I have three rental properties which I manage on my own, so I use an online service to help screen my applicants. Also, I try my best to be fair and follow Fair Housing Act so that I don't get a horror story to write on here. I've had very "good luck" in my 6 tenants so far. I only say "good luck" because I think screening weeds out a lot of bad stuff.
Needless to say, every time someone decides to move out, I despise the entire process of showing, getting applications, and signing the lease. However, I know it's just one necessary part of this rental business, so I just suck it up and do it when it happens.
However, this time, I have what I think is a unique story. So while it will be long, and hopefully provide useful for others, I'm always looking for ways to improve my process. I'm also not seeking any kudos, but do appreciate knowing I'm doing stuff right too.
Background: I have already greatly improved my process learning from previous experience. I rent 2 BD / 1 BA properties, all three of which are townhomes. Two are in the same complex. The third was a previous residence of mine. The market based on my homes and locations are mostly young professionals/couples who are either starting a family, or have a small family.
I only advertise online, which works well for my demographics as I tend to get electronic correspondence. I used to just set up random showings, and had a lot of no-shows. Now I try to book 6 showings in one hour, 10 minutes apart, so that a no-show isn't a bid deal. I also ask everyone to reconfirm via text a few hours before the showing. That helps me also gauge their interest.
I put my application criteria in the listing, but also the paper application has a one-page addendum of all the reasons for denial. I require a 600 or more credit score, rent cannot be more than 40% of income, and then typical background check, etc. I also have no smoking and no pet policies.
I also charge for the application fee to cover my costs and refund that if they sign a lease.
I do often have people ask if I'm flexible on the credit score, and I tell them I have been in the past, but I will only be flexible if I have run out of applications. So for example, if I'm doing a handful of showings on one day, or maybe back to back days, I tell them that if I receive no applications from those showings, I'd consider someone with a slightly lower credit score depending on the reasons, etc.
So here's the story...
Applicant #1: She warns me in advance, she has an eviction but said she will explain and would like to see the place as everything else is good and she qualifies. The story was based on domestic abuse/divorce, in which she left. However, he stuck around and stopped paying the rent, so since her name was on the lease, she has an eviction on her record. Okay, I can sympathize with that and she sees the place and applies. Get back the credit check, she did not pass the credit check. This is rare for me as I've seldom had anyone apply who did not qualify. So I tell her she's denied based on credit score.
I then set up another round of showings...
Applicant #2: She is very excited to see the place and wants to move in immediately. She said her rent is going up and she wants to move. In fact, she takes the application and tells me she'll go fill it out right away. She mentions where she lives now, and I have to run errands that direction after showings, so I just tell her I'll stop by. (Good excuse to see her current living situation too.) She fills it out. No issues. I tell her it'll be a couple days for the service I use to verify employment and rental history. However, she continues to check every few hours to see how it's going. This is a bit of a red flag, but I don't think much of it. She also keeps interchanging "me" and "we" when mentioning her current situation and new situation. So even though she applied for one adult, and said only one adult, it's obvious others live in her current place. So red flags are going up. Background check comes back and it mentions a recent arrest but doesn't have a lot of explanation. Thanks to Google I start searching, and she was in another state, and charged with a gross misdemeanor for assault, is currently out on bail, has a court date in about two months, and if convicted could spend up to a year in jail and/or a large fine. Needless to say she was denied and she didn't even respond to my denial text and email. I chalk this one up that she was maybe hoping since I don't use a management company, that she could sneak this past me? Whew! Glad I caught it.
So by now it's been a couple weeks, because it's a busy summer, and my renters are about 10 days from moving out. So I do another set of showings...
Applicant #3: This man comes and finally, I have someone. He runs his own successful business, travels a lot. Was just going to buy a house, but then got a divorce, so he's just moving out on his own. He has a college-aged son who is away at school. Doesn't ask a lot of questions. Just wants a place close to his business to serve as a home. This is nearly the perfect applicant. Has great credit score, background, everything is great. I let him know on a Sunday afternoon that he is approved and ask him when he wants to sign the lease... tonight, or maybe Monday night. He says he's really busy and "can't until Wednesday Night" and picked 7:30 PM. Not ideal, but hey, I have the perfect renter. So Tuesday Night I text him just to confirm we're still on. No response. Wednesday morning I text again to confirm. He writes back that he forgot about it and might not be back in town by then. He's out of town for business (driving distance based on where he told me). So I just tell him to update me when he knows. An hour before our meeting time I text him to check on any updates. Nothing. At the time I'm supposed to meet, I call. No answer. I text. I get a response that he's still out of town and it's the anniversary of his mother's death, etc. and he won't be back in town tonight. I wrote back and asked him when he can make it then. He wrote back he wasn't sure and I can find someone else then. At this point I think I'm being led along, and just give him a deadline for Friday afternoon to sign the lease or I'll start showing again. So I never heard from him again, and decided to let me renter's move out peacefully, so I could get in and make it sparkle for the next rounds of showings...
<<< I decide to change my process and going forward I now require a $200 hold, due at time of applying, which holds the apartment for 48 hours after being accepted and is forfeited if a lease is not signed in those 48 hours. >>>
Applicant #4: I am setting up another round of showings, and I have one person emailing me and just asking a ton of questions. She is very excited on the place. She works in real estate, familiar with the area, and wants this exact location. It's close to a boyfriend, daycare, school. Is perfect. In fact, she gets the application in advance and shows up with it filled out. She has no red flags, until she asks if she could have the owner's phone number to ask him some things. Well I'm the owner, so I told her and she said she'll just ask me at the showing. So the question was she needs a service dog and is that okay for my "no pets". Well I know legally I can't say no anyway, and I have actually trained a service dog, so I tell her it's fine.
She did tell me she was on disability recently from work, so cash is a little low until she gets her big insurance check, but would be able to come up with the $240 to apply and she did show up with $240 cash. And she gets approved with no issues. Her background check comes back fine. Her rental history comes back fine. Her credit score comes back fine. The only hiccup for her, is she doesn't yet have the money to be able to pay the damage deposit and prorated first month's rent. She claims she just paid her daycare and is starting a new job (including showing me the job offer letter). She did toss out if there was some way to extend the hold, and while she doesn't have money, she could offer up something for collateral.
I think on it a bit and realize I can either walk away from her, or allow her an extension. And I feel once she's in, this will be a good renter because her child will be starting school and her boyfriend lives very close. So I make her a final offer. I will allow her to extend the hold at a cost of $70 for every 24 hours. And that the maximum I'll allow her to extend is one week, or $490. And that I would allow her to use some type of property as collateral as long as the value is obviously worth more than the amount she's expecting it to replace. And that if she doesn't sign a lease, I will allow her to get back her property if she wants to pay the amount in cash instead.
She said that was fair and offered to meet me to give me a necklace her grandmother gave her, which has some diamonds and sapphires on it. So we met last Thursday. I have the necklace, she has a hold until this Thursday. She emailed me Friday to let me know the insurance company finally has all the medical records they need, so she's expecting to get her insurance check this week.
So I'm keeping fingers crossed this will all work out and I sincerely think it will, but wow, this has been a very unique (at least for me) set of 4 applicants. I tell this story, not to discourage anyone from landlording, but it's a good example of some of the times it's not just about collecting rent. That being said, again, once this process is over, it's a pretty easy way to have a nice income stream.
I'll take any advice people have on process improvements for the next time I screen tenants. And I'll update everyone on how this turns out.