Things to Look for When Screening Tenants
Renters Warehouse Blog
One of the most important aspects of being a landlord is filling vacancies. However, it is important to fill those vacancies with tenants who will be the right fit. In fact, as many experienced landlords will tell you, it is better to have a vacancy than a bad tenant!
Bad tenants can be costly. From damaging your property to not paying rent. The good news is that if you screen your tenants properly, you’ll be able to drastically lower your risk of ending up with problem tenants, helping to ensure that you’ll end up with renters who will pay the rent on time and look after your property as though it were their own.
Tenant screening can be time-consuming at first, but once you get a system in place you’ll find that it becomes much easier. And having a system in place will help to ensure consistency in the screening process as well. In order to make the process easier for you, here are some things you should be on the lookout for when it comes time to screen applicants.
A Note About Discrimination
First of all, it is important to remember that you cannot discriminate against tenants, this includes potential tenants as well. There are areas that you can screen that will help determine if the applicant will be the right fit, but there are also areas that you cannot discriminate towards or make judgments upon, and certain questions you cannot ask.
It is also important that you understand the Fair Housing Act, and follow any rules and regulations your state or city may have for you as a landlord, especially when it comes to screening tenants. If you have any doubts or questions, you might consider hiring an attorney to walk you through the process to help ensure you are handling things legally.
Your best option is to always ensure that you screen candidates equally and fairly, and that you only assess them based on their ability to pay the rent and abide by the terms of the lease. Everything else is inconsequential.
Getting Started: Your Target Tenant
Before you get started, it is important that you have a basic idea of what you are looking for in a tenant. Consider things such as:
- Stable monthly income
- Clean eviction report
- Good credit score
- Positive references
- Steady employment
All of these are the positive qualities of an excellent tenant. Before you start screening tenants, you should establish if there are any areas you are willing to compromise on and to what extent. In some cases, for example, a tenant who does not have steady income that’s three times the rent may be asked to provide a guarantor when signing the lease. A good compromise and a great way to remove a great deal of risk from the equation.
Finding great tenants isn’t impossible. Consider reading: Finding Great Tenants for Your Rentals for more tips.
A rental application is one of the best tools you can have to help screen tenants. During your rental application, you will be able to get important information as to whether the tenant is going to be a good fit for your unit or not. You should be sure to outline your policies on pets, smoking, roommates, and subletting as well, to help give your potential tenant a careful look at what they are getting into and to also help them determine if your property is the right fit for them.
Some of the main things to include on your rental application are:
- Previous Evictions
- Background Check and Credit Score Information
- Proof of Income and Current Employer Verification
- Personal References
- Previous Landlord References
If someone has a history of evictions, there is a good chance that they may end up in a similar situation in your rental. It is important that you determine what your stance on evictions will be. You should also consider satisfied evictions, which is where the tenant was evicted but later paid the past due rent.
A background check is a common assessment that can give you an inside look at your potential tenant. It is important for landlords to know about the criminal history of a tenant as they can be held liable for any crime that happens on the property. It is important to keep in mind that some cities have banned the use of criminal background checks for landlords. Additionally, the US Department of Housing and Urban Development (HUD) advises landlords to do away with blanket bans that disqualify applicants based on prior convictions or arrests. Be sure to know the laws for your area before you proceed with requesting this from potential tenants.
Asking for proof of income is one way to help determine if your potential renter will be able to afford your property. It is important that your tenant is able to cover both rent and utilities, even if you aren’t offering utilities in the cost of the rent. One easy way to determine this is by seeing if the applicant makes three times the amount of rent per month.
It is also important to keep in mind that it is easy to make fake pay stubs, so be sure to follow up with their employer to ensure they have a current job. Keep in mind that most employers will not verify anything other than if the tenant has a current job and source of income.
You must also keep in mind that your tenant’s credit score isn’t something that should always be a deal-breaker. For instance, younger tenants who have not had time to establish a credit report might have a low credit score. However, a credit score can also show you a general trend on how your tenant manages their finances, how much debt they have, and how often they make payments on time. Different landlords set cutoffs for credit scores, some being willing to accept lower scores and others requiring a solid credit score. Whether or not this is important to you regarding your own investment is a decision for you to make.
When you are gathering personal references, you should be careful to make sure that you don’t break any privacy laws and that you understand what questions you can and cannot ask. Ideally, you will want to get a general feel for the potential tenant’s character. Are they reliable? Trustworthy? Consider who they have listed as personal references; have they listed just their parents and grandparents? Or do they have friends and employers listed as well? These factors will obviously be influenced by the age of your potential tenant but nonetheless, they are important to consider.
Getting some information from the previous landlords can also be informative. While not all landlords will disclose information regarding the tenant in question, if you ask your questions carefully, you should be able to get a pretty good idea if the tenant was able to make monthly rent payments and if they left the property in decent condition. When you can, it’s a good idea to check with multiple previous landlords to see if the trend of being a five-star tenant continues.
Another thing you should try to determine is why the tenant left the previous property. Was it because they moved to another state? Were they evicted? Were they simply looking for another adventure somewhere else? If you are looking for a tenant who will settle in and sign a year lease contract, then someone who moves every three months might not be a good fit.
Be sure to ask questions such as:
- What shape was the property left in?
- Were damages paid for?
- Were there any late payments?
- Were there any lease violations?
This will help give you a good look at what kind of tenants you will be selecting and if they will be a good fit for your property.
Being a landlord isn’t always easy; especially on your own. Consider reading: Being a Landlord - The Good, the Bad, and the Ugly for an inside look.
Once you are able to set up an interview with your potential tenant, it is important that you have some questions outlined to help give you a better insight and understanding of who you are considering renting to. Some valuable questions you could consider asking are:
- Do you have pets?
If you have a strict no-pet policy, it could be a deal-breaker if the potential tenant has a pet. If you allow pets, now would be a good time to go over the types of pets they have and how they plan to care for them and clean up after them. In addition, it doesn’t hurt to clearly go over your pet policy and what your tenant is responsible for, should there be damages.
- How long have you lived in your current location?
Inquiring about their current living conditions can give you a good insight into how stable they currently are. If they seem to be moving around a lot, you might be left with another costly vacancy in the near future.
- Why are you moving?
Taking the time to learn the details behind their current move could also potentially help save you in the long run. Whether their reasons are straightforward or complex, it is simply up to you to gather the information and then be sure to follow up to ensure their story checks out.
- Do you smoke?
Many landlords have strict no-smoking policies, and meeting your potential tenant in person would be a great time to see how honest they were about their answers. Many tenants will say they don’t smoke, yet smell of smoke and have a pack of cigarettes nearby. This would be a good time to clearly explain your no smoking policy. While you cannot reject someone based on the way they smell, you can ensure the rules of your policy - and the consequences for breaking them - are in place.
- When would you like to move in?
This is perhaps one of the best ways to determine if you should continue the interview or not. Maybe your tenant isn’t looking to move for another month and you are looking to fill a vacancy now, or vice versa.
Remember that not every person you receive an application from or happen to interview will be a good fit, just make sure you make your decisions based on genuine factors that impact their ability to pay the rent; such as employment and credit score. Don’t rush the screening process. It might take a little bit longer to find the perfect tenant for your property but investing the time to select the right tenant can help you to save a great deal of time and money in the long run.
At Renters Warehouse we fill vacancies quickly. We offer a fast tenant placement process of 11-17 days on average, and our process ensures that fully screened and qualified applicants are approved. Learn more!
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