What is the first thing you need to know about a potential tenant? For most property owners, it is their credit score. But this is not the only thing that matters. In fact, when we screen potential tenants as part of our property management services, we look at a wide variety of criteria before determining if we should recommend renting to them or not. So, what are some reasons you might be better off rejecting a tenant even if their credit is stellar? Let’s take a look at 5 valid reasons to reject a tenant with good credit — and legal — reasons below.
# 1: Their Income is Below the Threshold
You do not want to rent to anyone who will not be able to afford the rent each month. Even if they can manage it at first, all it will take is an expected expense and then they will fall behind. Every tenant you rent to should have proof of income that meets the threshold.
And what should that threshold be? A common rule to use is that the income threshold should be three times the price of monthly rent. However, there are many factors at play when determining this. If you work with a property management company, they should be able to help you determine the correct threshold for your rental.
Of course, asking about their income is not enough; it is vital that their income can be verified. The tenant should be able to provide employer references, pay stubs, and tax returns as proof of income. If they are unable to do so, they should be considered a risky choice and have their application denied.
# 2: They Refuse to Authorize a Background Check
While the credit report and background check are often run simultaneously, it’s not unheard of for a potential tenant to refuse the background check portion. If this occurs, you should automatically reject their application. The background check is a vital part of making sure the people you rent to are good people who will treat your property well and represent your community. Not only that, but the law states that all tenants must be treated equally, so if you have required background checks in the past, you must continue to require them in the future.
# 3: They Smoke or Have Pets
Every rental application should ask if the potential tenant smokes and if they have a pet or pets. Both of these raise multiple concerns. In either case, you may be fine with renting to them, but it is also valid and legal if you are not. Smokers who smoke in their units can cause them to smell, discolor the walls, and leave dangerous toxins behind. They can also cause fires while smoking. Even outside of the unit it poses problems in terms of the comfort of other renters and littering.
Animals also can leave behind odors and damage the units. Outside, they can leave your green areas less than pleasant for the larger community. However, unlike with smoking, there are some renters with pets you cannot legally deny, namely those with service animals. Before turning down a renter with a pet, you must be certain they are not referring to a service animal. If you do decide to rent to someone with a service animal, be certain to see all paperwork validating them as an actual service animal and not an emotional support animal. If you are uncertain how to handle this, you might wish to work with a property management service with experience in this area.
# 4: They Have No Rental History or a Less Than Stellar Rental History
If a tenant has no rental history, renting to them is a big risk. In most cases, it’s best to deny their application. However, you can make an exception when there is a cosigner or if you feel everything else looks good. This is a decision you must weigh carefully, but without ample evidence pointing in the right direction, denial is safest.
On the other side, they may have plenty of rental history, but it might not inspire much confidence. Perhaps their prior landlords reported damage to their property, late payments, or other problems. If their rental history is poor, you should not take the risk, no matter their credit score.
# 5: They Lied on Their Application
Why do we lie? To hide something. And if a tenant is trying to hide something from you, it cannot be good news. Should you discover any portion of their application to be falsified, reject it immediately. Even seemingly small errors can be calculated to stop you from finding something out. Instead, wait for a better applicant to come along.
For Excellent Property Management Services, Turn to A Creative Property Management
There is often a fine line between valid and legal reasons for rejecting a potential tenant and those that are not. Rather than attempting to determine the right choices on your own, turn to us. We have been helping Southern California property owners in these decisions for decades, and we are happy to guide you as well. Contact us to learn about our customized packages and make the most of your rental property.