Screening prospective tenants is one of the most important moves you can make as a property owner and landlord because the reality of it is that you’re more than likely renting your property out to a complete stranger. Since time is of the essence when it comes to filling your properties, it's important that you collect as much information as quickly as possible before handing over the keys. This is where screening comes into play, and it can provide you with all the information you need to ensure that you place your property in the hands of someone who will respect the space and pay their rent on time.
So, What is Tenant Screening?
Great question! Screening essentially means digging into potential tenants' backgrounds to ensure they are a good fit for your property. Simply judging a tenant on the application alone is not the most reliable these days as applications are easily fabricated. You want to protect yourself and your property from a sticky situation by conducting things like background checks, criminal checks, eviction history, credit history, employment and past rental checkups before entrusting someone to inhabit your property.
5 Qualities of a Great Tenant
While there are no guarantees you won’t encounter any issues with a tenant, there are some qualities that are a good indicator of what kind of tenant they will be. These common guidelines are used by professional property managers such as Utopia Management as a blueprint for identifying strong tenants.
The tenant provides an income that affords the cost of monthly rent, and they have a history of paying their rent on time.
They are able to prove employment and have a history of stable income.
They have a history of taking care of past rentals and leaving the unit in good shape.
They have clean criminal records and commendable credit.
Bonus! They’re pleasant and provide you with all of the information needed to go through the tenant screening process in a timely manner.
Of course, not every tenant you work with will be perfect, but looking for qualities such as those mentioned above will weed out many of the unsuitable candidates and save you future stress and concern.
Set Your Standards and Minimum Requirements
Establishing your expectations for a tenant up front by addressing them on the rental ad is another tactic that will weed out those not suitable for the property. By coming up with your own list of standards, you will more likely attract those qualified to rent the specific property advertised and will save each of you time. Let these standards guide you in your decision-making process and don’t be afraid to be upfront with them by including them in the advertisement or when interested parties call over the phone. A few examples of appropriate expectations are listed below:
Many landlords use the rule of thumb that income is three times the cost of the rent.
Requiring prior landlords as references is the best indication of what kind of tenant they will be. A poor review from a past landlord may be a red flag.
Ask about prior evictions if they have any. Reasons may vary but this is an important area to explore.
Background checks cover your back and the neighbors of the property, so ensure you conduct solid criminal history research.
Start with Pre-screening
The screening process starts with the property’s advertisement. Include your standards and expectations alongside the photos and description of the property listing, promoting those who qualify, given they read the description, to give you a call or email.
Hopefully, the calls you receive are made by quality interested parties, prompting you to pre-screen further in your phone call. Are they polite and pleasant to talk to? Are they genuinely interested in the property and asking specific questions? A simple and quick phone call can weed out anyone who isn’t qualified to rent from you and also establishes the fact that you care about your properties and the people who inhabit them.
Pre-screening can also be done via conversation in person while showing the property to the interested tenant. Typically, a tenant scheduling a tour is indicative that they are serious about the property and prospective of moving in.
The Fair Housing Act
While screening potential tenants is perfectly acceptable and an important step in the rental process, discriminating against someone for any reason outlined in The Fair Housing Act is illegal. This includes:
Sex (including gender identity and sexual orientation)
In addition to Federal Fair Housing Laws, different states may have additional landlord-tenant laws that you should look into before listing and advertising your property. Be sure that you are in compliance and understand both federal and state laws when it comes to renting your properties out.
Require an Application
Asking the right questions on an application makes the screening process all the easier when it comes to doing your research. Make sure that you require the following for each property application:
Name, current address, phone number, and driver’s license
SSN and date of birth
Contact information for current and at least one previous landlord
Contact information for current employer and income
Whether or not they have a criminal history or history of eviction
Release of information signature
Reaching out to tenant’s employers ensures that they are first and foremost, employed and that they are receiving steady income which will ensure they can pay rent. Contacting past landlords is essential to screening potential tenants. Did they pay rent on time? Did they take care of the home and leave the property in good condition? Are they trustworthy and respectful to their neighbors? These are questions that will offer a glimpse into what kind of tenant they will be.
Run a Background and Credit Check
Assessing a tenant’s credit report will provide valuable information on whether or not they are financially responsible and have a history of making payments on time. There are plenty of screening service companies that will run the background check for you and save you the hassle.
Processing a background check is also a valuable precaution when screening potential tenants to ensure that they are who they claim to be. A background check also looks into their criminal and eviction history as well as any fraud or deception.
These steps in screening do incur costs, but they are crucial in selecting a qualified tenant to live on your property. To cover these charges, it is common to charge an application fee to all prospective tenants. Learn more on why it's so important to run a tenant screen.
Accept or Decline Your Applicant
After conducting your research, you are now ready to make a final decision! Of course, with any acceptance of a rental agreement, there will be plenty of declined applicants. It is important that you document the reason as to why they were declined, so there is no question of discriminatory behavior leading up to your decision. This may be that the chosen applicant provided all of their information first, or perhaps the denied applicant had a history of paying rent late on multiple occasions. Once you officially deny an applicant, the process for denying an applicant housing from a consumer report is called Adverse Action and regulated by the Fair Credit Reporting Act.
With the blueprint of the screening process provided above, you are on your way to finding your next great tenant!