHA Compliant?

Is Your Tenant Screening Process FCRA & FHA Compliant?

/0 Comments/in , , /by

Many investment property owners who handle their own tenant screening process and rental decisions are unaware that there are state and federal laws that apply to tenant credit and background checks, and how landlords can use that information to make rental decisions. If you’re not consistently practicing a compliant tenant screening process, you could find yourself facing stiff discrimination fines or vulnerable to civil suit from rejected prospective tenants.

What Does The Fair Credit Reporting Act (FRCA) Have To Do With My Rental? 

You’re not a credit reporting agency, so this may seem weird, but when you order a consumer report on a prospective tenant, you’re certifying to the agency providing the report that you are going to use that information for a legally “permissible purpose,” in this case, tenant screening. So far, so good.

But if you find something in that report that causes you to reject the tenant’s application or require a co-signer, or require additional rent (these are called adverse actions in legal terminology), the FCRA requires you to notify the party in writing of the adverse action and reason. You must provide the contact information for the company who gave you the report, and let the recipient know that they have a right to dispute the report.

Fair Housing Act And Criminal Background Checks For Tenants

Running a criminal background check on a prospective tenant seems like a no-brainer. Who wants to rent to criminals? In practice, though, landlords are limited in how they use information from a criminal background check to take adverse action against a tenant.

  • A tenant can’t be rejected because of an arrest, if no conviction followed.
  • You must be able to demonstrate that a rejection based on criminal record “accurately distinguishes between criminal conduct that indicates a demonstrable risk to resident safety and/or property and criminal conduct that does not.”
  • People with convictions for distribution or manufacture of drugs can be denied based on those convictions. People with convictions for drug possession cannot.
  • Your treatment of criminal issues must be consistent across all applicants. You can’t reject an application from one person with a drug distribution conviction, and then later accept one from another person with the same conviction.
  • Selective use of criminal history to reject applications based on race, national origin, or other protected characteristics is considered discriminatory.

Stay On The Right Side Of The Law With Tenant Screening

The laws that cover tenant screening are complicated and they’re always changing. It’s easy to see how a landlord could end up breaking the law without even knowing it. The Orlando property management experts at Belmont Management Group help their clients stay compliant with all of the applicable laws, so they can rest assured that their investment property business is in good standing and running smoothly. Call or contact us online to learn more about how working with the professional property management team at Belmont Management can make your rental properties turn the best possible profit for you.

 

NOTE:

Please keep in mind that this is mostly a summary of the important points, but by no means does it constitute or cover all of the requirements of a compliant tenant screening program.