The importance of screening tenants effectively cannot be overstated.
Great tenants help you save time and money because they pay rent promptly, don’t damage property, reduce turnover, and respect your other tenants.
Bad tenants, on the other hand, can turn into a costly nightmare quickly.
That’s why making sure you’re renting to great tenants lays the foundation for success in the property management space.
In this article, we’re going to discuss how to properly screen a tenant in four steps.
Step 1: Build a Framework for the Tenant Screening Process
It’s crucial to start with a plan and then proceed. A framework allows you to focus on details because you already have something in place for the procedure. There are seven actions you should make sure you employ in step 1:
- Employ passive screening techniques
- Require a rental application
- Call employer references
- Contact previous landlords
- Run credit, criminal, and eviction history checks
- Accept or deny the applicant
Employ Passive Screening Techniques
Even before a potential tenant applies, there are measures you can take to ensure you’re attracting the best quality renters. Where you market, how you present your property, and the information you communicate to applicants who reach out are all ways to passively screen for tenants. It can save you (and tenants who would be a poor fit) a lot of time and help lay the foundation for a more successful screening process.
Once an applicant has made contact, pre-screening is an informal way of developing a relationship with them and getting a feel for who they are. For example, do they respond promptly to your emails and calls? Do they seem organized or out of sorts?
One factor of pre-screening is including your screening requirements in your listings. It provides transparency for applicants and filters out renters who know they won’t be able to meet your minimum requirements.
Asking about things like pets and why they’re moving can be helpful as well. Pre-screening can save time and money for landlords by weeding out people who wouldn’t be a good fit for the property.
Require a Rental Application
Creating an effective and concise rental application is crucial to the screening process. Therefore, you should focus your application on collecting all information necessary for judging an applicant’s qualifications.
That said, most applications collect the following information: Applicant’s employment history, dates of employment, position, salary, and their residence history with landlord contact information.
If you need extra help, look for pre-made, customizable rental applications. These ensure that you’re collecting all the essential information, as well as asking the questions that matter most to you.
Call Employer References
Contacting an applicant’s employer allows you to verify the employment information they provided on their application. You should attempt to verify how long the applicant has worked at the company and their position there.
It’s important to note that some employers will only tell you the applicant’s dates of employment. Others will be open to talking more about the applicant. Regardless, the information you gather from contacting an applicant’s employer allows you to figure out whether or not they’ll be able to make regular rent payments.
Contact Previous Landlords
Information provided by previous landlords is typically a realistic illustration of an applicant’s character. Be aware, though, that some landlords might exaggerate the tenant’s behavior. This is rare, but it’s still good to remain somewhat skeptical.
Previous landlords can tell you whether an applicant paid rent on time and the condition they left the property in. The answers to these two questions alone help you judge whether a prospective tenant will follow the terms of their lease and respect your property and other tenants.
Run Credit, Criminal, and Eviction History Checks
Running a tenant background check is the most reliable way to gather information about a tenant’s qualifications. Where allowed by law, background checks can provide reports on a tenant’s credit, criminal, and eviction history.
There are plenty of tenant screening services on the market that will do this work for you. Finding all of the information on your own will take an exorbitant amount of time, and screening services can provide reliable information instantaneously. And you can usually pass the fee onto your applicants.
Step 2: Determine Your Screening Criteria
Once you have a framework for how you’ll screen tenants, it’s time to decide the minimum standards an applicant must meet to qualify for housing. You should center your criteria on the following:
- Credit History
- Criminal History
- Rental History
To stay in line with the Fair Housing Act, you’re only allowed to deny an applicant if they fail to meet your requirements for one or more of the categories listed above.
Step 3: Put it Into Action
The framework is in place, and you have your screening criteria. Now it’s time to follow through and find great tenants.
Make sure you are consistent as you put your plan into action. Give all applicants an equal opportunity to housing and comply with Fair Housing laws. The last thing you want is a Fair Housing claim because you didn’t apply your screening process equally to all applicants.
Step 4: Adhere to Fair Housing Laws
We’ve mentioned Fair Housing laws a few times, but in order to avoid Fair Housing claims and lawsuits, you must ensure that you’re complying with federal, state, and local housing laws.
The primary regulation to be aware of is that you cannot deny housing based on a protected class, which includes:
- Familial Status
- National Origin
You must keep this in mind during every step of the application and screening process. Whether during pre-screening or while you’re filling out your scoring sheet, be intentional about judging an applicant based on their actual qualifications and not on any of your own implicit biases. It is imperative to screen tenants with a fair mindset.
Screening tenants properly is a critical part of your business. And how you do it is the key. By putting together a great screening plan and solid criteria, you can save money and time in the long run.
Remember that screening tenants is the best way to protect your business. Great tenants can make all the difference as you move forward.