Diversity in real estate is a critical issue and one that isn’t addressed as often as it should be. Some Indianapolis business leaders hope to change that, though. Community leaders Lacy and Patty Jonson and Al and Shary Oak donated $500,000 to Indiana University’s Center for Real Estate Studies. The donation is to be used to improve diversity among the state’s real estate professionals. This donation has the power to do a lot of good in the state of Indiana.
How It Began
Al Oak and Lacy Johnson have been friends for around four decades, and that friendship has spilled over into the professional world, as well. Johnson represented Oak’s architectural design firm, and he quickly realized something. There isn’t much diversity in commercial and investment real estate. While African-Americans are involved in the residential side of real estate, few are a part of commercial or investment real estate.
The two friends decided they had to do their part to make a change. They knew they were in a unique position to do something. Oak was, after all, the co-founder of IU Center for Real Estate Studies, so he has some pull. He talked to the board, and everyone agreed with him. Indiana needs more diversity in real estate. With the board behind him, Oak knew he and his friend had the power to make a difference in Indianapolis and the state of Indiana.
Oak and the board decided the school needed to recruit more minorities to the program with the hope of giving them the needed tools to succeed in commercial and investment real estate. However, having a goal wasn’t enough. The school needed financing, and that’s when the two families stepped up.
The two families gave the $500,000 in an effort to help the real estate center achieve its mission. The investors believe the Indianapolis campus is the best place to recruit minority real estate majors. Students of color are more prevalent at the Indianapolis campus than they are at the Bloomington campus, so the investors realize they can reach more people at this school than elsewhere.
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Now, it’s their job to make the students aware of the opportunities that investment and residential real estate provide. That begins by making sure minorities at the school are fully aware of what the real estate center has to offer.
That begins by explaining that real estate isn’t just about selling houses. There are commercial and investment opportunities out there for those who are interested. However, many people do not realize that, so they miss out on those opportunities.
That’s why the money was necessary. While some of the money will offer financial support, the rest will go to recruiting and retaining minority students. They need to reach minorities before they select a major. They must pull them over to the program before they commit to another major, and that will take a substantial amount of work and money. Fortunately, the school can hit the ground running, thanks to the large donation.
Minorities in real estate isn’t just an issue in regards to commercial and investment real estate. It’s also something that landlords have to think about. Even though there are protections in place, minorities still face housing discrimination to this day. If you are a landlord, you need to make sure your doors are open to everyone. Fortunately, there are some ways you can make sure you avoid housing discrimination.
How to Avoid Housing Discrimination
Housing discrimination occurs when a landlord fails to rent a property based on:
- National origin
- Religious beliefs
- Veteran status
These groups are protected classes under federal anti-discrimination laws. In addition, some states have added other protected classes. These classes include sexual orientation and gender identity. It’s a good idea to avoid discriminating against all protected classes, even if some of them aren’t a part of your state’s law yet. If they aren’t a part of the law today, they will likely be a part of the law in the near future.
There are some tips you can follow to make sure you don’t discriminate against anyone when renting property. It’s important to follow these tips, so you don’t get in trouble with the court system.
Don’t Discriminate in Your Rental Listing
When you create a rental listing, you have to be careful that you don’t discriminate. That means you need to make sure you avoid any discriminatory language. On the surface, this sounds easy as could be. Don’t use any discriminatory language and you’re good to go.
It’s actually a bit more complex, though, because landlords often discriminate without realizing it. Doing something as simple as saying, “This property is great for single people” could be viewed as discrimination. You might not be trying to discriminate, but it could still come across as discriminatory.
So, how do you avoid it? Only describe the property, not the tenant. Instead of writing an ad based on who you think would be a good fit, write about the property. Let the people decide if they would be a good fit for it. Never use words like “single,” “student,” “church,” or other descriptors. Instead, let the people know what the property has to offer. That is the best way to stay out of trouble with housing authorities. It will also help you find some high-quality tenants who love the property. That’s the best way to find people who will stay in your rental property for the long term.
Screen Tenants Fairly
If you’re like most landlords, you don’t automatically accept someone just because he or she fills out an online rental application. You accept the application and then put it through a screening process. It’s important that you use the same screening process for every application. Everything must be done the same way, from the way you accept the application to how you go about signing the lease. If you deviate from the norm at all, you could be accused of discrimination. It will be hard to prove you didn’t discriminate against someone if you choose your practices from one applicant to the next.
