One of the most difficult areas when dealing with rental property is the selection of tenants. While it is important that you find tenants that are responsible, financially stable, reliable and considerate, you must always abide by fair housing laws and clearly understand the rules associated with discrimination.

Establishing which criteria are most important when it comes to tenant selection takes careful planning. You should never just rent to a tenant because you like them, or someone else gives them a good referral. Letting your own opinions or the personal opinions of others allow you to make your decision is very risky and can also be potentially illegal. Set up good guidelines and stick to them.

All prospective tenants should be made aware of your application system. You can list your qualifying criteria right on your rental applications. Be sure to state clearly that your system is fair and takes into account that you will be complying with all federal, state or local housing laws. Before beginning any rental process, consult the state and local guidelines for fair housing to be sure you are in compliance.

Once you know the fair housing laws and how they apply to you, your rental property and your prospective tenants, you can identify additional factors that you will use to rate each tenant’s application.

It may seem like common sense, but you should always verify your applicant’s identification. Most people have a driver’s license or non-driver’s photo identification. Make a copy of this identification and attach it to the tenant application. Not only does this help you verify that the person you are reviewing is who they say they are, but you will have a permanent record to keep in the event that are ever legal issues that arise requiring you to identify your tenants.

You will need a method to verify that the potential tenant has an adequate income to rent ratio. Most landlords require that a tenant prove they have a gross monthly income that is at least three times greater than the rent of the unit. Pay stubs, bank statements and tax returns can be evidence to this. Being unable to verify an applicant’s income is an acceptable reason to deny an application, as there is no assurance to you that the rent will be paid.

Many landlords will run a credit check on their applicants. This must be done only with the applicant’s permission. The results of this credit check will be an indication of how financially responsible the applicant is. An applicant with a low credit score can legally be denied due to the risk. Any potential occupants over the age of 18, along with any cosigners, should have a credit check.

References should be checked carefully. Be sure to obtain names and numbers of current or previous employers, as well as previous landlords. You can verify the applicant’s income source, as well as their history of paying rent on time. Character references can also be helpful, however, applicants are highly likely to provide the names of friends or relatives that would perhaps be less objective. Poor references can be a legitimate reason to deny an applicant. For assistance, contact a Michigan property management company.