Tenant screening is an important part of the rental process. After all, bad tenants who miss payments or destroy property can make things harder for landlords. How can landlords properly screen tenants? Here’s what you need to know.
What Should be the Criteria for Tenant Screening?
Every tenant background check for landlords should focus on risk assessment. The criteria are similar to those lenders use to screen borrowers for mortgages. Here are some criteria landlords can use in their tenant screening checklist to protect their investment.
- Credit Score and History. Landlords should run a background credit check for renters to minimize the risk of delinquencies.
- Proof of Employment. Landlords should ensure that tenants have a legitimate source of income to make sure they can make monthly payments.
- Security Deposit and First Month’s Rent. The tenant should be able to pay the security deposit and the first month’s rent without trouble. This is proof that the tenant won’t default on their rent.
- Clean Criminal Record. To minimize complications or potential neighbor complaints, choosing tenants with clean criminal records is best.
- Lifestyle Considerations. Landlords should consider whether a tenant’s lifestyle affects how they use the property. Does the tenant smoke or have pets? These can lead to property damage or complaints from neighbors.
Apart from these factors, landlords should also watch out for several red flags. These include bankruptcies, prior evictions, late or missed payments, or unstable employment histories. If a potential tenant has these red flags, asking them to explain what happened is best. Afterward, then landlords can assess whether or not the tenant is safe.
Legal and Ethical Considerations
While it may be tempting to weed out all the “bad” tenants, landlords should be careful not to get into any legal trouble. They must abide by federal, state, and local laws during vetting. Otherwise, they could face a lawsuit.
Remember to follow all the guidelines in the Fair Housing Act. According to its provisions, landlords cannot discriminate against tenants based on their race, gender, ethnicity, disability, and other characteristics.
Apart from this, several states have laws specific to the rental industry and landlord-tenant relationships. For instance, California’s Assembly Bill 12 states landlords cannot ask for security deposits larger than one month’s rent. The new law will take effect on July 1, 2024.
How to Do Tenant Screening
What should landlords do to conduct proper tenant screening? Read on to find our step-by-step guide.
1. Pre-Screen Tenants With Listings
After creating criteria, it’s best to pre-screen tenants through the rental listing. What do we mean by this? Simply put, create a detailed listing to help potential tenants understand whether they meet the qualifications.
For example, it may be wise to disclose other information apart from describing the property’s number of rooms and amenities. These include the monthly rent, security deposit amount, credit report fee, background check requirements, and references from past landlords. It may also be helpful to include smoking or pet policies.
With these in place, tenants who don’t meet the requirements will not even bother to apply. Landlords can quickly narrow down tenants and reduce the number of screenings they need to do.
2. Review Applications & Obtain Consent
The next step is to review applications and conduct a tenant background check for each applicant. Make sure to obtain the consent of tenants before you conduct tenant verification.
What should landlords form in the application? Consider including the following:
- Applicant name, birth date, contact information, and previous address
- If more than one person will reside in the property, collect their information as well
- Social Security Number and Driver’s License Number
- Employment and Income information
- References and their contact information
- Questions regarding past evictions, pets, lifestyle habits, and reasons for moving
3. Do a Credit Check
One of the most important screening parts is the tenant credit and background check. Look at the credit score and the tenant’s credit report. This can help landlords verify whether the tenant gave the right personal information.
Moreover, it can help landlords understand whether the tenant is currently (or previously) financially unstable. They can also tell landlords whether the tenant has had bankruptcies, missed payments, or is in too much debt.
If the tenant’s credit history isn’t clean, ask the tenant to explain. Landlords can also ask for a co-signer or a higher deposit if they want to continue with the agreement. They can also deny the application when in doubt.
4. Run a Criminal Background Check
A criminal background check for renters is crucial. This can help landlords assess whether the tenant might endanger the property or engage in criminal activity. It also protects the landlord from liability and can determine tenant retention. In some cases, it may also include an eviction record if a previous landlord obtained a judgment in court.
5. Verify Other Information
Tenant background verification also includes checking other information. Verify the tenant’s employment and rental history by contacting their references. This can help the landlord learn more about the tenant.
6. Schedule an Interview
After the tenant screening background check, conduct an interview. Ask the tenant why they are moving, when they plan to move in, and how long they plan to stay. It’s also vital to ask how many people will live on the property and what kind of lifestyle they have. Ask whether they need parking spaces, if they have pets, or whether they smoke.
7. Choose a Tenant
After the tenant screening process, choose a tenant based on the information found. Choose a tenant that best matches the rental property. Once decided, inform the tenant and set a date and time to sign the agreement. Landlords should also have a second and third choice if their first choice decides to back out.
The Alternative: Hire Tenant Screening Services
Tenant background screening can be a long and tiring process. Landlords, especially those with multiple properties, won’t always have the time to go through it. In this case, it may be a good idea to use tenant screening services like RentSpree or First Advantage.
Alternatively, a property management company can also help with tenant screening. They can also help landlords handle their listings, maintain property, and manage their various tenants.
Get Started Today
Tenant screening should be addressed. Otherwise, landlords may sign contracts with tenants who are more trouble than they are worth. Skip the headache and do proper background checks before signing a rental agreement.
Do you need help screening tenants or managing your rental property? SurfRider Property Management can help. Contact us online or call us today at 727-403-7088 for more information!