How to Screen Potential Tenants

Managing a rental property requires a lot of work and careful decision-making, including determining which tenants to rent to. Fail to screen applicants, and it could lead to issues in terms of rent payments, tenant relationships, and security. As a landlord or property manager, it may not always be possible to know the kind of tenant someone is until after they move in. However, there are several steps you can take to reduce the risk of problematic tenants.

A good starting point for tenant screening is prescreening measures, such as creating a rental application form. The form should clearly outline the rules and expectations for residents of your property, while adhering to state laws and Fair Housing Act (FHA) regulations. This act forbids screening renters based on their familial status, sex, race, color, disability, religion, or national origin.

Also, brief prospective tenants on the process you use to screen applicants before giving them the application form. Some may decide not to proceed if they fall short of your requirements. Such occasions help spare you from expending time, energy, and resources on reviewing and responding to unsuitable applicants.

For tenants who submit an application, you will want to evaluate their probability of meeting their financial obligations to you on time. Use credit scores to assess their ability and reliability in this regard. The higher the credit score, the better because it means that the applicant has a good history of paying off debts and loans. You can obtain credit reports from any of the leading credit reporting agencies, which comprise Equifax, TransUnion, and Experian.

The credit report will not fully reveal potential problems associated with a given tenant, so conduct a comprehensive background check as well. This includes checking their criminal history. However, always consider the relevancy of any listed convictions and ensure FHA compliance when reviewing criminal records. For example, a nonviolent conviction from several years ago may have nothing to do with being a good tenant.

If you want to simplify this part of the screening process, research the numerous services and platforms available that provide insights into the financial history, credit rating, and criminal record of prospective tenants. For instance, TransUnion offers a dedicated tenant screening tool for landlords.

For employer and landlord references submitted by potential tenants, follow up with all contacts in order to validate the information supplied and confirm rental and employment background. Multifamily leasing professionals suggest speaking with as many previous landlords as possible when researching an applicant’s tenant history. To verify the employment status, contact their current employer. A prospect with a stable income is more likely able to afford the rent. Additionally, consider asking applicants for recent pay stubs or bank statements.

Unless their application or background check raises enough red flags to warrant rejection, conduct a final interview with potential tenants. During the interview, give them the opportunity to supply missing documents and clarify anything that concerns you. You might have questions about inconsistent employment or income history, for instance.

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