Renting property can be a lucrative business, but it can also be costly if you aren’t careful. That is why tenant screening is a crucial step in the process. While there are no guarantees that you will be able to eliminate every bad tenant situation, pre-screening prospective tenants can reduce the risk of a non-paying tenant. Use these tips to successfully screen people for your rental property.
Pre-screen Potential Applicants
Before you show the rental property or start the application, first check to see if they are a good fit by asking some simple questions like:
- Why do you plan to move?
- How soon would you like to move in?
- What are your monthly earnings?
- Can you provide me with references from your employer and previous landlords?
By asking these questions in advance, you can eliminate candidates who do not meet your criteria. This saves you time from unnecessary showings of the rental property. Also, make sure that the prospective tenant knows that you do plan to run a credit report and a background check as part of the application process.
Show the Rental Property
Once you have eliminated unqualified candidates, schedule showings with the prospective ones. Meeting your potential tenants face-to-face has many benefits. First, it allows you to assess their character and habits. Did they show up on time for the appointment? How well do they present themselves?
This is also an opportunity for you to get a good picture of their personality, and establish a relationship with them. If ever there is a situation, by knowing your tenants personally, you are better equipped to deal with any future incidents. Being a great landlord and having an open relationship with your tenant can help reduce potential problems.
Take Applications from Potential Tenants
The next step to the process is accepting applications. Again, if you make it known upfront that credit and background checks are required, you can potentially eliminate anyone who isn’t qualified. If someone has unfavorable information on either of these reports, they may simply decide not to apply once they learn you plan to run these checks. If you do not already have a rental application drawn up, you can easily download a template online.
The rental application should include the following:
- Contact information for the rental applicant.
- Prior rental history.
- Proof of income and employment.
- Authorization to run credit and background checks.
You may also want to include an area that gives applicants an opportunity to explain any negative information on their reports such as a bankruptcy or eviction.
The number of applicants you take depends on the situation. If the first or second applicant seems well-qualified, then you do not have to continue accepting new applications. However, don’t rush to accept an applicant because you are eager to rent the property. That could end up costing you more in the long run. And remember, according to the fair housing act, you must stay objective and use the same criteria for all applicants.
Analyze the Applications
The final step to successfully screen prospective tenants is to analyze the applications and ultimately choose one. You’ve done all the pre-screening and due diligence, but this final step is the most critical. When you are at this stage, first, review the application for anything that might disqualify applicants. For example, if they do not currently have employment or a source of income, this is a red flag.
Next, check the information on the application with the background and credit checks. Was the potential tenant honest on the application? Have they had any bankruptcies or evictions? Do they have a criminal background? Hopefully, these people eliminated themselves prior to you researching this information, but it is always best to carefully examine these documents and don’t assume anything.
When you call their references, make sure to ask the right questions. Sometimes applicants will list a false reference as an employer or landlord. For example, don’t ask “was this your tenant?”. Instead, phrase the question as “how do you know him?”. You still may not get an honest answer, but you can catch the false reference off-guard.
Thorough screening involves a little leg work (and sometimes patience) up front, but in the long run, it pays off. You reduce the risk of non-paying tenants, and you can find those who you are confident will take care of your property while they are renting it.
Once you find the right one, go through the rental agreement and begin!