By: Jay Long
Q: Dear Jay, I’m a seasoned investor with several properties. The other day I took an application from a young minority woman who was divorced with three kids. As soon as I rejected her, she started screaming discrimination. This really got under my skin because I’m a divorced single mom and I would never discriminate illegally. I rejected her because she didn’t have a job and her credit report showed she pays none of her bills on time to any of her creditors. How do I run a clean business without worrying about people accusing me of such things? Seething Mad in Seattle A: Dear Seething, You have hit a nerve in our politically over-correct culture. I believe your honest and don’t discriminate illegally. The problem is that just the allegation of discrimination can land us in federal court with tens of thousands of dollars in legal fees. Illegal discrimination is one of those areas where it seems the landlord is considered guilty until proven innocent. Here are the basics: It is illegal (Federal law) to decide not to rent to someone because of their race, color, national origin, religion, sex, family status, disability, and in some local laws sexual orientation. You may notice that everyone fits into one or several of these protected classes. Just because someone is a member of a protected class doesn’t mean you have to rent to them. It means you can’t reject them because of their class. But, you can reject them for any other reason you want… as long as you are consistent with your rejection and approval criteria. Frankly, I don’t care about any of that stuff when it comes to picking a good tenant. I just want them to have enough steady income to pay the rent on time and to have a history of staying the full term of their lease. It’s nice if they are clean also, but that’s unusual. The catch is how do we protect ourselves from the dirt-bags who are looking for a legal payday by making false accusations against us? What we’ve done at my office is to have written criteria for how all rental applications will be scored. We have these requirements printed on the back of the applications for everyone to see. We also keep a written score sheet on every application. They score a plus 1, 2 or 3 for good income and job history or negative 1, 2 or 3 for bad income and job history. The same scoring applies for their credit check and their rental history / landlord references. A total score (the 3 areas added together) greater than plus 6 and they are approved. A total score of plus 3 or less and they are rejected. Scores of 4, 5 and 6 will be considered if they are willing do something extra, like pay a bigger deposit or get a co-signer. We keep every single application and score sheet. And we are 100% consistent in how we score folks. We don’t fudge the numbers. If we are ever accused of illegal discrimination, I can show over ten years and hundreds of applications where everyone was treated fair and exactly the same. This may not be enough to keep me out of court, but it goes a long way to showing investigators, I’ve got my act together and they’ve got their work cut out for them. Get a written qualification program in your arsenal as fast as you can. Also keep all of your score sheets to show your consistency if you are ever tested or challenged. Jay Long is an expert real estate investor and national speaker. He’s also a licensed real estate broker, author of several real estate courses, seminars and a monthly newsletter, and former vice-president of KREIA (Kentuckiana Real Estate Investors Association). If you would like more information about Jay’s courses, monthly newsletter subscriptions, or if you would like to have Jay speak to you group… contact him at: JAY LONG PO BOX 20025 LOUISVILLE, KY 40250 PHONE (502-893-3313) FAX (502-893-3384) EMAIL Jaylong7@aol.com or www.JayLongInnerCircle.com
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