Whether you’re a seasoned landlord or just starting, proper tenant screening is an important step in protecting your investment. Looking for a good credit score is a given. But, there are other important factors to consider when making your decision. In this guide, we’ll cover everything you need to know about screening tenants, from credit scores to rental history and beyond.
Qualities of Great Renters
There are a few signals that landlords often look for when screening a potential tenant. A good credit score, clean rental history, and steady source of income are always positive signs, but it’s not the only thing to consider. Other important factors include:
- Positive attitude – Tenants who are polite and respectful towards you and your property are more likely to take care of your investment. Read their body language and listen to their tone of voice during your meetings to get a sense of their attitude.
- Consistent job history – A potential tenant’s employment history is a good indicator of their ability to pay rent on time. You can also ask them questions about their outlook on their current job. Look for someone with a steady job and consistent income. If you’re renting to college students, look for those who have part-time jobs in addition to their studies.
- Sense of responsibility – Try to gauge a tenant’s sense of responsibility by asking them questions about their current living situation. How do they handle paying bills on time? Do they keep their space clean and tidy? The way they answer these questions will give you some insight into their level of responsibility.
- Reliable references – Asking for references from previous landlords, employers, or even friends and family can give you a better idea of what kind of person your potential tenant is.
- Fit with your property – Not every tenant is a good fit for every property. If you’re looking for someone to rent a luxury apartment, for example, you’ll likely want to screen for tenants with a higher income. On the other hand, if you’re renting out a budget-friendly apartment, you may be more lenient with your screening criteria.
- Criminal history – Checking for a criminal history is an important step in tenant screening. You’ll want to run a background check to see if your potential tenant has any red flags in their past.
Of course, when you add extra criteria to the screening process, you want to avoid overstepping legal boundaries by violating the Fair Housing Act. It’s important to screen all potential tenants in a fair and consistent manner.
Understanding the Fair Housing Act
The Fair Housing Act is a federal law that prohibits discrimination in housing and tenant screening. The law protects potential tenants from being discriminated against based on race, color, national origin, religion, sex, familial status, or disability.
When screening tenants, you can’t use any of these protected characteristics as a basis for your decision. For example, you can’t refuse to rent to someone because of their religion or national origin. You also can’t ask questions about these topics during your tenant screening process.
In addition, the Fair Housing Act requires landlords to make reasonable accommodations for tenants with disabilities. This means that you may need to make some changes to your property, such as adding handicap-accessible features or allowing service animals.
Finally, it is important to know that there may be additional protections for tenants under state law, such as those who are under Section 8. Before you start screening tenants, make sure you understand the laws in your state.
Screening tenants can be a tricky process, but it’s important to do it carefully and fairly. The bottom line is that you need to treat all potential tenants fairly and equally when screening them for your rental property.
Specifying Your Minimum Requirements
By specifying your minimum requirements upfront, you can save yourself a lot of time and energy in the tenant screening process. Start by creating a list of must-haves for your ideal tenant. Here are a few examples:
- Credit score – What is the minimum credit score you’re willing to accept? A minimum 600 credit score allows flexibility without being too demanding.
- Income – What is the minimum income you’re looking for? The most common requirements are three times the monthly rent.
- Rental history – How many years of rental history do you require? Most landlords prefer two to three years of rental history.
- Employment history – What is the minimum employment history you’re looking for? A common requirement is two years of steady employment.
- Criminal background check – What type of criminal history are you willing to overlook? For example, some landlords are willing to rent to tenants with a non-violent misdemeanor on their record. Others require a clean criminal history.
- Pets – Are you willing to allow pets in your rental property? If so, what type of pets and how many?
- Smoking – Are you willing to allow smoking in your rental property?
- Minimum lease term – How long are you willing to commit to a tenant? A minimum six-month lease is common, but you may be open to a shorter or longer lease.
Marketing Strategies to Prescreen Tenants
When you’re marketing your rental property, you can somewhat prescreen tenants by incorporating your preferences into your marketing plan. If you’re just posting to public classifieds like Craigslist, you’re opening yourself up to anyone and everyone. But, if you research marketing techniques that specifically target your ideal tenants, you can avoid a lot of unqualified applicants.
