The rental application is one of the most important tools that a landlord uses in their business because it’s what makes it possible for the landlord to screen and place the most qualified tenants in their properties possible.
As important as the rental application is, it’s also possible for a landlord to make common mistakes with the application that can be very costly.
Thankfully, there are several things that landlords can do to avoid making rental application mistakes including the following:
1. The rental application is discriminatory
Most landlords and tenants are aware of the Fair Housing Act. This makes it illegal for landlords to refuse housing to anyone based on race, color, nationality, gender, religion, age, disability, or familial status. Therefore, it would be a massive mistake if the rental application had illegal questions or clauses.
For example, illegal questions on a rental application form would include:
- What is your national origin, or what country did you emigrate from?
- Do you have children, or are you planning to have children?
- Have you ever been arrested?
Although most states allow landlords to check criminal convictions, asking about being arrested is a mistake. This is because being arrested doesn’t make someone guilty of a crime.
However, it’s not against the law to discriminate against a potential tenant based on smoking or pets. Therefore, these are valid reasons for sending the tenant a rental denial letter.
2. The rental application denial letter is discriminatory
It’s not a mistake in the rental application process to disqualify a tenant based on their income, references, or credit report. Also, if a tenant lies on the application, that is a valid reason to reject their application. However, the rental application denial letter can’t mention anything discriminatory.
For example, the application rejection cannot be based on any protections offered by the Fair Housing Act. In addition, it’s a mistake to deny tenancy based on arbitrary reasons. For example, sending a rental application rejection letter because you noticed the applicant had tattoos.
3. Ignoring the law on rental application fees
Don’t make the common mistake of ignoring state and city laws on rental application fees during the rental process. It is usually possible to charge fees for the tenant screening process. However, some states don’t allow you to charge tenants fees. In addition, it may be required to refund fees if you deny the tenancy.
4. Charging too much for the security deposit
The rental application contains information on the security deposit, and it can be a costly mistake to ignore state laws on these. Many states have rent control laws that regulate security deposits. These regulations control how much you can collect, how to hold the money, and when to return it.
In some cases, landlords can request an application or holding deposit to allow the tenant to secure the property while screening takes place. If the application is rejected, it’s important to refund the holding deposit.
The security deposit is different from the application deposit because it’s used to pay for potential damages during the lease. It is usually only paid after the application has been approved and the lease signed.
5. Setting the wrong rental rate
One of the worst mistakes during the rental application process is to get the rental rate wrong. The amount you charge in rent directly impacts your revenue and vacancy rates. If the rent is set too high, you will have trouble attracting prospective tenants to apply. Even if you find a suitable tenant, they may not stay too long if they find cheaper accommodation.
Of course, if the rental rate is too low, you will find it difficult to make a profit, cover unexpected costs, or make mortgage payments. For example, it may be challenging to keep up with maintenance, and the rental unit could fall into disrepair. And this is usually a reason for tenants to get their landlord into trouble. You may even attract the wrong type of renter if you underprice the rent.
6. Accepting illegible or incomplete rental applications
It can be a costly mistake to ignore the warning signs of a sloppy application. For example, spelling mistakes or illegible writing could create confusion down the line. Also, it could make the screening process difficult if you can’t read the social security number or the previous landlord’s phone number.
It is also necessary that tenants complete every section of the application. If a section doesn’t apply, then they should mark that appropriately.
Many landlords use a property management app or request tenants complete a digital application to fill out rental applications properly. This way, you can ensure that only a properly completed application can be submitted.
Contact RPM Central Valley
At RPM Central Valley, we specialize in full-service property management for the Central Valley rental market.
Our team saves owners the time, money and hassle of managing their investment properties themselves.
To learn more about the services we can offer you, contact us today by calling (209) 572-2222 or click here to connect with us online.