Legalized Marijuana: Its Impact on Your Rental Properties
"You don’t have to provide a one-hundred page document listing every type of pet by name that aren’t allowed in your no pet policy, so why should you have to identify what can or cannot be smoked in your property."
The 2020 elections completed last month will go down as one of the most memorable for our great country. Along with the obvious reasons, it is also historic for landlords as almost every state now has adopted some form of legalized use of marijuana, whether recreational, medical or both.
Why landlords you ask?
In my experience, landlords are primarily interested in two things:
1) protecting their ability to collect rent and,
2) protecting the value of their property.
Let’s examine both in more detail in relation to legalized marijuana and its effects on your individual properties.
PROTECT MY ABILITY TO COLLECT RENT
Your ability to collect rent is the lifeline of managing and maintaining your asset. As I have discussed in prior articles, that ability has come under attack earlier this year with eviction moratoriums. Now, with the legalization of marijuana, it is under attack again, although this time it is a little less straightforward. Tenant screening company Rent Perfect has data for 2020 that shows the average credit score for every applicant that applies through their system. Here is a breakdown that you may find alarming:
Average credit rental score for all applicants………………….633
Average for applicants with no criminal history in 7 years……646
Average for applicants with a drug conviction…………….……574
Average for applicants with any criminal history……………….567
Based on these numbers I feel confident in saying that an individual who smokes marijuana (or uses other drugs) does represent a higher risk to a landlord not being paid rent. This does not indicate that every person who smokes marijuana has a mid-500 score, but on average they do have a subpar score compared to the average renter or those with no criminal history, who score almost 80 points higher. As a seasoned landlord I know that an applicant’s credit score reflects their reliability and responsibility in paying rent. The numbers indicate that a non-criminal, non-drug user (illegal or otherwise) is most likely to pay you rent every month over someone with a drug conviction or other criminal history.
PROTECT MY PROPERTY VALUE
If you’ve ever been in a property that has been affected by traditional cigarette smoke, the impact is obvious. Why would we ever think that smoke from marijuana would have any less of an impact? Truth is, it is nearly impossible to remove smoke damage from drapes, ceilings, walls, and carpet. In addition, individuals who smoke marijuana recreationally rarely do it alone; it is more of a social thing. So, you don’t just have one smoker in your property, you now have the potential of several user who just multiply the damage. That is why most landlords do not support smoking of any type. When you have a no smoking policy, that already includes marijuana smoke. No smoking literally means no smoking. You don’t have to provide a one-hundred page document listing every type of pet by name that aren’t allowed in your no pet policy, so why should you have to identify what can or cannot be smoked in your property. Critics may cry that marijuana is legal and it’s not fair to prohibit its use on your property. Tobacco is legal and you don’t want it in your property either. Bottom line, you own the property, you make the rules.
In early December 2020, the House passed sweeping legislation that would decriminalize marijuana. If that becomes law, as a landlord I would say “no big deal” as we already have that covered. As landlords we should care about smoke damage from marijuana use and not the drug itself. If alcohol, which is legal, caused extensive and expensive damage to my property, I would prohibit its use as well. Again, my property, my rules. Landlords have the right to protect their property and to create criteria and rules that will allow them to collect rent and maintain their investment well into the future. After all, you’d hate to see the value of your property go up in smoke due to the actions of your renter.
About the Author
David Pickron has been a licensed private investigator for over 20 years, specializing in tenant screening for real estate investment owners and property management companies. His company, Rent Perfect, an Investigative Screening Company, helps clients onboard tenants from the initial background check to leasing and payment collection. You can learn more by visiting www.rentperfect.com or calling 1-877-922-2547.