Tenant screening is a necessity if you’re in the rental business.
Avoiding bad tenants and finding great ones will make your life as a landlord so much easier by reducing turnover, minimizing evictions, and dodging other problems that’ll complicate your business.
To avoid these pitfalls, though you must know how to properly screen tenants.
Here’s how you can conduct thorough tenant screening in five steps:
Step 1: Passive Screening
When you think of tenant screening, odds are you’re thinking of active screening.
Most of the steps in the tenant screening process are in the active screening category, which entails evaluating applicants, rejecting those who aren’t qualified, and accepting those who are.
Passive screening, on the other hand, is handled before you even get to that point.
With passive screening, you’re trying to attract the kinds of applicants you want through how you advertise your property.
By targeting specific demographics, you can deter applicants who don’t meet your standards from applying in the first place.
For example, if you make the price of your rent clear when advertising your property, then tenants who know they can’t afford your rent are less likely to apply.
Step 2: Pre-Screening
Pre-screening is an informal way for you to get a general feel for an applicant once they’ve contacted you.
Whether by email, phone call, or in a first showing, you can take note of an applicant’s behavior and traits such as their punctuality, communicability, and friendliness.
You can also ask an applicant basic questions in the pre-screening process to see if they’d be a good fit to apply. These can include:
- When are you hoping to move in?
- Do you have any pets?
- Why are you moving?
- Are you comfortable providing references from your employer and former landlord?
Pre-screening can help you and applicants decide whether you should move forward with the application process.
Step 3: Require an Application
A rental application is an essential part of the screening process because it allows you to ask applicants information about themselves directly. This information should include:
- Residence history
- Employment history
- References
- Proof of income
- Any other information (pet ownership, smoking, etc.)
While it can be tempting to fully depend on background checks and credit reports, don’t overlook the importance of a thorough application.
Some of the most pertinent information to decide if an applicant is qualified can only be acquired by asking them directly.
Step 4: Call References and Previous Landlords
On your application, you should ask renters to provide references. These should include current/previous employers and landlords.
And don’t just ask for the references and leave it at that; make sure you contact them!
Employers will be able to verify any of the employment and income information that an applicant gave you. If the renter lied on the application, that should be a major red flag.
Furthermore, previous landlords can also tell you about the applicant’s rental habits.
For example, by talking with an applicant’s previous landlord, you can learn if this tenant pays rent on time, doesn’t disrupt neighbors, and is respectful to property.
Step 5: Run Credit, Criminal, and Eviction History Checks
Running background checks is arguably the most reliable way to learn whether a tenant is qualified.
There are three that you should use every time you screen a tenant: credit report, criminal records, and eviction history.
The information you gather from a credit report will tell you how financially responsible a tenant is. You’ll be able to see the frequency and severity of late payments, as well as any outstanding debts.
This will give you an idea as to whether an applicant will be able to pay rent on time.
Criminal history reports will give you information on someone’s past convictions.
While you can legally deny an applicant who poses an immediate danger to your neighbors and property, many states have laws forbidding landlords from denying tenants for other crimes.
An eviction report will indicate if a tenant has ever been evicted. If an applicant has been evicted one or more times, this is a red flag because the last thing you want on your hands is a costly eviction.
With that being said, you should learn more about the eviction because sometimes they are wrongful or come with a reasonable explanation.
Conclusion
A thorough tenant screening process is crucial because it allows you to sift through bad tenants to find great ones.
Before you can know whether you should accept or deny an applicant, it’s important to have an effective tenant screening process.
A thorough process ensures you’re getting all the information about an applicant that you need.