As a landlord, the pre-rental process should consist of your looking through several viable candidates for your rental property or properties until you find the right match based on applications and in-person meetings. These types of processes exist because not every potential tenant is perfect and some may have some undesirable characteristics. Every individual who owns an investment property and is looking to rent it needs to know what they should be looking out for in applications and what reasons they can use to legally reject a potential candidate.
A criminal history
When conducting a background check, finding arrest records or past convictions can be concerning and might be a reason that you reject an application. However, the legality of doing so can sometimes be risky, because several factors play into the rejection of a potential tenant with a criminal history. For example, the biggest thing you need to ask yourself when looking at these records is whether or not this individual was actually responsible for the crime or crimes and whether or not these crimes pose a potential danger to your property and tenants or to properties and tenants surrounding your own. You should also consider how long ago the charges were, whether or not the individual is still engaged in such behavior, and how serious the crime was.
Insufficient income or high debt
Tenants must be able to pay rent. If it appears that they may struggle to do so after they move in, it’s OK to reject an application. Insufficient income and high debt often play off each other, and you should easily be able to see whether or not the tenants have the reliable income that allows them to afford your rent and to be able to pay it on time. Any indication of a potential problem is why you can reject the application.
Poor credit history
This plays heavily into the point above because a credit score will tell you how well individuals have managed to pay back debts. If their scores are low compared to the average credit score, this is a good indication that they have been late in paying bills and are at risk of paying their rent late to you, too.
Evictions are definitely something you need to keep your eyes open for as you evaluate a tenant’s application. If a tenant has had one or multiple evictions, it shows that they were either a problem on the property or were unable to pay their rent and needed to be removed. Either way, evictions are red flags on an application and show that the applicants are not likely to be good tenants for your property.
Unverifiable income sources
Your potential tenants should be able to show proof of income. If they can’t provide proof of income either through tax forms, steady bank deposits, or other means, it could indicate that they are not making enough money or that they are trying to conceal their current means of income. Either way, these are not tenants that you would want in your rental property.
It’s important to make sure that you are searching for the right things when you are going through the tenant screening process and selecting legal reasons for rejecting a tenant. If you believe that tenants might not be the right choice for you but you also want to make sure that it’s OK to turn them away, peruse the five legal reasons to reject a tenant application.