let me ask you something do you require your tenants to fill out a rental application when you run to them in this video i will explain why you should use a rental application and if you do what information you should be asking for coming up [Music] hey guys if we're just meeting my name is vitale volpof i'm a practicing attorney an active real estate investor and a part owner of a real estate brokerage in upstate new york on this channel i discuss relevant legal concepts as well as best strategies and tips for real estate investing and personal finance if you're new to the channel consider subscribing and hitting notification bell so that youtube notifies you of all my future content if you enjoy the content in this video hit the like button and comment down below and as always whenever i'm discussing legal or financial topics just remember nothing that i say in this video should be construed as legal or financial advice i provide this information for educational and entertainment purposes only and you should always consult with your own attorney and your own advisor before making any legal or financial decisions last but not least the views and opinions that i expressed in this video are my own loan and don't necessarily reflect those in my law firm or any of my business partners so why do you even need a rental application after all you can perform the necessary due diligence on your tenants without one for example you can require your tenants to go to a site like renprep.com which i talked about in a recent video affiliate link in the description below if you would like to check them out and have them provide all of their personal information directly to the site in order to obtain their background and credit checks in that scenario all that is needed from your tenants is their name and email address there are also other sites that tenants can go to where they can obtain a copy of their background and credit reports which would not require them to fill out an application with you so if getting the background and credit checks isn't the reason for an application why do you need one well there's actually more to vetting a tenant than simply checking their background and credit first an application allows you to see how truthful the tenant is in his or her responses to the questions you ask them on their application you can cross-reference their responses for example with regard to their past landlord history if your application asks them to list all their past residences and their responses on that application omit an address that their background report shows well that may be a red flag and is something you need to follow up with them on second a well-crafted application provides you with some insight into your tenant's mindset about their personal finances and how seriously they will view their responsibilities as a tenant i'll explain what i mean by that in just a bit third a good rental application will gather information that may allow you to more easily collect on the money judgment against the tenant should such a judgment become necessary in the future this is information such as their social security number driver's license date of birth and so on finally a good well-crafted rental application will also act as a shield against potential fair housing discrimination claims relating to your tenant's selection process one word of caution here is that a poorly crafted rental application which overtly violates the fair housing laws can result in more rather than less liability so as i will talk about in a little bit definitely take care to know the laws in your jurisdiction when it comes to tenant screening so you don't unwittingly violate them okay so hopefully you're starting to see the value in using a rental application so what information should you ask for if you decide to use one well there are six categories of information that i think you should be discussing with your tenants on your rental application number one is the applicant's personal information you should ask your applicant to provide their full name social security number date of birth driver's license number phone number and email address as i mentioned this information is important in identifying your tenant confirming that they are who they say they are and ensuring that you have all the necessary information should you ever have to sue them and collect on the money judgment against them of course the hope is that you never have to do that but you want to be prepared and armed with the right information if you do number two is the applicant's rental history i think that you should ask your applicant to list all the places they have lived over the last five years including their current residence this section of your application should ask the applicant to provide you with the full addresses landlord's names and phone numbers move in and move out dates and the reasons for moving you should then cross-reference the information the tenant provides you in this section with the data that will be provided in their background check once you get this information you should call the landlords listed and ask them about how this applicant was as a tenant while they rent it to them another tip that i picked up from brandon turner biggerpockets.com is that you should put more weight on what the prior landlords tell you rather than what the current landlord tells you about this applicant because the prior landlords have no reason to lie while the current landlord may be looking to get rid of a bad tenant and embellish how good the tenant is prior landlords have no incentive to be untruthful number three is the applicant's employment information in this section you should ask your applicant to provide the name phone number and supervisor's name at their current employer you should also ask them to state their title and how much they make per month in gross income my rule of thumb is that the applicant's gross monthly income should be at least three times their monthly rent and preferably significantly more lastly you should include a line in this section for other sources of income and how much those bring in per month in terms of vetting the income information that your applicant provides you you can try to confirm it yourself or you can outsource this task to attend a screening website rampprep.com has an income verification add-on to their standard screening package that uses a unique approach to income verification that will be quite difficult for your applicant to fake this is something that i covered in my review of renprep.com and i will include a link to the video in the youtube card above number four is a section where you should ask your applicants some probing questions with regard to their financial responsibility and mindset when it comes to being a responsible tenant in this section you may want to ask your applicant questions like how long do you plan to live here have you ever broken a lease do you smoke what reasons could cause you not to pay your rent on time and so forth there's a lot of room for including some creative questions that could give you an indication to how good or bad this applicant will be as a tenant but you also have to be careful here so that you don't ask any questions that may be prohibited in your jurisdiction for example in some jurisdictions it is perfectly legal to ask whether your tenant has ever been convicted of a crime or whether they have ever been evicted however in other jurisdictions those questions are strictly prohibited by state and local laws and regulations even asking a question like what pets do you have or how many people will be living in the apartment must be phrased with care you don't want your questions to give the impression that you are against people who have children or renters who have emotional support animals those are also prohibited in most circumstances and can result in potential liability for you number five is a section in your application which provides your applicant with a list of qualification standards that you will follow in determining whether or not you will rent to them now this isn't a section where you're asking your applicant to provide you with any information rather it's a section where you are providing information to your applicant this will be a list of criteria on which you judge your applicants some examples include a minimum credit score of 650 positive landlord references for the last five years gross monthly income that is at least three times the monthly rent and so on the purpose of including these criteria in the application and by the way if you used any criteria in your advertising the criteria in your rental application should be 100 consistent but the purpose of including these criteria in the application is to number one make sure that your applicant is fully informed and number two protect you from claims that you discriminated against an applicant when you don't have any stated criteria and you decide who you will run to based on some factors for some applicants and other factors for other applicants you open yourself up to claims that there was an improper reason for you to reject a particular applicant even if your actual reason was perfectly legal consistency of standards and your implementation of those standards to each applicant is the most important part of keeping yourself out of legal trouble finally number six is a section where you will inform your applicant that you will be performing a background credit employment landlord history and other inquiries with third parties and that your applicant gives you the express right and permission to do so this is very important since many third parties will not provide you with any information about the applicant without such written authorization so this section should include a detailed paragraph on what kind of verifications you plan to do and it should also be signed and dated by the tenant so these are the six categories of information that i believe should be incorporated into every rental application if you guys would like to get a sample rental application i will include a link to it in the description below it is totally free but keep in mind that it is merely a sample and is not necessarily something that is approved in any jurisdiction you will need to refer to the laws in your local jurisdiction to ensure full compliance federal state and local laws are constantly changing and even if the sample application complies with them today it may not do so tomorrow there is no substitute for consulting with a knowledgeable attorney who's up to date on your local landlord and tenant laws so with that said guys that's going to do it for this video if you have any questions for me please feel free to drop them in the comments below if you enjoyed and got value from this video please hit the like button and if you haven't yet subscribed to my channel definitely subscribe so you don't miss any of my future content have a great day and i will see you in the next one take care [Music] [Music] you