Screening tenants for a rental property is a critical process that can significantly impact a property’s success and profitability. By implementing effective screening methods, landlords can attract reliable and responsible tenants who will not only meet their rental obligations but also help property owners maximize the potential of their investment. In this article, we explore seven key steps in screening tenants to ensure landlords make informed decisions to fill their vacancies while adhering to Fair Housing Laws.
Property owners should plan ahead by utilizing a tenant screening checklist to guarantee they’ve covered the necessary steps in the tenant screening process. Download our complimentary checklist and decision flowchart below, which includes rental application items, ways to verify income and employment, and tenant interview questions.
1. Understand & Comply With Fair Housing Laws
It is important to have a comprehensive understanding of Fair Housing Laws before embarking on the apartment screening process. Familiarize yourself with federal, state, and local regulations to ensure compliance and to help you avoid any discriminatory practices. Landlords must treat all applicants fairly and equally, without any bias based on race, color, religion, sex, national origin, familial status, or disability.
To avoid breaking fair housing laws, landlords should follow these general guidelines:
- Treat all applicants equally: Treat every applicant fairly and equally regardless of their background or characteristics. Avoid any form of discrimination or bias during the process of screening tenants.
- Use consistent screening criteria: Develop a clear set of qualifications and requirements based on factors like income, rental history, creditworthiness, and references. Apply these criteria uniformly for all applicants and avoid making exceptions for specific individuals or groups.
- Advertise responsibly: When advertising your rental property, avoid any language, images, or statements that could be interpreted as discriminatory. Focus on describing the property features, amenities, and location rather than using language that targets specific groups of people.
- Ask legal and objective screening questions: During interviews or interactions with applicants, ask only legal and objective screening questions directly related to their qualifications as tenants. Avoid inquiries about protected characteristics, family status, and disabilities.
- Maintain accurate records: Keep detailed records of all interactions, communications, applications, and screening results. Documentation can help demonstrate that your tenant selection process is fair and unbiased.
- Use screening services: Utilize reputable tenant screening services or credit reporting agencies to conduct credit checks and background checks during the verification processes. These services are equipped to handle sensitive information and ensure compliance with fair housing laws.
2. Use a Rental Application to Prescreen Tenants
Utilizing a well-designed rental application is a practical step in the tenant screening process to protect your investment properties. A comprehensive application helps gather essential information like personal details, employment history, income verification, references, and consent for background and credit checks. The application acts as a prescreening tool, allowing you to screen tenants and determine their suitability for your rental property.
A rental application should include several key pieces of information to help landlords assess the fit of potential tenants. Here are some essential details that should be listed on your application:
- Personal and contact information: The application should require the applicant’s full name, current address, phone number, and email address. This information allows landlords to contact applicants and verify their identity.
- Employment history: Requesting details about the applicant’s employment history, including current and previous employers, job titles, and durations of employment, helps assess their stability and income source. This information offers insights into their ability to meet their financial obligations.
- Income verification: A rental application should include a section where applicants can provide proof of income, such as recent pay stubs, employment contracts, or tax documents. Verifying income ensures that tenants have the financial means to pay rent consistently.
- References: Applicants should be asked to provide references from previous landlords or professional contacts who can vouch for their character and reliability. Contacting references offers valuable insights into the applicant’s rental history, payment habits, and general conduct as a tenant.
- Rental history: It is important to gather information about the applicant’s previous rental history, including addresses of previous residences, dates of tenancy, and reasons for moving. This allows landlords to assess their rental track record and helps landlords understand where their tenant has lived and in what types of properties.
- Consent for credit and background checks:Including a section where applicants grant consent for credit and background checks is crucial. This authorization enables landlords to request personal information on the tenant from the right legal entities.
- Additional information: Depending on specific preferences or property requirements, the application may include additional sections, such as questions about pets and vehicle information, or ask any specific questions that might help in determining their eligibility.
3. Run a Credit Report & Background Check
Once you’ve obtained a completed rental application, you can run a credit and background check on the tenant. A credit report serves as a valuable resource for landlords by providing essential information that helps assess the financial responsibility and reliability of prospective tenants. This detailed evaluation allows landlords to gauge an applicant’s ability to meet financial obligations, including paying rent on time.
A background check is a valuable tool that landlords can utilize to gain insights into a prospective tenant’s history. By conducting a background check, landlords can uncover crucial information to help you make informed decisions during the tenant screening process.
Key information that will be found on a prospective tenant’s credit report and background check are:
- Credit score: The credit score provides an overall snapshot of their creditworthiness. A higher score typically indicates a more responsible approach to managing financial obligations. Most landlords like to see a score of 700 or above.
- Payment history: In the applicant’s payment history, landlords can look for patterns of late payments, delinquencies, or accounts in collections. Consistent on-time payments demonstrate a tenant’s financial responsibility.
- Debt-to-income ratio: The debt-to-income ratio indicates their level of financial obligations compared to their income. A lower ratio suggests a better ability to manage additional rental expenses.
- Outstanding debts: Look for any outstanding debts or judgments against the applicant, as these may affect their ability to pay rent consistently.
- Criminal records: Check for any criminal records or convictions. While minor offenses may not be immediate grounds for rejection, serious offenses should be carefully evaluated.
4. Verify Income & Employment
Verifying income and employment helps landlords select tenants with the financial stability to fulfill their rental payments. Landlords should have a general guideline for income requirements needed from tenants. A common guideline often followed by landlords is the “three times the monthly rent” rule.
