Multifamily Rental Criteria: An Owner's Screening Guide

A multifamily site's rental rules should explain how forms, household income, credit, rental past and supporting files will be reviewed. Put that step in writing before leasing begins. This includes who handles questions, needed gaps and an unfavorable choice.

A score or income multiplier does not predict each future payment. The owner needs a steady step that can be explained from the form and its supporting records. Coastline's written main rules use a 2.5-times gross-income rule, with site-clear differences and needed gaps. The calculations below explain that rule and a split three-times case. They do not decide whether an applicant qualifies.

Establish written criteria before collecting applications

Clarify which adults submit forms, how household income is combined, which records are requested and how the form becomes complete. Keep the form review and the proposed lease signatures distinct. Questions involving a live-in aide, an accommodation or a guarantor need the local step rather than an assumption that each adult user must be treated identically.

The person handling leasing should know where an open question goes. For case, a reference that cannot be reached is other from a reference reports an unpaid balance. The form record should distinguish unavailable facts from checked facts.

Explain the income calculation and its limits

For a hypothetical unit renting for $2,000 a month, a 2.5-times gross-income criterion produces $5,000 in monthly income, or $60,000 a year. A three-times criterion produces $6,000 a month, or $72,000 a year.

At those figures, rent uses 40 percent of gross income in the first case and one-third in the second. Gross income is before taxes. Neither calculation includes the household's other spending or guarantees payment. State what income and rental charge the written criterion uses so someone can reproduce the calculation.

State Government Code section 12955 needs income standards to account for people living together on the same basis as married households. Lawful, verifiable income can include wages, benefits and housing assistance.

For an applicant with a government rent subsidy, an income standard must use the applicant's portion of rent. If the hypothetical $2,000 unit has an applicant-paid share of $600, applying a 2.5-times income standard to that share yields $1,500, not $5,000. This illustrates the calculation, not a determination of program eligibility.

If credit past is used for a government-subsidy applicant, the applicant must be offered the option of lawful, verifiable alternative proof of ability to pay their rent share. When elected, give reasonable time and reasonably consider that proof in place of credit past. Benefit records, pay records and bank statements are examples.

Read the credit and rental records behind a score

Coastline's written rules refer to a 650 credit benchmark and record gaps involving bankruptcy, medical or student debt, along with a co-signer route for missing or insufficient credit. Obtain the current written site rules before applying a cutoff. A benchmark in this article does not set that a score of exactly 650 qualifies.

A credit score summarizes facts under a scoring model. It does not explain each entry or set whether the report belongs to the correct person. Check the applicant identity, report date and facts key to the written rules. A reported balance, a disputed item and a bankruptcy are other facts.

The CFPB's credit-report guidance lists Chapter 7 bankruptcy at ten years and Chapter 13 at seven years as main reports periods. Its split bankruptcy guidance explains that bankruptcy may remain up to ten years across chapters, with gaps. A main reports period is not a universal rejection rule.

Rental past can involve a landlord reference, an account balance or a court record. An eviction filing and an eviction judgment are other events. The CFPB's tenant-screening guidance explains federal reports limits and notes more state protections. Review accuracy, age and whether facts may be used before applying a criterion.

Request documents that serve the review

Coastline's main record list includes government-issued photo checks and the most recent three months of bank statements and pay records. Its screening step calls for reviewing the files and recording missing facts before proceeding. The site rules must account for lawful nonwage income and needed alternative proof. A standard wage-record list cannot cover each household.

The form should explain the files requested and their purpose. Income check may involve pay records, benefit statements or self-employment records. A bank statement may check a particular fact. Explain the period requested and handle local alternatives through the screening step.

Describe the period in clear terms. “Twice monthly” and “each two weeks” produce other numbers of pay statements in a year. Avoid the ambiguous phrase “bi-monthly” when explaining what to give.

The State Team of Real Estate's form guidance explains that an applicant unable to give a Social Safe or driver-license number may give government-issued photo checks, such as a passport or foreign driver license. Identity check is other from asking about immigration status.

Specify the approved submission method and who needs access to the files. A blog's sample list should not become an step to email a Social Safe card, tax return or bank statement to an unverified address.

Review criminal history within the applicable limits

The State Civil Rights Team explains that housing providers cannot consider arrests without a conviction, sealed or expunged records, or juvenile matters. It also prohibits blanket bans on everyone with a criminal past.

When a conviction is considered, its connection to tenancy and safety matters. CRD describes reviewing the nature and severity of the conduct and the time that has passed. A screening report's label is not a substitute for that review. Keep the permitted facts and the reasoning tied to the local rules.

Follow the screening-fee process

Screening fees depend on the permitted costs and form step. Civil Code section 1950.6 limits fees to eligible costs and reasonable processing time, subject to the CPI-adjusted state ceiling. Open slots and the chosen form step matter.

Coastline's logged step supplies written site rules with the form, considers completed forms in received order and approves the first applicant who meets the rules. A fee is charged only for an form actually considered. An unavailable unit, incomplete form and unconsidered form are other situations.

Record which applies. Refund fees for unconsidered forms. This includes within seven days when concurrent submissions inadvertently collect them. Applying the fee to another available unit is an alternative only at the applicant's choice.

Give the itemized receipt and return unused amounts as needed. If a fee was paid, give the applicant's consumer credit report within seven days of receiving it. For an form considered but not picked, retain only permitted actual screening costs and refund unused amounts. Review the complete statute and current site rules before collecting a fee.

Document an unfavorable decision and the required notice

Coastline's current rental-plan step assigns form review to the leasing person and routes a site or plan gap to the Senior Site Team. Keep the rules used, supporting records, missing facts and gap handoff in the form record. The logged co-signer income rule is 5.5 times the rent, with the other local rules met. Needed subsidy rent-share and alternative-proof rules still apply.

The FTC's landlord guidance explains that an unfavorable action based partly or entirely on a consumer report needs an adverse-action notice. This can include denial or needing a co-signer.

The notice identifies the reports agency, explains that the agency did not make the choice. States the rights to dispute facts and request a free report within sixty days. Use of a credit score adds disclosure rules. Written or electronic notice helps preserve a record. Still, completing a notice does not by itself set that the underlying choice was proper.

For a multifamily owner reviewing the leasing step, begin with the current written rules, the form form and a sample of how incomplete facts, needed alternatives and notices are handled. Contact Coastline Equity to discuss the care work your site needs. A main article does not approve or deny a particular form.