Aug 04

There is this online company, Airbnb, that lets you rent your house to complete strangers for hundreds of  dollars a week.  The company has a $1.3 billion dollar valuation.  Well at least they did until last week. I think the name stands for air (as in online) bed and breakfast.

The company became big news when, surprise, surprise, news breaks that some tenants trash homes.

It seems Airbnb’s business model was based on the idea that most people respect the place they are renting

The vast majority of our community members genuinely respect and protect each other 

I guess they should have had a few actual landlords in their focus groups as they set up the business model.  Every landlord would have foreseen this.

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Aug 01

A question was raised on one of the email list I subscribe to:

I need a set of screening criteria to use so I can weed out unpotential renters. Does anyone have a set they use. Also I am in Wisconsin, are their things you can and can not include?

In WI you cannot include any of the “Seven Deadly Sins” i.e. violations of ATCP 134.08. An overview of prohibited WI  lease terms can be found here.

A screening criteria is not  one size fits all.  Rather you must formulate it match your property, the community the property is in (college neighborhoods have a different set of concerns from an upper income condo, which is different from rural farm housing, which is different from lower income urban areas…) , your management style etc.
A properly written and enforced screening criteria can save you some hassle if fair housing questions are raised.   A poorly written criteria or one that is not evenly enforced will aggravate your problems if a fair housing complaint is filed.

For example a husband and wife who happen to be the same ethnic background as you apply.  Your criteria is income must be 3 times rent.  They make $2500 a month and want to rent your $950 three bedroom unit.  You like them, they seem like nice people.  So you accept their application even though they should earn $2850 to meet the criteria.

A month later a little green man from mars applies.  His job with NASA pays $1200 a month.  He wants to rent your $500 one bedroom.  You say “Sorry, our criteria is income must be three times rent.  You would have to make $1500 to qualify”  Uncle Martin (the Martian from my favorite Martian)  goes to HUD to complain.  Through their investigation they uncover that you bent your rules for those applicants that looked and talked like you, but refused to do so for little green people from Mars.  You are now facing a much bigger problem than had you had no screening criteria at all.

As to income criteria make certain that you don’t violate fair housing as to lawful sources of income.  For example requiring a recent pay stub to document income is troublesome as there are many lawful sources of income that do not provide pay stubs.  SSI, W-2, Child Support if applicant wishes to include it, retirement benefits,  and many more.  You must also include food stamps n.k.a SNAP in any income based criteria.

You can change your criteria at will, however all those screed after the change must be held to the same standards.

Our company’s criteria for rejection includes:

  • First time tenants may be required to have a collectable cosigner
  • Evictions within past 3 years
  • Felony drug or violent crime convictions in 5 years
  • Misdemeanor drug or disorderly charges in past 3 years
  • Non verifiable income or insufficient income
  • Non verifiable rental history or bad reference from any prior landlord

We have debated our criteria with neighborhood groups who would want a one strike and your out policy that would reject someone for having a misdemeanor possession charge twenty years ago, and with tenant advocacy groups that feel Charlie Manson and Attila the Hun both should be accepted.   Neither group likes them, but neither could find legal fault with them either.

NOTE: Our criteria would be illegal in Dane County and Madison due to criminal background being a protected class in those communities.

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