Rental Application Mistakes That Cost Landlords Money

Screening potential tenants with a thorough rental application process is your best form of protection against issues like frequent turnover unpaid rent property damage regulatory fines and extended vacancies Even small mistakes and oversights at this stage can hurt youThatrsquos why serious investors hire property managers ndash theyrsquore good at finding quality tenants who follow the lease and pay rent on time For example Fresno property management company Green Residential helps Texas landlords acquire good tenants from the start by using standardized legally compliant rental applications and thorough screening criteria that reduce riskIf yoursquore relying on outdated forms or making inconsistent decisions your rental business is at risk This guide will walk you through the most common points of failure during the application process and how to correct them1 Using the wrong application formsYour rental application forms must adhere to all applicable federal state and local landlord tenant laws Downloading a general application form online whether free or paid wonrsquot cut it You canrsquot verify if the forms were created by a lawyer and therersquos no guarantee theyrsquore current Not only do you need legally valid forms but you might need to include information specific to your rental units as a prescreening method to deter unqualified applicantsThe legal risks can be serious If your application doesnrsquot follow the law it could get you sued Using forms that donrsquot reflect accurate and current laws expose you to compliance violations HUD makes updates to the Fair Housing guidelines and using an outdated form might mean yoursquore asking prospective tenants prohibited questions2 Overlooking incomplete applicationsWhen a prospective tenant submits an application with incomplete information thatrsquos a red flag You canrsquot assess what you donrsquot know Missing employment information and gaps in rental history are all too common Not having enough information can create blind spots in the screening process that only surface after the lease has been signedOne of the most concerning bits of missing information is a lack of employment data you can use to verify employment and proof of income Without this information applicants can exaggerate or even fabricate their earnings People who lie about their employment and income are more likely to default on the rentAnother problematic omission is the lack of full rental history Skipping prior landlord references makes it impossible for you to get information regarding a tenantrsquos behavior and compliance Sometimes tenants skip rental history to hide evictions and disputes with former landlords If you find gaps in an applicantrsquos rental history or employment information and you have other qualified prospects skip the incomplete applications3 Violating fair housing lawsMany landlords are subject to the federal Fair Housing Act along with state fair housing laws Violating these laws can result in extensive fines and legal trouble For example you canrsquot ask applicants about their family status national origin disability or religion Yoursquore also required to accept service animals and emotional support animals without requiring pet rent or a pet depositIf you deny an applicant itrsquos critical to document objective reasons for the denial or yoursquoll expose yourself to discrimination claims Undocumented denials even when valid trigger cumbersome and costly enforcement actions4 Failing to calculate debttoincome ratioAccepting a tenantrsquos application just because they make 23 times the rent can be a mistake when their debttoincome ratio is high High debt reduces a tenantrsquos ability to absorb unexpected expenses which can cause them to default on the rent if an emergency pops up5 Charging improper application feesApplication fees are regulated by each state and sometimes local ordinances and violations are common Since the fee caps vary greatly by state itrsquos critical to know your statersquos limits In some states the fee caps change yearly If you charge too much for an application fee you might be forced to provide refunds or find yourself named in a lawsuitAnytime you collect an application yoursquore required to process it Charging fees without processing an application when no unit is available has resulted in enforcement actions To avoid this issue only take applications for available units6 Making decisions based on credit scores aloneA credit score doesnrsquot reflect rental payment behavior If you receive an application from a tenant with a high credit score who has a recent eviction and a high debttoincome ratio ndash even with a high income ndash thatrsquos a red flag Remember to consider all factors together and look at the big pictureProtecting your rental income begins with your applicationsRental application oversights can turn into unpaid rent and legal disputes quickly Use your applications to screen prospective tenants as a safeguard against preventable liabilities

Rental Application Mistakes That Cost Landlords Money

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Rental Application Mistakes That Cost Landlords Money

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