Tenant screening is one of the most important elements in the successful management of your rental home. The type of tenant you place will dictate whether you are effective as a landlord or stuck in a cycle of trying to collect late rent and prevent property damage. A thorough screening process will include conducting background checks, determining whether the applicants can afford to live in your home, and talking to former landlords.
Managing the Application Process
You have an opportunity to prescreen potential tenants when you talk to them on the phone or meet them at the property to show it. Ask about why they’re moving, when they plan to move, and what they do for work. Make sure they fill out a written application that collects their personal information and consents to have you conduct a full background and credit check. Everyone 18 years of age and older who will live at the property must complete and sign an application.
Conducting Background Checks
Once you receive an application, start your screening process by running a credit check, a background check, and an eviction check. This will give you an idea of whether the prospective tenant has been evicted or owes any money to former landlords. A perfect credit score isn’t necessary, but look for red flags such as unpaid utility accounts or overdue cable and phone bills. By checking nationwide criminal databases and sex offender lists, you’ll also know if the applicant has a criminal past.
Verify Employment, Income, and Rental History
Talk to the applicant’s employers to verify the length of time they have been on the job and their position. Ask about salary, or request pay stubs from the applicant so you can be sure they’ll successfully cover rent every month. We recommend a rent to income ratio that’s 35 percent or lower.
Ask for landlord references. It’s a good idea to talk to the current landlord as well as one previous landlord. This will tell you what kind of tenant this person has been in the past. You can ask if rent was paid on time, the lease was followed, and if any damage was left behind.
Fair Housing and Tenant Screening
It’s important to follow all state, local, and federal fair housing laws. Make sure you understand who the protected classes are, and what you can and cannot use when you’re making decisions about whether to approve or deny a tenant. For example, you cannot deny a tenant with a service dog because you have a no-pet policy. There have been recent changes with how you use information on criminal backgrounds. If you’re in doubt about what’s allowed and what’s prohibited, talk to a property manager who knows the law and can keep you out of trouble.