When you’re managing a rental property, it’s essential that you do everything in your power to find good tenants. You want tenants who will take care of your home and pay their rent on time, but you also need to make sure they won’t cause any problems for neighbors or other tenants in the building.
Screening potential tenants is one way to ensure that your property only houses quality tenants—those who are reliable and will take good care of the place. The key is being thorough without being unfair: make sure that you thoroughly check every detail of their application (and have them provide proof if necessary), but don’t discriminate against anyone because of race or religion or any other protected class dictated by the federal Fair Housing Guidelines.
The Rental Housing Market is Hot Right Now
The rental housing market has never been hotter. According to a recent survey, the demand for rentals is at an all-time high, and it’s only getting hotter.
Unfortunately, there are also some serious downsides to renting: tenants can be very demanding due to increased competition to secure a rental home; scams from tenants are more common than ever before; plus many landlords don’t know how much they should charge for rent because of fluctuating rates based on factors like location or neighborhood amenities availability.
If you’re a landlord, this is your chance to learn what the best practices are when it comes to choosing tenants. The tips below will help you quickly weed out the bad ones and find quality renters who will treat your property with respect.
Require a Completed Application
This probably goes without saying but it’s important that you know who the tenant is, what they do for a living, and how long they have lived at their last address. You should also ask for references from previous landlords or employers. The last thing you want is to rent your property to someone who doesn’t pay rent on time or has some kind of criminal record.
Make sure to check the tenant’s credit report. You can do this by ordering a credit report from one of the three main credit reporting agencies: TransUnion, Equifax, or Experian. You can also use an online application, such as RentPrep or MyRental. These tools provide you with both a credit score and a criminal record search.
Request Proof of Income from Each Applicant
The income of all applicants is one of the first things you should consider when screening potential tenants. You want to make sure that their monthly income can cover the rent, and that it is stable, reliable, and predictable.
A good rule of thumb is to only accept applicants whose combined gross monthly income equals at least three times the amount of your monthly rent payment. For example, if your monthly rent is $1,500 per month, then all applicants must have a combined gross monthly income of at least $4,500.
If you are working with a property manager, he or she will request that all applicants provide proof of income. You can also ask for recent pay stubs or W-2s from each applicant.
Screen Your Applicants Credit
When you’re trying to determine whether or not your potential tenant is financially responsible, one of the first things you can look at is their credit report. All potential tenants should be screened for their credit history.
While there are many different types of credit reports available, they all provide insight into an individual’s financial history and their ability (or inability) to pay debts on time. You’ll want to make sure that any prospective tenant has a clean bill of health when it comes to their credit history—if someone has negative marks like charged off accounts, unpaid utilities or multiple missed payments on their record, then chances are good that person will have trouble paying rent on time as well.
It’s also important to note that more often than not, applicants will have education and/or medical debts reported on their credit report. These debts can weigh heavily on someone’s credit but should not be weighed heavily in your decision to rent to them. These types of debt are extremely common and have much different payback options than traditional credit cards or auto loan debt.
Run a Criminal Background Check
When you’re searching for a new tenant, it’s important to run a criminal background check. This can help you learn more about their overall character and whether or not they are likely to cause problems in your rental property.
There are many places online that offer a variety of different types of background checks for renters. Most people use these services because they want to know if the potential tenant has any negative information on their record, such as drug charges or theft convictions. These kinds of things are important to know when you’re deciding who should live in your home!
Once you have chosen an appropriate website and paid for their service, they will provide instructions on how best to run the search yourself. It should take no more than 10 minutes once all instructions have been followed correctly! Most importantly: Be sure not leave anything out while completing this task because it could mean missing out on vital information.”
Do’s and Don’ts.
Follow these Do’s and Dont’s as a First Time Landlord to Manage Your Property Like a Pro
References From Previous Landlords Can Help You Get a Sense of the Type of Tenant They Will Be
One of the best ways to determine if a potential tenant will be a good fit is by checking out their previous rental history.
- Ask for references from the other landlords the applicant has worked with. You can find this information on their application, or you can ask when they fill out your application.
- Call or email each of these references and talk to them about what kind of tenant they were and how they held up over time as tenants.
If you get any negative feedback from anyone in their past who’s willing to talk about it, it’s likely that this person won’t be good for your property either! If there are no concerns raised about previous rental histories or interactions between former landlords and tenants then this is another sign that everything looks good so far!
Typical questions you would ask of the previous landlord would be:
- Has this tenant paid late in the last 180 days?
- Has this tenant ever had an eviction filed on them by you?
- Does this tenant have pets?
- Did this tenant or their pets leave damage to the property?
- Has this tenant had any lease violations with you?
- Did this tenant give you proper notice to vacate?
Verify That The Information Provided by The Applicant Matches Up With Their Credit, Employment History, and Rental History
The next step is to verify that the information provided by the applicant matches up with their credit, employment history, and rental history. If it does, you can proceed with the application. If not, you may have to reject it.
In order for your application process to go smoothly and efficiently, we recommend using a tenant screening service like SmartMove™ from TransUnion® or Experian® RentBureau™ or any of the ones listed above. These services will provide information about an applicant’s credit history along with other important details such as past evictions so that you can make informed decisions about whether or not that person is right for your property.
Review Your Applications Thoroughly For Scams
As a landlord, and as we’ve discussed earlier, you should be prepared for the fact that scams are at an all-time high with tenants. Scammers will oftentimes fill out your rental application with false employment details, false rental history, or even the obvious fake social security number. You want to pay attention to the information on each of your applications and look for inconsistencies or anything that doesn’t add up.
Be sure to take your time reviewing the information on each application before you make any decisions about who you’re gonna accept or reject as a tenant. It’s always best if you can get back to potential tenants within 48 hours so they know that someone is looking over their application in a timely manner and they aren’t wasting their time by submitting one.
Be Thorough but Fair When Screening Potential Tenants for Your Property
Screening potential tenants is the best way to ensure you find good renters. It’s also a good way to weed out bad ones. Even if you already have a great tenant, it’s always wise to be thorough when screening potential tenants, as this helps ensure that your property doesn’t go into foreclosure and leaves you with enough money for bills and other expenses.
If you have a rental property, then screening potential tenants should be an important part of your business plan—regardless of whether or not you intend to do it yourself or hire a property manager. Here are some things to keep in mind when screening potential tenants:
•Check their credit report. If a potential tenant asks you not to check their credit report, then this is probably a sign that something is wrong with it. In most cases, it’s best to screen your applicants by pulling at least one of their three credit reports (Equifax, Experian, or TransUnion).
•Ask for references. References are the best way to check a potential tenant’s credit and rental history. You should also ask for references from previous landlords, employers, or other people who have known them for a long time.
•Ask for a deposit. Landlords should always require a deposit from new tenants. This is an excellent way to protect yourself in case something goes wrong.
If you’re going to use a property manager, then make sure that any tenant screening is done through them. You should also check references with the property manager before signing a lease with a new tenant.
A Tenant Screening Will Help You Find Good Tenants
As a landlord, you want to find the best tenants for your property. You want to avoid problems with tenants that will cost you money and possibly lead to legal action. You don’t want negative reviews online. Your reputation as a landlord is important, especially if you plan to sell your rental property in the future. A tenant screening will help you find good tenants who are likely to pay rent on time, take care of the property and not cause any issues while they live there.
We hope this guide has helped you understand the importance of screening tenants properly and provided some tips on how to do so. Remember that it’s important that you are thorough, but also fair and respectful when screening potential renters for your property. If your screening process results in a tenant who is not qualified, we encourage you to keep looking until find one!