When you receive an application from a potential tenant, do you know how to recognize if that tenant will be a good (or bad) option? Here is a step-by-step process you can follow to find the right tenants for your properties, limiting the risk you take every time you say yes.
Step 1 – Set Your Standards
The first step in screening tenants? Identifying your ideal tenant. First, you need a tenant with the right income-to-rent ratio. This will ensure that your potential tenant has the necessary income to pay the rent each month. Look for an income that is at least 2.5 times your monthly rent. Can you accept a tenant who does not have this income? Yes, but only if the tenant has a co-signer who is willing to take financial responsibility if the tenant cannot pay.
References that exceed your expectations, especially from previous landlords, are also important. If your tenants are first-time renters, look for references from teachers, employers or other professionals who would know the individual’s character.
Finally, make sure that the tenant has no recent evictions or a criminal record. Tenant screening should include a background check. If you see these red flags, move to the next tenant for your own safety.
Step 2 — Rental Application
Make sure you collect the minimum information you will need to check references, perform a background check, and perform a tenant credit check on your tenant rental application. In addition to personal information — including Social Security number — ask for employer and job details, eviction and lease history, and current and past landlords. After you get these items, call to verify them. Be sure that the employment brings in adequate income and is stable, because you don’t want a tenant who suddenly loses his or her job and can’t pay rent. Ask tenants to sign that they authorize the release of information to you, so you can order a tenant credit report.
Step 3 — Run a Tenant Credit Check with AAOA
Once you have the necessary permissions and documents, request a credit check for landlords through the American Apartment Owners Association (AAOA). Reviewing the tenant credit report is this is the final step in determining if your tenant is a good fit.
As you work through this process, for a handy guide, check out this tenant screening infographic. To get started, consider using one of our application or tenant screening packages to make the process as simple and stress-free as possible.