What Do Investors Need to Know about Rental Applications?

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12 Apr What Do Investors Need to Know about Rental Applications?

Real estate investors that choose rental properties for their long-term goals must follow plenty of laws and regulations.

As a rental property owner, you want to find the best tenants possible to minimize vacancies and maximize your rental income. One of the first steps in finding new tenants and starting the leasing process is creating a rental application. However, there are some critical things to keep in mind when creating a rental application to find quality renters and stay compliant with the law. Here's what you need to know!

What Is a Rental Application?

The rental application is a document that potential tenants fill out to apply for rental housing. It collects information about the applicant's rental history, employment, income, and other vital factors. The rental application helps landlords screen tenants and decide who to approve for tenancy.

With current property management technology, prospective tenants can fill out an application online to expedite the screening process and keep critical information secure.

close up of rental application with pen

While it's probably tempting to use a generic template to gather basic information, property owners must pay close attention to wording to avoid legal issues and discriminatory practices. Therefore, if you start with a template, take time to research local landlord-tenant requirements and customize the application to comply with the law.

What Should Be Included in the Rental Application?

When creating a rental application, property owners should request the applicant's contact information (name, email, and phone number), rental or residence history, employment information, and current income.

A real estate investor may also require a credit check, criminal background check, and references. However, before conducting any background screenings, potential tenants must give approval in writing. Your rental application is an excellent place to request permission and a signature to proceed with a background check.

We recommend working with a real estate attorney and a property manager when creating the application and rental lease agreement. They can help you comply with state and local laws and let you know what else may be required for these documents.

Can Rental Property Investors Charge a Fee for the Rental Application?

Yes, landlords can charge a fee for the rental application in most states. The fee is generally used to cover the cost of a credit check and criminal background check.

In most cases, this fee is not refundable. However, be sure to check your state and local laws regarding rental application fees before charging any prospective tenants.

Are There Any Special Considerations for Rental Applications?

Yes, there are a few special considerations landlords should keep in mind when creating rental applications. For example, landlords cannot ask questions about an applicant's disability or need for an emotional support animal. These questions could be considered discriminatory under the Fair Housing Act.

Additionally, some states have laws that prohibit landlords from requiring a credit check or criminal background check. An attorney can help you check on these requirements for the rental application. Remember that specific requirements can change depending on the various markets where you operate rental properties.

Additional Disclosures

While the application's primary function is to gather information to help you choose the right renter for a rental investment property, it's also the ideal place to include required disclosures that ensure a fair and legal screening process.

Again, working with a real estate lawyer and a property manager is the best way to make sure your applications comply with the law. Most states require residential property owners to disclose the rent amount, security deposit amount, renter criteria, and if you allow pets (or not) on the rental application.

Protect Rental Real Estate Investments With a Legal Application

Creating a rental application is an important step in finding quality rental property tenants. However, there are some critical things to keep in mind when creating the application to find quality renters and stay compliant with the law. Following best practices and legal requirements helps protect the investment properties you worked hard to find and make profitable as rental homes.

Close up view of couple signing documents, customers renters tenants or clients write signature on rental sale prenuptial agreement or rental contract paper

When in doubt, work with a real estate attorney and property manager to create your rental application and lease agreement. They can help you avoid lawsuits and reduce the risk of placing a bad tenant due to a rental application that wasn't thorough enough.

After a thorough screening process, make sure your standard lease agreement complies with the law! Rental applications and lease agreements are critical documents that protect tenants from unfair screening, selection, and management practices (like denying an emotional support animal)—but these documents are also crucial to helping investors generate the revenue they need from their real estate investments!

Find Your Next Investment Properties With Privy!

Before creating a rental application and standard residential lease agreement, you need a good rental property to attract good tenants! Privy delivers up-to-date real estate opportunities and investor insights in multiple markets throughout the country. No matter where you choose to own and operate rental properties, start and build your portfolio with the Privy Advantage! Reach out soon to learn more about how our platform works.

Download our free resource, "The Ultimate Guide to Lease Agreements," for expert lease creation tips!

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