For example, Facebook and many other types of social media allow you to target specific audiences based on many different types of criteria. You can target users based on:
- Current location – Only show your ad to people who live in the areas that fit the property, such as on the outskirts of college towns.
- Education level – Only show your ad to people who have a college degree, if that’s what you’re looking for.
- Workplace – Only show your ad to people who work at companies that are within commuting distance of the property.
Remember, don’t be too selective, or you risk not only alienating potentially good tenants, but you can also run afoul of the law. The best way to find a tenant who meets all of your requirements is to use a tenant screening service.
Establishing an Efficient Screening Process
Now that you know what to look for in a tenant, it’s time to establish an efficient screening process. This will help you save time and avoid potential legal trouble down the road.
The first step is to create a tenant screening criteria checklist. This checklist should include all of the qualities and characteristics you’re looking for in a tenant. Once you have your checklist, you can start screening potential tenants.
While the most common way of tenant screening includes basic information, like credit scores, there are some other areas you can investigate. For example:
- Look for social media profiles – Any publicly available social media profiles can give you valuable insights into a tenant’s character. However, do not try to get past privacy settings by adding them as a friend. This could cause trouble.
- Search for court records – Checking for court records is a good way to screen for potential red flags, like evictions or criminal history.
- Google their name – A simple Google search can turn up a tenant’s social media profiles, court records, and more.
Identifying Red Flags in the Screening Process
Some tenants are going to give off red flags right from the start. It’s important to understand what they are to help you avoid problems down the road. Some red flag examples include:
- First contact – Tenants who immediately ask questions like “how much do I need to move in?” or “when can I move in?” without asking any questions about the property are likely to be problematic.
- Asking questions answered in the ad – If you include all of the pertinent information in the ad, but the tenant still asks those questions, they may not be paying attention or they may be applying to many properties out of desperation.
- Unprofessionalism – If a tenant is unprofessional or disrespectful during the screening process, they’re likely to be the same way after they move in.
- Poor communication – Tenants who are difficult to get ahold of or who don’t respond to messages in a timely manner are likely to be problematic.
- Failing to meet deadlines – Tenants who fail to meet initial deadlines, like turning in their application or sending in their deposit on time, are likely to be difficult to work with.
Checking Previous Rental History
An essential step in tenant screening is checking a tenant’s previous rental history. This step will help you avoid potential problems down the road. Other ways of checking can leave a lot of unanswered questions. So, the best way to really get a sense of a tenant’s rental history is to contact their previous landlords.
When you contact a tenant’s previous landlord, be sure to ask questions like:
- How long did the tenant live there?
- Was rent paid on time?
- Did they give any notice before moving out?
- Did they have any guests over often?
- Were there any noise complaints?
- Did they take good care of the property?
- And, most importantly: Would you rent to them again?
These questions will help you get a sense of what it was like for the tenant’s previous landlord. If the landlord has nothing but good things to say, then the tenant is likely to be a good fit for your property. However, if the landlord has any concerns, you may want to reconsider.
Verifying Income and Employment
Some tenants may exaggerate their income and employment in order to qualify for a rental property. So, it’s important to verify this information before you move forward with them. The best way to verify income and employment is to request pay stubs or tax returns from the tenant.
You can also contact their employer directly to confirm their employment status and salary. However, be sure to get the tenant’s permission first. Once you get that, contact the employer and ask the following questions:
- How long have they worked there?
- What is their job title?
- What is their salary?
- Is it part-time or full-time?
Finally, it’s important to note that with the rise in freelancing and gig work, some tenants may not have traditional employment. In this case, you can request bank statements to verify their income.
Tenant screening is a time-consuming process, but if you really care about maximizing your investment, it’s worth it. By taking the time to screen tenants, you can avoid potential problems down the road. And, ultimately, that will save you time and money in the long run.
If you don’t want to put in the effort, hiring a property management company can be a good solution. A property management company will handle the tenant screening process for you, so you can rest assured that only qualified tenants are moving into your rental property.