That means you must ask every potential tenant the same questions. Also, make sure you don’t ask any frivolous questions, even if you ask those same questions to everyone. Unnecessary questions could be deemed as discrimination, so it’s best to avoid them.
Uniformity isn’t the only key to screening tenants. You need to make sure your process doesn’t have any unnecessary hurdles that only some of your potential tenants can clear. For example, some landlords actually require that people have savings in case of an emergency. It would be wonderful if all tenants had extra money in the bank, but that might be viewed as discriminatory.
Now, that doesn’t mean you can’t have requirements for tenants. You can require that they have income and that they have a certain credit score. That isn’t discriminatory. That’s protecting your best interests.
Look at your entire screening process and ask yourself if it is fair to everyone who applies while still protecting your interests. If it is, then you are likely not being discriminatory. You can continue screening applicants in the same way without any fear.
Avoid Income Discrimination
Income discrimination is a serious problem in the real world. Some landlords refuse to rent to people who receive public assistance, or they might discount the income that a woman of child-bearing age receives because they assume she will have a baby and quit working. In addition, some landlords refuse to consider the money made when it comes from social security, annuities, or pensions. This is illegal. You need to treat all income the same, and you cannot assume that someone will not make money in the future. Otherwise, you could end up in court with a discrimination case on your hands.
Always Be a Professional
You need to be a professional at all times. That includes once you fill the property. Treat all tenants the same way and use the same policies when interacting with them. That means, have an inspection schedule in place for all tenants. If you inspect one property more than the others, that can be viewed as discriminatory. The same is true if you completely ignore a tenant. That could be viewed as discriminatory, as well.
It’s a good idea to use a tenant portal when communicating with your tenants. That way, all communications will be stored, and you can access them if you have a complaint. It will also ensure that you keep up with your maintenance requests. This is a quick and easy way to keep your tenants happy.
What happens if someone files a discrimination claim against you and wins? Let’s look at the potential penalties. These penalties will remind you why you never want to be charged with housing discrimination.
Penalties for Housing Discrimination
The courts can impose a variety of penalties for housing discrimination. These penalties are put in place to protect renters from suffering from discrimination and can include punitive damages. Penalties are imposed on a case-by-case basis, but you can get an idea of what to expect if you’re found guilty by looking at the court’s options.
Rent to the Person Who Filed the Claim
In some cases, the court will require that the landlord rent to the person who filed a discrimination charge. This occurs when the judge believes the person was discriminated against and the best course of action is for the landlord to open the property up to that person. If this happens, the landlord must make sure he or she doesn’t discriminate against the tenant moving forward. If there is additional discrimination, the landlord can expect to incur additional penalties.
Pay Actual Damages
Judges also might require that the landlord pay actual damages to the potential tenant if he or she was rejected illegally. Actual damages typically include the additional rent the person had to pay for a new property. For instance, if your property goes for $1,000 a month and the person had to rent a property for $1,100 a month, he or she had to pay more due to the illegal rejection. You could be on the hook for that extra money.
Pay Compensating Damages
If the tenant was humiliated when getting turned down, you could be forced to pay compensating damages. These damages cover humiliation and emotional distress, and the amount you pay is up to the discretion of the judge. Of course, there are state laws in place to limit the amount, but you could still have to pay a large amount of money.
Pay a Civil Penalty
Things can really add up if you’re forced to pay a civil penalty to the federal government. You can be charged $16,000 the first time you break the law. It is important to follow all the rules, so you don’t have to pay such a high fine.
If the judge thinks you went out of your way to discriminate against someone, he or she can also fine you punitive damages. Along with thousands of dollars directly to the plaintiff, you might be forced to pay attorney’s fees. This could actually cause you to go broke. You might end up losing your real estate business if you have to pay thousands of dollars in damages.
Diversity Is Key
Diversity in real estate is important, from the tenant/landlord relationship to the people making deals. As a landlord, make sure you follow all the rules, so you do not discriminate against anyone. Discrimination won’t just cost you money. It will also cost you your reputation. If you have a reputation for discriminating, people will not want to do business with you. That will make it difficult for you to have tenants. That means you’ll have a challenging time running a real estate business if you aren’t open to diversity.
About the author
Matt Angerer is the Founder and President of VerticalRent. He enjoys writing on a variety of topics that help Landlords, Property Managers, and Renters across America. He is particularly interested in helping renters understand their local marketplace, pick the best places to live, and find an awesome roommate. Since 2011, VerticalRent has grown to service over 100,000 landlords and renters across America.