Thoroughly screening potential tenants is one of the most important steps a landlord can take when renting out a property. Taking the time to verify a tenant’s background, income, references, and rental history can help avoid major headaches down the road from problem-makers.
While no screening process is foolproof, having a comprehensive tenant screening process in place can help landlords find responsible, reliable tenants who pay rent on time and take good care of the property. This protects the landlord’s investment and provides tenants with a safe, well-maintained place to live. Here are six tips for effectively screening tenants before signing a lease:
1. Use a rental application
Having potential renters fill out a detailed rental application is a landlord’s first line of defense when screening tenants. The application collects vital background information to help assess if an applicant will be a good fit. At a minimum, the rental application should request:
- full name and contact details
- date of birth
- Social Security number
- current and previous addresses
- employment details
- income information
- credit history
- rental history
- vehicle information
- pet information
- disclosure of any prior evictions
- criminal convictions
Given the increasing digitization and the need for seamless integration of various data points, using platforms like RentSafe can be a game changer. Not only do they standardize the rental application process, but they also automate the data verification, making the process faster and more accurate.
Relying on sophisticated software solutions ensures you’re not just gathering data, but interpreting it correctly to make the best decisions for your property. Requiring all applicants to complete a comprehensive rental application shows you operate a professional rental business. It also supplies important screening details not contained in credit reports or background checks. Thorough rental applications let landlords verify applicants’ claims and identify any red flags or inconsistencies that warrant further screening.
2. Check references
While credit reports show financial responsibility and background checks reveal legal issues, reference checks unearth applicant behaviors that directly impact the living environment. The effort to personally contact references gives landlords a better sense of applicants as people, not just names on paper. Conversations with references may reveal “red flags” not evident elsewhere, like frequent late-night noise complaints or unauthorized pets.
Landlords can talk to:
- Previous landlords: Landlords can confirm if applicants paid rent on time, followed property rules, kept the unit clean, were respectful of neighbors, and ultimately were good tenants. Landlords can also discover if past eviction notices were served or if property damage occurred while that tenant lived there.
- Employers: Employers can also serve as references to confirm employment status and income. Speaking directly with references requires more effort but offers invaluable perspectives on applicants. The time investment often pays off by avoiding problem tenants who look good “on paper.”
3. Run background checks
Performing background checks allows landlords to uncover issues that may make applicants unsuitable for tenancy. Criminal record searches can reveal convictions, sex offender registration, pending cases, and even warrants that applicants failed to disclose. Background checks also verify applicant identities and cross-check previous addresses.
With many online services, landlords can run fast, affordable background checks on every rental applicant. The small upfront cost per screening is worthwhile to avoid renting to dangerous or irresponsible tenants. Background checks also show applicants you are a vigilant landlord committed to safety and responsible property management.
However, background checks have limitations too. Minor convictions from long ago may not warrant rental denial. Applicants should have the chance to explain their side of any criminal record. Consider only recent, serious convictions directly related to tenancy. With careful use, background checks can help you avoid risky situations without being unduly punitive.
4. Obtain credit reports
Reviewing credit reports for rental applicants provides a comprehensive snapshot of their financial history and how well they handle financial obligations. Reports from all three major credit bureaus should be obtained for the most complete record. In these reports, focus on any negative marks, such as:
- late payments
- collections account in arrears
- heavy debt balances.
However, a lack of established credit does not necessarily equal bad credit. While credit scores indicate financial responsibility, they are just one piece of the screening puzzle. Applicants with stellar credit could still end up being troublesome tenants. Likewise, applicants with mediocre credit may pay rent reliably but have high medical debts dragging down their score. Set a minimum credit score requirement but weigh scores as part of the total applicant evaluation.
5. Verify income
Before approving rental applicants, landlords must verify stable employment and adequate income to afford the rent. Requiring recent pay stubs or tax returns documents applicants’ recurring income sources and amounts. For self-employed applicants, multiple years of tax returns offer proof of steady earnings.
Landlords should establish a minimum income requirement for prospective tenants, typically 2-3 times the monthly rent. Applicants should meet this threshold through verifiable employment or other consistent income streams. Income standards ensure tenants can manage rent payments along with other living expenses.
However, income is just one piece of a complete tenant screening process. Applicants may earn sufficient income but still have shaky credit, criminal records or eviction history. Likewise, gainfully employed applicants could lose their job status suddenly. For a well-rounded assessment, income verification should occur alongside checking credit reports, performing background checks, contacting references, and reviewing rental history.
6. Review eviction history
Checking court records for past evictions is essential when screening rental applicants. Previous evictions indicate applicants may be high-risk tenants likely to default on rent or cause property damage. Responsible landlords should investigate applicants’ background for prior broken leases, property damage judgments, and nonpayment evictions.
While a past eviction does not necessarily disqualify someone, it merits deeper scrutiny. Landlords may decide to require an increased security deposit, rental insurance, co-signers, or other safeguards. However, blanket policies of refusing any applicant with an eviction may violate fair housing laws. Landlords must evaluate the facts behind each prior eviction case.
While it takes diligence and effort upfront, taking the time to thoroughly screen tenants can prevent countless problems and headaches for landlords down the road. Following best practices minimizes risks and helps identify responsible, reliable tenants who pay on time and treat the property with care. Investing in detailed, consistent tenant screening provides peace of mind and protects the property as an important financial asset. By following these tips for screening tenants, landlords can find great tenants and avoid troublesome ones.