Why Is Tenant Screening Important?
Following thorough tenant screening processes is essential to protecting your rental property. There are several benefits to verifying a potential tenant’s qualifications. Screening tenants will:
- Reduce the chance of lost rent
- Lower the risk of vandalism and crime
- Reduce your risk of liability
- Prevent frequent vacancies
By evaluating critical factors of an applicant’s finances, employment, and personal life, you can better ensure rent will be paid on time, they will respect the property, and the tenant will lease from you for extended periods. The number one mistake landlords make in tenant selection is failing to complete a full tenant screening report. While it will extend the rental application process, requiring a tenant credit and background check will save you headaches in the long run.
How To Screen Tenants
Create a Criteria Checklist
Set tenant interview guidelines for yourself. It’s tempting to fill your vacant rental as soon as possible, but entering into a lease agreement with an under qualified tenant is dangerous for your bottom line. Instead, create a criteria checklist and use it to evaluate every application you are considering accepting. Even if you know the tenant personally, follow through with the screening process. It is better to be overly cautious in your acceptance policy. It lessens the chance of damage to your property or unpaid rent.
We suggest including the following in your criteria checklist for tenant applications.
- The tenant’s income is at least 3.5x the rent amount. You want to make sure tenants can afford rent. Approving tenants that make less than 3.5x the property’s monthly cost will likely result in late payments.
- Run a credit check. Credit reports reveal more than just a credit score. Requesting a credit check on potential tenants will show if the applicant has defaulted on a mortgage or was previously evicted.
- Employment verification. Just because applicants say they have a job doesn’t make it accurate. Following the COVID-19 pandemic, landlords are experiencing more instances of false employment claims by tenants. Requesting a current pay stub and calling the HR department of a tenant’s workplace takes minimal effort.
- References. Ask tenants for their previous landlords’ names, phone numbers, and addresses. Watch out for contacts that share the same last name as the applicant. References from family members are notoriously unreliable.
- Social Media. It doesn’t hurt to type an applicant’s name into social media platforms like Facebook, Instagram, Twitter, or TikTok. Look out for frequent posts that involve partying, excessive drinking, drug use, or show the tenant engaging in irresponsible behavior.
Everyone has fun every once in a while. But odds are, if your potential tenant posts about a huge party every week, they will end up hosting one in your rental property. That behavior increases the odds of damage and heightens your risk of liability from injuries on your property.
- Background check. Performing a tenant background check will show you if your applicant has a criminal history. Aside from checking for felonies, watch out for theft, drugs, and vandalism charges.
- Meet in-person. Always request a face-to-face meeting with your potential tenant. In-person conversation allows you to evaluate factors not communicated on a written tenant screening report, like timeliness and personal hygiene.
Avoid Tenants with These Red Flags
If something doesn’t feel right, it isn’t. A tenant might meet every qualification on your criteria checklist and still be the wrong candidate. Watch out for these behavioral red flags that suggest you may have problems with this tenant in the future.
Paying Cash and Under a Time Crunch
Accepting cash deposits can be tempting. Cash is quick and guaranteed. However, when you combine the desire to pay some larger portion of yearly rent upfront in cash with a tenant is overly eager to move in you need to exercise caution. If a tenant requests to forgo the renter screening process, you should pause and ask further questions as to what is really pushing their timeline and if there is more they want to share about their current situation. Rushing the process could signify that they are running from a problem or potentially facing eviction.
A good tenant will respect you and your property. Missing an appointment to view the rental or finalize paperwork is a sign that person is irresponsible and unreliable.
Tenants with a less-than-great rental history will try to convince you of their qualifications by exaggerating good behaviors or responding with overt enthusiasm. If a rental applicant aggressively explains how they are responsible or a great tenant, investigate their application further. Most likely, they have omitted information or lied on their tenant screening form. You should be able to gauge a potential client’s qualifications from their credit score, background check, and references. If an additional explanation is required on behalf of the tenant, avoid signing a lease with them.
Use a Third Party Screening Service
Complete credit reports and background checks are more accessible through a third-party service. Two of the best tenant screening services are SmartMove and MyRental.
SmartMove provides a tenant screening service that issues landlords credit reports, eviction reports, background checks, and income insights on potential tenants. The premium service costs $42 per tenant screening. While this may seem expensive, paying a small fee upfront can save you thousands in lost rent and property damages by signing a lease with a bad tenant. SmartMove also allows landlords to invoice tenant applications for the service fee.
MyRental is another website that provides tenant background screening. The top package offered by MyRental gives landlords credit reports, criminal history, a SafeRent score, eviction history, and more on each tenant screened. This tenant screening report costs $35.
Post Vacant Properties on the Right Platform to Attract the Right Tenant
If you live in an area where it is difficult to find an available rental or your property is in a highly desirable location, expect to receive many tenant applications. Screening tenant applications takes a lot of work. Post your vacant rental on sites most likely to attract tenants with the qualifications you require.
Do you own more than one rental property? If you have upstanding tenants in other rentals, ask if they know anyone looking to rent. In most cases, the saying, “You are the company you keep,” is true. If you have a tenant who pays rent on time, is responsible, and is agreeable, chances are their friends, and family members are the same. Filling vacancies with referrals eliminates the need to post your vacant rental property online. It saves you time and increases the odds of finding a qualified tenant.
Zillow’s real estate platform is for more than just selling homes. Their rental property platform offers several benefits to landlords, including:
- Easy process for creating listings
- Millions of views by potential renters each month
- Options for lots of photos, videos, and property details
- Property management services, including rental applications and tenant screening services
Zillow’s platform is heavily trafficked. Be warned; you will receive many applications for your vacant rental property once it is posted. However, there is an option to require interested tenants to fill out an application and tenant screening form right on the platform. Zillow charges applicants $29 to complete this process. The immediate fee helps to discourage unqualified people from applying for your rental property.
Platforms to Avoid
- Craig’s List. Landlords who have used Craig’s List to advertise their available rental properties report that most inquiries received were spam.
- Facebook Marketplace. While listings on Facebook Marketplace reach a large audience, there are no tenant screening options on that platform. You will get hundreds of messages from interested renters, and it is difficult to weed through them accurately.
- Apartments.com. Unfortunately, apartments.com is inundated with false listings. Due to the high risk of scams, qualified tenants do not trust this platform.
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