As a rental property owner, conducting a thorough screening process before choosing your next tenant is a crucial aspect of maintaining your business and protecting yourself and your property. It’s just as important as conducting proper rental inspections.
Implementing an intensive screening process can act as a preemptive measure to avoid many issues caused by problem tenants. These issues range from damage to your property and angry neighbors to illegal activity on your property or lost funds due to missed or late rent.
As a landlord, it is never ideal to have to evict a tenant or deal with any of those issues, and thoroughly and effectively screening potential tenants is the best way to avoid such problems.
While some landlords may think that they can save time and money by skipping this process and just choosing a tenant based on a gut feeling, screening tenants can potentially save you a large amount of time and money on things like evictions and maintenance of your property.
As time-consuming and costly as screening rental applicants may be, it’s an infinitely better alternative to evictions or other issues that may happen in your unit as a result of a problem tenant.
But what is the best way to screen tenants effectively? From credit checks to interviews, it can seem like a daunting task. That’s why we have provided a simple step-by-step guide to help you navigate your next tenant screening process with ease.
Determine Your Requirements
The first thing you want to do before conducting a screening process is to determine what to look for in a tenant and what your standards are.
To help you figure out what qualities you are searching for and what to require on the application, here are some things to consider.
One of the most common issues that landlords run into when it comes to dealing with tenants is unpaid rent. The ideal tenant is someone who has a stable income that allows them to pay rent every month, even when other unexpected costs come up.
If a tenant doesn’t make enough money, they may end up being unable to pay rent or other expenses. A good rule of thumb is to choose a tenant who makes at least three times the amount of the rent price every month. Using this ratio, you should be able to choose a financially reliable tenant.
If the tenant you have chosen has an income that is less than this recommended amount, consider bringing in a co-signer with a verified stable income as added financial protection for you as the landlord.
Previous Landlord and Employment References:
Applicants should be able to provide positive references from both landlords and employers. This helps you determine what kind of tenant they have been in the past and whether or not their employment is reliable. You can also request a proof of income letter.
Contacting prospective tenants’ former landlords is extremely useful, as the previous landlord can provide you with information about that person’s behavior as a renter. This can include things like their financial reputation, how they treated previous rental properties and their lifestyle.
Make sure to ask the previous landlord questions about the state they left their last rental property in, how reliable they were when it came to paying rent, whether they ever had disputes with neighbors or other tenants, and if they responsibly abided by all terms of their previous lease.
If all of these things, and any other concerns you may have, are answered positively and the landlord had a good experience with the renter in question, then that is a great indicator that they will continue to be a high-quality tenant.
Doing a credit check can be extremely useful to determine whether or not the tenant is financially responsible and able to pay their rent on time every month. A positive financial history of making timely payments is indicated by a high credit score.
It is important to use your own judgment to determine what the lowest credit score you’re willing to accept is. Keep in mind that rent will likely increase after a year.
If you decide to choose a tenant with a lower credit score than you would like, consider asking for a co-signer with a higher credit score than the tenant or consider charging them a higher security deposit.
Before you decide to ask a tenant for a higher security deposit, make sure to familiarize yourself with your local or state laws to make sure you avoid any legal trouble.
It is important to know whether or not an applicant has ever been evicted from a rental property, as this can say a lot about how they are going to be as a tenant. Research shows that tenants who have already been evicted are three times more likely to be evicted again.
Additionally, evictions can be costly and time-consuming, and no landlord wants to endure the frustrating legal and financial hassle of needing to evict a problem tenant.
An entire eviction process can cost a landlord thousands of dollars. Further, it can take weeks or months, depending on where you are located, to complete this process legally.
Running a criminal background check on potential renters is a good way to determine whether you, your property, and the neighborhood will be put at risk if you choose this tenant. Skipping this step in the screening process could be a costly mistake if you end up having to evict the tenant later down the road.
Taking an individual approach to each situation is the best way to move forward if you end up seriously considering a prospective tenant with any prior convictions found on their criminal background.
When you are analyzing these records, it is important to consider whether or not the conviction is relevant to you or your rental property.
Conduct an Initial Screening
In order to get the best results in your tenant screening, you must start with your advertisements for the property. List the qualities that you are looking for in a tenant, in addition to any details you think are relevant to someone who is considering applying.
This will help you to set expectations early and deter any unqualified tenants from pursuing the rental property. Additionally, be descriptive and honest about the space so that potentially interested tenants can be aware of whether or not the property is what they’re looking for.
Be sure to include your pet policy and your deal breakers, such as prior evictions, smoking inside the home, or a low credit score. Additionally, make sure to include your limit for how many tenants you will let occupy the rental home.
Once the wide pool of prospective tenants has been narrowed down, talk to the interested applicants over the phone. Make sure to ask them detailed questions such as their reason for moving, when they are looking to move in, how many tenants will be living in the unit, and how long they intend to live in the unit.
If your conversation with the potential renter over the phone indicates that they may be a good fit for the rental home, schedule an in-person meeting to further discuss the property and the applicant’s qualifications.
This is when you can ask additional screening questions to make sure that the potential tenant is serious about renting the property and determine whether or not you wish to continue the screening process with this person.
Ask the prospective tenant about their previous rental history and whether they would like to fill out an application.
Create Your Application for Prospective Tenants
When you are asking prospective tenants to fill out their application to rent your property, it’s important to give every potential renter the exact same application. This is because you always want to make sure that you are complying with Fair Housing Laws and because it will help you evaluate prospective tenants equally.
On your application, you should collect information such as current and former landlords, employment history and references, proof of income, and any prior evictions.
Make sure that with each application, you keep a copy for your own records that is signed and dated by you. This will be useful should you ever be faced with any legal disputes regarding the application process.
Screen Your Tenants
Now that you have set your criteria for your ideal tenant, done an initial prospective tenant screening, spoken with interested parties, and collected applications, it’s time to verify all of the information that has been provided to you in the application process.
At this point, you will begin to verify the applicants’ income and call their references, including former landlords, current employers, and any other personal references they may have provided.
After this, you can check their credit score and history, run a criminal background check, look into any eviction reports, and any other aspect of their application that you wish to verify or look further into.
All of this will give you a good idea of whether or not the applicant will turn out to be a high-quality tenant for you and your rental property. You might want to use a third-party tenant screening service to make it easier.
Choose Your Tenant
After going through the process of verifying the information on the prospective tenant’s application and checking references, it is time to return to your original criteria of the ideal tenant to determine whether or not this applicant is a good fit for the property.
At the end of the day, you know your property best, and choosing a tenant is a big decision for any landlord. As long as you are adhering to Fair Housing Laws, it’s best to use your own judgment combined with whatever information you have been provided with to decide on a tenant.
The Bottom Line
As you can see, tenant vetting is an incredibly valuable process that can protect you and your rental property from a wide variety of issues that could be caused by a problem tenant.
By committing yourself to a thorough and effective new tenant screening process, you are sure to find a high-quality tenant who will pay their rent on time, abide by all the terms of the lease, and treat your property like it is their own.