There’s no way around it: the success and profitability of your properties is directly related to getting quality tenants. And the key to getting quality tenants is proper tenant screening.
Tenant screening is the only way to ensure the people who rent your properties are responsible and pay their rent on time. But knowing how to screen tenants — how to find the good ones, eliminate the bad ones, and get the right people in the door — can be tricky.
Good Tenants vs. Bad Tenants
Before we jump into how to screen tenants, let’s look at what differentiates a good tenant from a bad tenant.
A good tenant is someone who...
- You can rely on to take care of your property and keep it safe
- Pays rent on time
- Treats you and your other tenants with respect.
A good tenant typically has...
- A good credit score
- A solid employment and rental history
- The ability to easily obtain renter references from previous landlords.
A bad tenant is someone who...
- Is late on the rent (or skips out on rent entirely)
- Causes property damage
- Stirs up issues with the management and other tenants
- Completely disregards the rules laid out in your lease agreement.
A bad tenant often has...
- A low credit score (which is a red flag that they have problems paying bills on time)
- A history of evictions and run-ins with the law
- The inability to provide any positive renter references.
Having good tenants in your properties will make the process of owning and managing your properties easy and pleasant. A bad tenant, on the other hand, can mean serious trouble for your properties.
Bad tenants are not only a hassle to deal with, but they can end up costing you a significant amount of money.
Tenant screening is important because it helps you to separate the good tenants from the bad tenants and ensure that the people you rent your properties to are responsible and dependable, and will take care of your properties (not to mention their rent).
How to Effectively Screen Tenants
Since tenant screening is such a crucial part of getting the right tenants into your property, it’s important that you understand how to properly screen tenants.
Set Your Standards Up Front
Before you start reviewing tenants, it’s important that you’re firm on what standards you’re looking for in a renter. For example, you might decide you won’t look at any applicants with a credit score lower than 700 or you won’t consider any tenants with a criminal record.
Having those standards in place before you start reviewing applications and interviewing applicants will allow you to immediately eliminate tenants that don’t fit your criteria, which will save you time and energy.
Create a Standard Application Process
It’s also important before you start reviewing tenants that you set a standard application process. Creating a uniform process all potential tenants must follow allows you to stay organized and better compare potential tenants (since you’re collecting the same information from each applicant).
Your application should include the following:
Information for a Background Check
You’ll want to run a thorough background check on each potential tenant, which includes criminal history, credit history, and employment history.
Copies of Government-Issued IDs
You should also ask for copies of government-issued IDs, like a passport, license, or social security card, to verify their identity.
Proof of Income
Asking for proof of income, like pay stubs, can help you verify income to ensure your potential tenant can afford to live in your property.
Information on Other Potential Tenants
If your potential tenant will have roommates or other members of their family living in the property, it’s important to gather their information as well. You may also want to inquire about any pets or animals that will be residing on the property.
Your application form should request the name and contact information of previous landlords. Connecting with previous landlords can offer you valuable insight into what it might be like to rent to the potential tenant.
Just make sure the numbers provided are for professional property management companies; potential tenants have been known to list families and friends as renter references.
Once you’ve collected all the information you need, you can start pre-screening candidates. Only candidates who pass the background check and meet your standards will move forward to the interview process, which will save you a significant amount of time and energy.
You can either draft your own application (just make sure to have your lawyer review it) or look for pre-approved templates, like the templates offered by Naberly.
Make Sure Your Screening Process Is Legal
Once you start processing applications and interviewing candidates, you need to protect yourself and make sure the entire tenant-screening process adheres to all applicable laws. Some things to look out for include:
Tenants Must Fill Out the Entire Application
In order to be considered in compliance with Fair Housing laws, tenants must fill out the ENTIRE application and not leave any blank spaces. This applies to both paper and online applications.
Know What to Ask (And What Not to Ask)
You cannot ask tenants any questions based on what are considered protected classes, which include race, religion, gender, sexual orientation, marital, and familial status.
You also can’t ask tenants if they’ve ever been arrested. You can ask them if they’ve ever been convicted of a crime, but questioning their arrest record is off limits.
Before you start drafting your application and interview questions, make sure that everything you request is in compliance with the laws in your state.
Save Yourself the Trouble and Hire a Professional
Proper tenant screening is a big — and important — job. The quality of your tenants will have a direct effect on your income, the profitability of your properties, and the overall experience of owning a rental. Good tenants make for a good experience, and bad tenants? They make for a serious headache.
Because the tenant-screening process is so important, it’s a good idea to hire a professional property manager to handle the process. Property managers know how to screen tenants, what red flags to look for, and how to keep the screening process within the boundaries of the law. They also know how to view potential tenants objectively and without emotion; while you might be swayed to rent to a risky tenant with a sad story, a property manager with experience in screening tenants will know to stay away and rent to a more reliable candidate.
Tenant screening is the key to a successful rental venture. Do yourself a favor — invest in a property manager with experience in screening tenants. Not only will it make the process easier and less labor-intensive for you as an owner — it will also ensure that you get higher-quality tenants in each of your properties.