You’ve invested a lot of time, energy, and money into your rental business. As such, you want to make sure that you’re protecting your property and getting good returns. The best way to achieve these goals is by renting out your property to qualified tenants. To find such a tenant you need to have an exhaustive tenant screening process in place. If you’d like to learn how to effectively screen prospective tenants, this is the guide for you!
Characteristics of Qualified Tenants
A qualified tenant is someone who can make consistent rent payments, care for the rental property for the duration of the tenancy, and respect the terms of the lease agreement. You also want to ensure that the tenant has a stable income, a solid rental history, a clean background check, and a good credit score.
How to Screen Prospective Tenants
The following are the steps you want to take to effectively screen your tenants:
Develop a Baseline Tenant Criteria
You want to think about the minimum criteria a tenant must have to move forward in the screening process. By establishing this baseline, you’ll save time by filtering out candidates that automatically don’t fit your needs. This criteria can include the following:
- – A minimum credit score of 660
- – Earning 3x the monthly rent
- – Willing to submit to a thorough background check
Develop Pre-Screening Questions
Like the baseline criteria you set, pre-screening questions allow you to quickly filter through various applicants to save you from performing multiple in-depth tenant screenings. You can ask these questions during property showings or as prospects inquire about the rental. Just make sure that the pre-screening questions and all other elements of the screening process adhere to the Fair Housing Laws.
Have Prospects Fill Out Applications
You want your rental application forms to answer baseline questions so you can streamline the screening process. The form should include the following information:
- – The prospective tenants updated contact information
- – Their current and prior landlord’s contact information
- – The name and contact information of their current and prior employers
- – Authorization for a background and credit check
Once you have this information you can check that they’ll be earning enough to make consistent rent payments and learn more about their rental history and habits from previous landlords.
Check Their References
Once you’ve been given the contact information for current and prior landlords and employers it’s time to reach out and learn more about the prospective tenant’s character. Landlords will be able to give you insights as to what their applicant is like as a tenant. You want to confirm that they took reasonable care of the rental and made consistent rental payments throughout the tenancy. From employers, you want to learn if the prospective tenant is a reliable worker and if they get along well with others.
During the stage of the screening, you need to be aware of potential scams. For instance, an applicant may have put down the contact information of a friend or family member and asked them to impersonate a prior landlord. To verify their identity you can ask questions about the types of property they rent out.
Verify Their Credit Score
Credit checks are very important and they can give you insight into the tenant’s financial responsibility. Ideally, you want a credit score of at least 660. The tenant should also have a history of making timely payments and have a steady income. Tenants with higher credit scores tend to be more reliable, thus landlords can rest easier knowing that they’re more likely to receive timely rental payments.
Perform a Background Check
In addition to a solid rental history and good credit score, you want to make sure that the applicant has a clean background. Verify their social security number and identity to ensure that you aren’t being scammed and check their criminal records. Note that you conduct this phase of the tenant screening you need to ensure that you’re adhering to all the rules and regulations laid out in the Federal Fair Housing Act.
Accepting or Denying an Applicant
Once you’ve completed your in-depth tenant screening it’s time to decide whether or not to accept the tenant. If you think the tenant will be an excellent fit, then you can call or email them. When communicating this new to them make sure to also explain the next step in the process which is the review and signing of the lease agreement.
If you’re not planning on accepting a prospect, make sure the send a polite and professional rejection in writing. You can inform them that the property is no longer available for rent as you’ve moved forward with another applicant. If you’d like to give a specific reason as to why you won’t be accepting their application you can, but it’s not necessary.
That said, the reason for rejecting a prospective tenant must not be based on any of the protected classes listed in the Fair Housing Act. It must be based on factors that appear during the background check like credit score, rental history, or income.
Bottom Line
Conducting a thorough tenant screening helps to minimize tenant disputes throughout the tenancy and protects your investment long-term. Make sure to follow the same procedure for all tenants and only accept or reject applicants for valid reasons. Tenant screenings can take up a lot of your time. What’s more, if you have multiple properties to rent out this can be even more daunting. Thankfully, you can partner with a trusted property management company that can handle the process on your behalf.
The team at Property Specialists Inc. can diligently oversee the management of your rental properties. We’ll handle everything from tenant screening and property marketing to rent collection and rental maintenance. Contact us today to learn about our services!
