AMA9-16-13Housing continues its upswing, and that’s driving growth in other economic sectors too. And a major contributor to the strength of the housing market is the bustling rental marketplace, which spells good news for income property investors as well as renters. Well, some renters anyway – as landlords fed up with problem tenants skirt fair housing laws to make sure that they attract the most desirable residents for their rental properties.

Time was, renting properties was simple: put am ad in the paper, wait for applicants to show up, do a bit of background and credit checking, and hope for the best. But the expanding pool of renters, rising rents and the availability of Internet tools has changed all that, allowing landlords not only to be more selective in their choice of residents but also to actively recruit the kind of tenants they prefer.

Tenant profiling allows property owners to define exactly what the ideal tenant might be – and then go after that individual or family. It’s a way to clarify, either mentally or on paper, all aspects of the best residents, and can include factors such as income, lifestyle and social status. As long as none of these criteria become public, anything is fair game – but fair housing laws prohibit rejecting a prospective on the basis of several protected classes.

Aggressive advertising in social media and other online locations as well as in desirable locations also helps to reach the “right” tenants. Target phrases such as “eco-friendly” or “energy-efficient” can also pull applicants in and bring in higher rents without violating housing laws.

Another new trend in the increasingly competitive world of rental housing involves checking out the competition. Just as a new business owner might evaluate similar businesses in the area, more and more landlords are actively snooping on their competition – visiting websites, touring properties following their listings and even posing as potential tenants in order to find out what others in the market are offering.

Tacking on fees to the application process is another tactic that helps screen out less desirable tenants. Application fees cover background and credit checks and compensate the landlord/investor for the time spent. And they also weed out lower income applicants and the less motivated renters as well – without overtly specifying income levels or other factors that might violate fair housing laws.

The courts are clogged with landlord-tenant cases, and investors concerned with making a return on their investment as Jason Hartman recommends can't afford vacant properties or the costs of repeated cycles of re-renting. So tenant recruitment becomes another tool for protecting the investment. And as housing continues its upswing, the new tactics help landlords change the landscape – and the rules – of the still expanding rental housing market. (Top image: Flickr/gorogen)

The American Monetary Association is the source for financial news you need. Read more from our archives:

Can the Housing Upswing Predict a Downturn?

Investing on the Go: 5 Useful Apps

The American Monetary Association Team

AMA logo