I’m Bob Cain, and I discriminate. Yes, I do. I am a habitual discriminator. I am also biased, and I show my bias daily, maybe even hourly. I am proud of that. It is good business.
I bet you discriminate, too. I would also venture to guess that you are biased, probably in many of the same ways I am.
Since this is a column about rental property management, here are my discrimination targets in rental property.
I discriminate, and I am biased. It’s good business. But what you will notice as you read this article is that none of the ways I discriminate has anything to do with race, religion, color, national origin, sex, familial status, handicap or any other way in which someone might become a legally protected class. It doesn’t matter a whit to me the color of someone’s skin or his or her religion, national origin, or any of those other things. What matters to me are the criteria I use to discriminate. Those are both legal and good business practice.
Above all else, I discriminate against bad tenants. Those are the people who have demonstrated that they don’t deserve to live in anyone’s rental property. They come in various gradations of “bad,” but the most egregious of them don’t pay rent on time or at all, are bad neighbors who have no consideration about getting along or acting considerately of the people who live around them, and take poor care of their homes, leaving trash, damaging fixtures, and apparently believing that cleanliness is inconvenient.
I eagerly discriminate against them. Those people have a history of bad behavior that disqualifies them from renting.
Related: The Five Keys to Tenant Screening
I also discriminate against people who don’t believe that timely rent payment is imperative. They might fall under the heading of “bad tenant,” but they deserve a special category because they might be and often are nice people who get along with the neighbors and take good care of their homes. They just can’t seem to manage money well. They always have an excuse why they don’t or can’t pay the rent.
Several years ago, one of my readers invited me to watch a sheriff’s deputy serve an eviction order on a tenant who could never manage to pay the rent, often at all. The rental unit was spotless. This tenant had planted flowers in the front flower bed and the unit looked charming and well-maintained. The floors were clean, swept and vacuumed. The stove and refrigerator looked as if they had never been used. That was possibly the case because this woman got all of her meals from McDonald’s. She may not have even known how to cook.
That money that could have gone to pay the rent went to McDonald’s and buying flowers for the front yard instead. She lacked a sense of priority about the rent coming first. It’s good business to discriminate against people who don’t pay the rent because if we don’t have rent, we don’t have a business.
Third, I discriminate against people who don’t earn enough money to pay the rent. Every property is different, but as landlords, we can use historical models to determine sufficient income to rent a specific property. The obvious first choice to discriminate against is the person who doesn’t have a job or any other source of verifiable income. That ought to be the first thing we look at on a rental application or require in our rental policies and standards, verifiable source of income.
They also must have sufficient income. That means their monthly income is enough not only to pay the rent but also to pay utilities, buy food, make car and credit card payments, and pay any other monthly bills that could affect having enough money to pay the rent.
A corollary is adequate time receiving that verifiable income. Last hired, first fired. Someone who has had a job only a couple of months is more likely to lose that job than the person who has worked somewhere three years. Public assistance and disability payments are likely to be stable, but maybe not. They can go away for a variety of reasons. It is up to the applicant to prove that income is stable and dependable, not up to us to prove it isn’t. If income is undependable, it can disappear overnight and the tenant can end up with insufficient income. It is good business to discriminate against people whose income is unverifiable, insufficient, or unstable. No or spotty income means we lose our businesses.
Related: Finding the Right Tenants, One Reason to Hire a Property Manager
Both good tenants and bad tenants come in all colors, races, creeds, religions and all those other criteria. Our job is to concentrate of what makes a tenant someone who will be a good tenant, not some irrelevant condition such as the color of his or her skin.
5 Comment on “I Discriminate; It’s Just Good Business”
prisco
July 12, 2013 at 7:29 pm
The question is how to discriminate aghainst these people in the phone interview, so they dont waste your time with a walk thru? I have 10 people coming to see my apartment Saturday, and I know Im not going to want half, because they cant comfortably afford it. Do you ask for their salaries on the phone? How can I not waste my time showing it to 10 different people? Im scared to say no, in case they accuse me of discrimination.
Bob Cain
July 12, 2013 at 10:03 pm
The safest (and most businesslike) way to proceed is to offer each of the people who come an application together with your rental policies and standards, which indicate, among other things, the income requirements for renting. Then tell each of them, “Please read our rental requirements and if you qualify, please fill out an application.” Many will see what income is required and tell you they will take it home and fill it out. Chances are, you will never see or hear from them again. That’s self-screening, the best screening of all.
Since you will be there anyway, it doesn’t matter that 10 people are coming through. Best of all, it can be an advantage in that it will have prospective tenants looking at each other and believing they have to act now if they expect to have a chance of renting from you.
luke heights
July 12, 2013 at 8:47 pm
Good article, keep up the great content. Could you write one about what to do when you don’t have tons of people wanting to rent the property? Any and all hints would be great.
Luke Heights
Author at http://www.LiveHappyAndSuccessful.com
Valerie
March 17, 2014 at 9:20 am
Simple answer to this statement of yours. First off review the property you have, from outside the inside box…would you rent it yourself , and if not why not?, Does it need some (TLC), Tender Loving Care to the inside or outside?, Is the area safe, meaning is the area a crime zone, and if it is, Is there anything you can do about security measures for the possible renters, such as security cameras, talk to the local police to do drive by’s, This is going to sound rude, but you asked for comments so here it is blunt and truthful…..Are you a nasty slum lord, who squeaks when he walks because your putting all the funds in your pocket and not reinvesting in the safety or the appeal of the property? Is the rental property clean and ready to show?, or did you just not care and showed it as the last tenants left it? The most important is this I believe….Is this property worth what you are asking for rent? If you are NOT getting bites on your property, review these things and be honest with yourself when doing so. I personally would rather lower my rent on my property and have income coming in, then to not have anything at all. Heres a thought from a investor that my boyfriends company does heating and cooling for. He has some rental properties that need some work on them and he rents it out to construction workers with maintenance experience on their resumes and what he does is lowers the rent considerably if they do all the work on the rental needed, when that one is done, they move into the next one he purchases and starts all over. Just a thought, but its working for them quite well. Good luck.
David Tilney
July 13, 2013 at 4:43 pm
Another excellent post Bob! HUD makes people think that discrimination is illegal when only ILLEGAL DISCRIMINATION is illegal. Occasionally I will ask a room full of landlords, “Who is willing to admit that they discriminate in accepting applicants for their rentals?” No one ever raises their hand. I point out that all landlords must discriminate if they want to survive as landlords, just not ILLEGALLY (against any federal, state or local protected classes).