Rental application process
Creating a process for your apartment rental business is essential to ensuring its success. Having a process in place is critical in streamlining operations and keeping track of the crucial details of your tenants and those who applied. This blog post will share tips on creating a process for your rental business. We’ll also provide you with an example process that you can use to improve on what you already have by the end of this post; You’ll have all the information you need to create your own successful process!
Why the process matters:
Suppose I asked you to make me a peanut butter and jelly sandwich the way you like it. In that case, I bet you could do it with your eyes closed if the ingredients were laid out in front of you on your kitchen countertop—two pieces of bread, peanut butter, and of course, the jelly.
Now imagine I asked you to make the same sandwich the way I like it. Would you be able to? How would you know how much jelly to use? Or what kind of bread? You wouldn’t unless I wrote it down step by step, and that is where the value of a process lies. In the scenario above, making my PBJ sandwich wrong will have zero detrimental effect; however, a poor or non-existent application process could cost you a lot of money and time.
The Standard Rental Process
The rental application process is designed to help landlords and property managers make informed decisions about potential tenants while also adhering to all applicable laws. It begins with the completion of an application form, in which the tenant discloses their past rental history, employment history, and contact information. Next, references may be requested from former landlords or employers who can speak to the tenant’s character and reliability. After that, a background check is conducted, which could include a credit report, a criminal record inquiry, or a review of any bankruptcy filings. The landlord then has the opportunity to decide whether or not they want to approve the rental applicant based on all of this information.
When screening potential tenants, it is your responsibility to ensure that they have the wherewithal to pay rent every month and the ability to handle the basic maintenance on your property, including maintaining a clean living space, changing light bulbs, and exterior maintenance. You must do all of this while maintaining compliance with Federal Fair Housing laws, as well as state and local fair housing laws. Although we will touch on the subject of Fair Housing basics, it is a topic for later conversations.
A Standard rental application covers the basics, including name, date of birth, social security number, income, employment, and references, past and present.
Define your minimum basic standards:
Credit Score- Do you have a minimum credit score requirement?
Credit History- Will you allow a tenant with a current bankruptcy or a bankruptcy in the last five years to rent from you?
Income requirement- The industry standard is three times the monthly rent.
Pets- Will you allow pets? If so, do you have any additional fees?
Application Fee- Charge enough to cover your costs of screening and time to screen.
Rental History – Will you rent to a tenant with no rental history? How about a tenant with a poor payment history to their current landlord or a tenant with outstanding judgments from a previous landlord?
Remember you cannot ask any questions pertaining to or make any reference to race, religion, national origin, color, familial status, sex, disability, and in Maryland, source of income.
Source of income means that you can verify that they receive a monthly income and you can verify where that income comes from, but you cannot refuse to rent to a prospective tenant with a H.U.D. voucher or who is receiving income from social security based on that fact alone.
Additionally, it’s essential to speak directly with each of the references provided by the applicant. Verify their current landlord and previous landlord, and talk with their personal references.
Taking these steps will ensure that you are making an informed decision as a responsible landlord, as well as provide security and peace of mind while collecting rent payments on time.
Screening a rental application
Now for the hard part! We have set our basic standards, and the screening report has just come back. Let’s Gather as much information about the applicant as possible beyond basic identification and contact information.
Checking credit scores and rental history can offer insight into how responsible an individual is with their finances, as well as how they may treat a prospective property. Taking these additional steps increases the chance of selecting a desirable tenant who abides by the terms of the lease agreement; however, this is not always the case. Regardless of the situation presented to you by your prospective resident, you must follow your minimum basic standards. Otherwise, you open yourself up to liability issues by showing favoritism towards one person over another.
First, any application that does not meet your minimum standards should be disqualified. Redact their D.O.B. and social security number from the application, prepare your standard declination letter, and mail it to the current address listed on the application. You should maintain all rental applications, associated notes, communications, and correspondences in your rental property files for seven years.
Second, applications that meet your requirements should be reviewed for completeness. This includes your completed credit and background check, proof of income, references, etc. If you are missing any documentation from your applicant, reach out to them and ask them to send it to you.
Third, after you have reviewed and screened your applicant- Let them know that they have been approved!
Conclusion- Following A Process Will Help You Avoid Evicting Your Tenant!
Ultimately, conducting reference checks and credit checks, along with verifying critical facts on the application, is essential when it comes to evaluating potential tenants. Doing it in a legal complaint fashion allows the landlord to voice their expectations and learn more about the tenant’s history and ability to maintain and care for the property. Following this advice can help you prevent being in a situation where you have to file a rent case or evict your Maryland tenant. If you need help with the Baltimore City evictions process, contact Baltimore Rent Court Agents today!