This means that applicants are typically expected to have a monthly income that is at least three times the amount of the monthly rent. For example, if the monthly rent is $1,500, applicants would generally be expected to have a minimum monthly income of $4,500.
However, you can choose to increase or decrease this multiple. For example, in New York City, tenants are required to make 40 times the rent to qualify for an apartment. So, if you want to rent a $2,000 apartment, you must make $80,000 per year.
Some landlords may have higher or lower income requirements based on their specific circumstances and preferences. Landlords can verify income and employment by contacting employers, requesting pay stubs, and employment contracts, or using professional verification services like RentPrep. Check out our RentPrep review if you’re interested in learning more about this tool.
5. Check Previous Addresses, Landlord & Eviction History
In addition to verifying income, when learning how to screen tenants for rental property, it’s essential for landlords to verify an applicant’s previous addresses and landlord and eviction history. Thoroughly vetting application information increases confidence that the applicant meets your rental qualifications and will be a good tenant.
By asking for references and rental history information on the tenant application, landlords can uncover information about a prospective tenant’s previous addresses, eviction history, and former landlord relationship status. Details you want to discuss with a tenant’s former landlord are payment history, adherence to lease terms, property maintenance, behavior as a tenant, and any issues or disputes during the tenancy.
When contacting a tenant’s former landlord, consider asking the following questions:
- Can you confirm the applicant’s tenancy at your property?
- How long did the applicant reside at your property?
- Did the applicant consistently pay rent on time? Were there any instances of late payments?
- How would you describe the applicant’s communication and cooperation during their tenancy?
- Did the applicant maintain the property in good condition?
- Were there any reported issues or complaints from neighbors or other tenants related to the applicant?
- Did the applicant provide proper notice when planning to move out?
- Were there any lease violations, disputes, or conflicts during their tenancy?
- Would you consider renting to this applicant again in the future?
Landlords can offer tenants an easy way of paying their monthly rent online to guarantee on-time payments with Baselane. Tenants can easily submit rent payments online, eliminating the need for paper checks or in-person transactions. This streamlined approach not only saves time but also ensures timely and consistent rent collection. Additionally, Baselane provides landlords with financial management tools to allow them to track income, expenses, and quickly generate detailed financial reports.
6. Interview Applicants & Ask Screening Questions
Once you’ve reviewed all application information and you’ve determined that you would like to proceed with a prospective tenant, then conducting face-to-face or virtual interviews with applicants may help you finalize your decision.
Landlords should prepare a list of questions when screening potential renters. These questions should be tailored to your specific requirements, covering rental preferences, lifestyle, and ability to meet rental obligations. Observe their communication skills, professionalism, and general demeanor during the interview to gauge compatibility.
Here are some suggestions for what landlords can do during the interview process and sample questions they can ask to assess if the tenant will be a good fit:
| Example Questions You Can Ask | Example Questions You CANNOT Ask |
|---|
| Do you have any pets? | Do you have any medical conditions? |
| Are you willing to comply with the property’s rules and regulations? | What is your sexual orientation? |
| Can you pay the lease application fee? | Do you have any plans to start a family? |
| Have you ever broken a rental agreement? | Are you married or single? |
| Are you able to meet the monthly rent obligations? | Do you have a |
7. Accept or Reject the Applicants After Screening
After carefully evaluating each applicant’s qualifications and determining whether they align with your renter criteria, landlords must decide whether to accept or reject their tenant’s application. Landlords should base their decision on a tenant’s creditworthiness, rental history, income stability, and overall compatibility to make an informed decision. Communicate your decision promptly and in compliance with applicable laws and regulations.
To help with the evaluation process, landlords should develop a clear set of screening criteria to objectively evaluate potential tenants. This is especially helpful when you have multiple applications, and you need to pick the applicant best fit for your property. Some screening criteria to help you with accepting the right tenant:
- Sufficient income: The applicant should have income that meets or exceeds the requirement of three times the monthly rent.
- Stable employment: A stable work history shows a continuous duration of time in their current job. This indicates reliability and a higher likelihood of consistent income.
- Verifiable income: Verify the applicant’s income through their current employer documents or tax returns. This helps confirm their financial stability and ability to meet rental obligations.
- Satisfactory credit: Assess the applicant’s credit history to make sure they have a strong credit profile. This indicates responsible financial behavior and increases the likelihood of timely rent payments.
- Clean criminal background: Check for a criminal background free of felonies or misdemeanors to prioritize tenant safety and security.
- Positive rental history: Evaluate the applicant’s previous residence and landlord history for a favorable track record of fulfilling lease obligations and maintaining their past properties.
After you determine whether the prospective tenant meets your criteria, you will be able to either accept or reject their application.
Landlords can leverage advanced software to screen prospective tenants. These tools offer a variety of features like automated rental applications, online background checks, and credit assessments. By using tools throughout the tenant screening process, landlords can save time, reduce manual paperwork, and make data-driven decisions. This ultimately helps with selecting the most qualified and reliable tenants for your rental properties.
Bottom Line
By taking the time to learn how to screen tenants in your property will reduce the headache of having to evict a bad tenant in the long run. Landlords should implement a thorough tenant screening process to minimize potential tenant scams, secure responsible tenants, and foster a positive landlord-tenant relationship. Leveraging technology and software tools can streamline the screening process and provide valuable insights into prospective tenants.
Like this:
Like Loading...