Last modified on June 26th, 2017

Tenant screeningWhen it comes to finding a good renter, implementing a comprehensive screening process is important. Eliminating those who are not a good fit for your property can save you time, money, and a host of headaches. The purpose of screening tenants is to find renters who are highly likely to fulfill all the terms of your rental agreement. At the very least, your tenant should be able to afford the rent, be willing to pay on time, and treat you and your property with respect.

Screening potential renters can be time-consuming, but it’s well worth the effort. It’ll require that you integrate a formal process to all applicants equally, and that you’re comfortable saying “no” to applicants who do not measure up. When you decline unsuitable renters, you must do so professionally so there is no question of discrimination. Fortunately, it can be easy to ask the right questions, obtain accurate information, and protect yourself when choosing your next renter.

Start with the Right Questions

Open-ended questions can reveal good information about your prospective renter in addition to the traditional request for references and past and current employers. You might learn more about their employment or discover why the tenant is moving. It might also be beneficial to ask questions over the phone while evaluating the applicant, and then get answers in writing. However, keep in mind that according to Fair Housing laws, you are not entitled to discriminate on the basis of race, religion, sex, family status, or handicap––so stay clear of any questions pertaining to these categories.

Look for Red Flags

When you speak to potential renters and scrutinize their rental application, keep your eye out for any information that may indicate difficulty in the future. Even a simple question regarding why the tenant is moving can point to issues that may pose a problem for you once they’re your renter. For example, you might find out that the applicant is being evicted and the what the basis behind the eviction notice is. They may also reveal that they are constantly arguing with their current property manager, or that they don’t get along with their neighbors. These may point to behavioral traits that signify a habit of noncompliance––something you want your community to steer clear of.

Find Out About Finances

Get written permission to contact the applicant’s current employer and create a form with specific questions regarding length of employment, salary, dependability, and other pertinent details. Information gathered from an employer may indicate if the applicant can afford the rent. As a rule of thumb, a renter’s income should bring in at least 2.5 to 3 times the amount of the monthly rent you are asking. So if you are asking $1,000 in monthly rent, the renter should earn at least $2,500 a month.

Run a Credit and Background Check

Another way to guarantee financial security is to have your applicants sign up for a credit and background check. A credit check will reveal the renter’s credit history, and serves as a good indicator of his or her ability to pay their bills in a responsible and timely manner. The credit report will also show if the social security numbers that were given to you match the street address they provided. Additionally, the background check will identify any criminal history and deception or fraud. Evictions will also show up on the background check.

Solidify your Criteria

Be sure to establish a written set of criteria that every rental applicant must meet in order to be accepted as your tenant, and apply the criteria equally. You may insist that the tenant have verifiable income 2.5 times the amount of the rent, a credit score of 600 or more, and a record of no evictions. You may decline a renter based on income, negative input from an employer or current landlord, or information contained in the credit or background check. Be sure to use an FCRA compliant adverse action letter if you decide to decline a rental applicant based on information provided in a background check.

Screening for Success

Effective screening can go a long way in helping you select the right renter. It’s worth taking the time and extra precaution so that your next renter cares for the property, pays on time, and respects the community, along with you, the property manager.

This article was contributed by Advantage Realty Services, Inc. Advantage Realty runs their property management business with AppFolio Property Manager, an all-in-one software with built-in screening features.