How to Screen Potential Tenants
Because you’re always seeking the best possible candidates as tenants, you need to interview them carefully. By reviewing their history and inquiring with references and employers, you can get a pretty good idea of how they’ll perform as your tenant. But how do you know you’re asking the right questions? What red flags should you be on the look-out for?
Take a close look at these important tips on how to screen potential tenants. With these go-to screening questions in hand, you’ll have what you need to spot warning signs early on, and that can potentially save you thousands in unpaid rent.
Why Screening Tenants Is So Important
In order to keep the eviction risk low, your first order of business when considering someone for your rental is to run a credit and background check. They help landlords build a profile of the prospective tenant’s financial and criminal history. Our partnership with TransUnion’s SmartMove helps make running credit checks and the vetting process simple. They’ll deliver a ResidentScore that takes into account credit history, criminal background check results and other key factors. Here are key questions that SmartMove helps to answer that can really streamline your tenant screening process:
Will this tenant pay rent on time? By reviewing your prospective tenant’s rental history, you’ll have access to their eviction report and eviction history. According to TransUnion survey data, it costs landlords around $3,500 to evict a tenant and can take from 3 to 4 weeks. You’ll get information that’s validated against credit report data to help verify their identity. You’ll also see a full history of writs and warrants of eviction on the candidate.
Is this renter a risk to my property? Suppose the applicant’s paid their rent on time, but they’ve got a history of domestic issues. TransUnion’s criminal background check delivers details on arrest records and civil actions made against the prospective renter.
Select Your Tenant on a Financial and Criminal History Basis
In order to stay in compliance with the Federal Fair Housing Act, it’s imperative that you base your decision to rule out candidates legally. Because tenants are protected under these housing laws, and other local codes, you need to work within those constraints. Be sure to carefully document the results of these questions and keep each application in case a legal action is filed that challenges your decision. Here are several questions to ask a tenant that can help you stay within the law during the application process:
What’s your annual income? Usually, their total monthly income should be at least three times that of your monthly rental rate. If it’s not, you may be legally allowed to reject their rental application. Also, if you’re unable to verify their income, you may have legal grounds to reject.
Will anyone be smoking? If you’ve prohibited smoking in your rental properties, you may have cause to reject the application.
Do you have pets? Depending on your pet policy, you can allow certain animal breeds and pets up to a certain weight to lessen the risk of a serious attack. Candidates with pets outside those limits may be disallowed. If you’re barring pets altogether, you’ll likely have cause to reject their application.
Have you been arrested or convicted of a crime? You may be legally allowed to reject a tenant for having a criminal history. State, federal and local codes vary on the grounds by which you may reject, so be sure to review these carefully before making your decision.
Have you rented elsewhere before? If the applicant does not have a rental history, you’re likely allowed to reject the application. But they may be a good candidate with a carefully vetted co-signer.
Can I contact your employer? The applicant should allow you to contact their employer. If they don’t or if the current employer gives you a negative review, you may be able to refuse the application.
Do you have any prior evictions? If they do, you may be able to deny the application.
Have prior landlords or property managers withheld any part of your security deposit? If the answer’s yes, it’s important to understand the reasons why the deposit wasn’t returned in full. If it’s revealed that the tenant damaged property across many rentals, you may be within your rights to reject the application.
Look for the Traits of High Quality Tenants
One good way to identify high quality tenants is to document details from the first encounter forward. Build a template in a word processor that you can use as a reference and add to it each time you and that prospective tenant talk, meet or email. You’ll find that patterns will begin to surface around the tenant’s reliability and personality. Here are traits to look for and some reasons why they’re important:
Prompt and friendly from first encounter forward. Whether it’s by phone or in person, review how the tenant greeted you and jot down if they were on time.
Follows up after an initial meeting. This may seem like a small trait to document, but it can speak volumes about your tenant’s professional ethic. These details help you to understand who the tenant is and can inform your decision when you’re considering multiple qualified applicants.
Returns a completed application. Blanks in an application can be a red flag. This is particularly the case when the blank concerns a “big ticket” question, like prior evictions or income data. When the application is returned complete, that’s a good initial sign.
Readily offers up bank, tax and income documentation. This is one big way to know that your prospective tenant is serious about renting. When the financial files they provide confirm the information entered into the application, that’s another good sign. Compare paystubs against bank deposit records and verify that those all match up perfectly. If they don’t, the paystubs have been falsified and you may be legally allowed to reject the application. You can also call their employer and request details on their wage.
Tenant has a steady income history. The proven ability to produce and maintain a steady paycheck is key to predicting future reliability.
Protect Your Rental Property With Great Insurance
There’s a lot riding on the decision you make when you move forward with a lease signing. Because you’re placing so much into the hands of your tenants, it makes good sense to insure your rental property carefully. Get in contact with your American Family Insurance agent and schedule a time to meet and review your rental’s current insurance plan.
You’ll find our expert agents are able to help you build a simple-to-understand policy that fully covers your investment property. And that knowledge can give you the clarity you need to help your business really succeed.