Properly Screening Tenants for Your Rental Property
Every rental property owner has a vested interest in selecting tenants that won’t be late paying the rent, cause property damage, annoy the neighbors, or otherwise cause problems. The last thing a landlord wants is to regret the decision to rent to a particular tenant and perhaps go through the arduous process of eviction. While there is never a guarantee that careful screening of potential tenants will be enough to prevent the occasional nightmare tenant, it greatly reduces that likelihood. But you have to know exactly what you’re looking for. Here is our guide to properly screening tenants for rental properties.
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Tenant Qualification Criteria
Property owners seek tenants who, first and foremost, can afford the rent and can put together enough money to cover the move-in costs—the first month’s rent and security deposit at a minimum. You’ll need to determine, after checking local and state regulations, exactly what those costs will be. Some landlords require the first and last month’s rent plus a security deposit, which could be equal to one or one and a half month’s rent.
Additional financial criteria will help ensure a prospective tenant’s ability to keep up with rent payments and any other fees associated with renting from you, such as:
- Current employment and length of time in that job (What verification will you require?)
- Previous employment if in your current job for only a short time (How long is long enough?)
- Current salary (How much is enough?)
- Credit history (What’s the minimum you require?)
Non-financial qualification criteria also are important. You’ll have to decide what you’re willing to accept in terms of:
- Any serious criminal history (What crimes would be disqualifying?)
- Pet ownership (Do you allow pets or not?)
- Smoking (Allowed or not?)
- Number of people in the tenant’s household (What’s your maximum?)
All of these criteria are quantifiable and verifiable, but you’ll need to decide what you consider acceptable in each case and what you will ask prospective tenants to provide to substantiate the information they provide.
You’ll also need to decide whether there is any wiggle room for those who fall short of meeting the criteria you establish. For example, under what circumstances, if any, would you consider renting to someone with a past bankruptcy or eviction for nonpayment of rent? Are you willing to perhaps rent to someone with a past conviction for a nonviolent crime? For a financial crime? How about someone on probation? How much time must have passed since the offense for you to consider renting to someone with a criminal record?
It goes without saying that none of the qualification criteria you establish can discriminate against prospective tenants or renters on the basis of race, color, religion, disability, national origin, or familial status. Discriminating against anyone in any of those protected classes would be a violation of the Fair Housing Act of 1967 and expose you to substantial civil penalties.
Tenant Screening Opportunities
Landlords have three key opportunities for implementing tenant screening measures based on such qualification criteria:
- When listing and advertising vacancies
- Through the written application
- During applicant interviews
The first of these actually is an opportunity for self-screening by tenants. The more information you include in a rental listing or when advertising a vacancy through any channel, the less likely it is that unqualified individuals will even apply to become a tenant. Being open and honest about the rent, move-in costs, and employment of credit requirements, and whether pets or smoking are allowed, can save you a lot of time fielding calls and responding to inquiries from people, you probably would not consider renting to.
The second screening opportunity is your review of a prospective tenant’s written application—an application that is designed to reflect your specific qualification criteria and elicit the information to assess how well the applicant meets them. (The application must include wording that authorizes a criminal records check and credit check.)
The outcome of this review could be a clearcut “yes” or a “no,” in which case, no interview is likely to change your decision. But in some cases, it will be a “maybe” or perhaps “yes, if …” and you’ll defer deciding until you’ve met with the applicant.
Ideally, that will be a face-to-face meeting, or some sort of video chat that will give you some insight from the person’s nonverbal communication as well as his or her words. Interviewing applicants gives you a chance to ask additional questions when you’re on the fence about renting to them.
Benefits of Tenant Screening
The only way to weed out bad tenants and rent only to good ones is to screen every applicant against the same qualification criteria. Renting only to good tenants is good for business. Obviously, it saves you the hassle and expense of collecting past due rents, evicting tenants, and potentially having to repair damage to your rental property. It also reduces tenant turnover and the cost of acquiring new tenants, as good tenants tend to be happy tenants.
If you have reservations about the time and effort required for careful screening of all prospective tenants, that’s a task you can outsource to a property manager or other third party once you have established qualification criteria that will protect your investment.
Get in touch today to find out how we can help.
