Screening tenants is crucial in order to run a successful real estate business. Performing proper screening allows you to avoid bad tenants, find high quality renters, minimize evictions, reduce turnover… the list goes on.
It can be difficult to find qualified tenants, and that’s exactly why screening is so critical. Just because an applicant gives off all the right vibes — they’re organized, punctual, charismatic — doesn’t mean they’ll make a good tenant. And the reverse can also be true. The only way to truly discern which applicants are most qualified is to implement a thorough tenant screening process.
To help you find the most qualified tenants to fill your vacancies, we’ll go over 4 steps to create an effective tenant screening system. You’ll be feeling better prepared the next time you have to sign a new tenant.
Step 1: Outline the Tenant Screening Process
First thing’s first, you need to lay out what exactly your tenant screening process will include. It’s best to start with a game plan and go from there.
In your screening process, you should:
- 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
Let’s take a closer look at each of these steps.
Employ Passive Screening Techniques
Even before a potential tenant applies, there are steps you can take to ensure you’re attracting the best quality renters. From where you market, to how you present your property, to the information you communicate to applicants that reach out, passive tenant screening can make a big difference. It can save you and tenants that 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, as well as assessing their character. All you’re trying to do is get a feel for the renter.
One factor of pre-screening is including your screening requirements in your listings. This not only provides transparency for applicants, but it also filters out renters who know they won’t be able to meet your minimum requirements.
You should also attempt to get to know applicants through initial communication. This includes phone calls, emails, and first showings. Do they respond promptly? Do they show up on time? Do they appear organized and collected? These are all things you should be gauging during initial communication.
It can also be helpful to conversationally ask questions such as the following:
- Do you have any pets?
- Why are you moving?
- When would you ideally move in?
- Are you comfortable providing references from your former landlords and employer?
- Are you considering submitting a rental application?
As we’ve said, this step is really just a way to get a feel for an applicant. You might decide not to move forward with the application process, and so might the renter. Either way, pre-screening is good at weeding out applicants who would be denied housing down the line, again, saving both parties time and money.
Require a Rental Application
Creating an effective and concise rental application is crucial to the screening process. All applications are a little different, and you should curate yours to collect all of the information necessary for judging an applicant’s qualifications.
That being said, most applications collect the following information:
- Applicant’s employment history, dates of employment, position, and salary
- Their residence history with landlord contact information
- Important questions such as:
- Do you smoke?
- Have you ever refused to pay rent?
- Have you ever been evicted?
- Have you ever declared bankruptcy?
If you need a little extra help, there are customizable rental applications available. These ensure that you’re collecting all of the basic 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 more open to discussing the applicant. Regardless, the information you gather from contacting an applicant’s employer allows you to ascertain 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. It is possible, however, that a landlord might skew or exaggerate the tenant’s behavior. This is rare, but it’s still good to remain somewhat skeptical.
When contacting previous landlords, you should ask whether the applicant:
- Paid rent on time
- Took care of the rental property
- Left the unit clean and in good condition
- Respected other tenants or neighbors
The answers to these questions will enable you to judge whether or not a prospective tenant will pay rent on time, follow the terms of their lease, and respect your property and other tenants.
Run Credit, Criminal, and Eviction History Checks
Running background checks is the most reliable way to gather information about a tenant’s qualifications. Your background checks should provide reports on a tenant’s credit, criminal, and eviction history.
With a credit report, you should be looking at not only the applicant’s FICO score, but also any outstanding debts or financial obligations. This information makes it easy to predict whether or not a tenant will pay on time every month.
Criminal reports can cover different levels of an applicant’s records, but the most thorough will report local, state, and nationwide criminal records. You can legally deny housing to applicants with convictions related to disrespecting private property or endangering the safety of other people.
Eviction reports simply include a tenant’s eviction history. These allow you to understand a tenant’s rental history. The last thing you want is to unknowingly sign a tenant with a repeated history of evictions.
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 more time than you have, and screening services can provide reliable information instantaneously. What’s more, you can typically pass the fee onto your applicants.
Accept or Deny the Applicant
Whichever way you decide, you should inform the applicant of your decision promptly. If you accept them, the quicker you inform them of your decision, the quicker they can sign the lease and start paying rent. If you deny them, telling them promptly will allow them to begin looking at other housing options or accept a different offer.
Step 2: Determine your Screening Criteria
In order to organize and evaluate the information provided by your screening, you need to determine your screening criteria. The best way to do this is to create a scoring system, which will expedite the process.
Your screening criteria should map out the minimum requirement an applicant must meet in order to qualify for housing. You should base the criteria on the following categories:
- Credit History
- Criminal History
- Rental History
In accordance with the Fair Housing Act, you’re only allowed to legally deny an applicant if they fail to meet your requirements for one or more of these categories.
Step 3: Follow Through with Consistency
As we discussed at the beginning, just because a tenant gives you good vibes doesn’t mean you should skip any of these crucial steps. Following through with your screening process ensures that you’re only signing the most qualified tenants.
Being consistent also makes sure that you’re giving all applicants equal opportunity to housing. This is required in order to comply with Fair Housing laws. You don’t want to be faced with Fair Housing claims 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 can not deny housing based on a protect class, which includes:
- Familial Status
- National Origin
You must keep this in mind during every step of the application and screening process. Whether it be during pre-screening or while you’re filling out your scoring sheet, you must be sure that you’re judging an applicant based on their actual qualifications and not on any of your own implicit biases.
Tenant Screening is a Must
It should now be clear that tenant screening is an integral part of a successful application process. Hopefully you’re feeling confident in your ability to effectively screen tenants in order to only sign the most qualified renters.