You’ve decided to become a landlord because it seems simple enough. You have the financial means to acquire a property, a solid understanding of the local real estate market and property maintenance, and the belief that real estate will be a successful and worthwhile investment. All you really need to do is find a tenant. Simple enough–everyone needs to live somewhere.
However, you probably haven’t given much thought to the legal aspects of property ownership, particularly fair housing law. So, to that end, some things for your consideration…
- WHAT LAWS APPLY TO FAIR HOUSING?
You have heard of “fair housing law” as a sort of umbrella phrase but you’re not sure what that means. Well, it depends on where you live. Federal fair housing laws set a minimum standard and apply throughout the United States. However, states, counties, and municipalities may impose additional laws that provide greater protections than those found under Federal law. Additionally, laws not labeled as “housing” laws may apply as well. For example, laws covering disability or age discrimination may impact your landlord/tenant relationship.
- MAKE SOUND BUSINESS DECISIONS IN TENANT SCREENING
Tenant screening is an important part of the business of being a landlord. Review the prospective tenant’s credit report, criminal background check, check references, and confirm employment history. These factors will help you make sound business decisions in finding your next tenant. As long as you employ sound business decisions while screening tenants, you are likely to remain compliant with any fair housing laws.
- BE CONSISTENT IN YOUR DECISION MAKING
Once you set the standards or guidelines for making sound business decisions (as discussed in item #2), apply them to every prospective tenant. No exceptions. This doesn’t mean that your decision making process can’t (or shouldn’t) evolve over time. It just means that consistency in your tenant screening business standards will help you avoid housing discrimination–it will even help you avoid the perception of housing discrimination.
Real estate investing can be exciting and financially rewarding but keep in mind that even on small scale, it is a business—be sure to treat it that way. Consult a local attorney to provide guidance on not just fair housing issues, but the business of being a landlord.