8 Tips for Better Tenant Screening

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A lot of thinking and effort goes into being a successful and profitable landlord. Although investing in properties that show a lot of promise is certainly the first step, but selecting appropriate tenants thereafter is arguably the most essential factor for the success of high-ROI rental properties.

If you know or can learn how to screen tenants properly on a consistent basis, that will empower you to maximize your success into the future.

Screening tenants doesn’t have to be as thorny a process as some have made it out to be. Whether you choose to work with a property management company like GreenResidential.com to handle your screening, or do it on your own, here are six crucial tips that should make the process simple and smooth.

Pre-Screen

You can save yourself a lot of time and hassle by pre-screening people from the first moment they call to inquire about your listing. Here are ways to do this:

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  • Setting an appropriate rental fee is a simple but critical decision that will screen out some applicants who won’t financially qualify to rent the property.
  • Ask how many people will be living in the unit. If you have a two-bedroom property, it doesn’t make sense for a six-person family to move in. (In fact, it’s illegal in many states, so it could be in yours.)
  • Inquire about the tenant’s monthly income while he or she is on the phone. (This will have to be verified, of course, but you can rule out some people immediately if they don’t earn enough or are equivocal about responding.)

Some people are happy to give you a ton of information over the phone, while others will be more hesitant. Get as many details as you can and pay close attention to the questions they ask of you.

Don’t Be Shy …

When a prospective tenant inquires about the property and goes through the application process, you should extract as much information as you’re legally allowed to obtain. Here are some top questions we recommend you ask:

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  • On which date would you prefer to move in?
  • Do you have any pets? If so, what kind?
  • How long have you been at your current address?
  • What’s your reason for moving?
  • Do you smoke? Does anyone who will be living with you smoke?
  • Have you ever been convicted of a crime?
  • Have you ever been evicted?
  • Have you ever broken a lease agreement?

Ideally, you want someone who has a monthly income that’s at least three times the rent amount, a clean eviction report, a good credit score, and a steady employment history.

… But Don’t Cross the Line

Although there are plenty of questions you may ask, there are also some you may not legally raise. Here are some of the questions that landlords are prohibited from asking:

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  • What race are you?
  • Are you disabled?
  • In what country were you born?
  • Do you have a service animal?
  • How many times have you been arrested?
  • How many children do you have?
  • Will you be retiring soon?
  • Will you be attending a church nearby?

Some of these appear fairly innocent and neutral, but they can place you on shaky legal ground. Anything that could potentially be construed as discriminatory could come back to bite you. It’s best to steer clear of these queries.

Call Their Current Employer

Just because an applicant tells you he brings home $5,000 a month, that doesn’t necessarily mean it’s true. It’s possible the individual’s take-home pay is $4,300 (which poses a big difference if you’re talking about a $1,500 rental fee). Thus it’s always a good idea to call the current employer and verify the prospective renter’s income.

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Call Past Landlords

You also need to call past landlords. (Notice the plural). You should call the current landlord and the previous one.

Why both, you might ask. Because it can be tempting for the current landlord to make a bad tenant sound good in order to get a problem off his hands.

The landlord who precedes the current one has less incentive to embellish, however. He or she will more likely shoot you straight (especially if the tenant is a bad one).

Pull Credit Score

Finally, pull the tenant’s credit score to see if the person has any major black marks on the record (such as a ton of outstanding debt and/or a history of not paying off loans). This will give you a sense of how responsible the prospect is about money.

Run a Background Check

The final suggestion is to run a background check. This will reveal any skeletons a prospective tenant or applicant has in their history. At the very least, it gives you peace of mind knowing you aren’t bringing in anyone who has a violent or questionable past.

Running a background check is totally legal; however, there are some specific steps you’ll need to take:

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  • Start by getting signed consent from the tenant that gives you permission to run a background check. It’s technically illegal to run a background check on an applicant if they’re unaware that you’re doing so. Consent should be given in writing. (The best way to do this is through a dedicated section in your application that explicitly asks for permission to run a background check.)
  • In order to run a background check, you’ll need a few pieces of information (including name and social security number).
  • Choose an approved background check service and input the required information. (Most services cost between $15 and $40. Verify that it’s approved by the FTC before running the check.)

A background check can pull up a wide variety of information. It’s up to you to decide what’s a red flag and what’s not. For example, is a teenage misdemeanor something that disqualifies a tenant? Or are you specifically looking for violent crimes? Having a set of standards will help you interpret the findings more objectively.

Enjoy Total Peace of Mind

If you can consistently attract good tenants to your property, you won’t have any trouble generating a solid profit margin. And although you may certainly depend on your instincts to guide your search, an airtight screening process will only serve you better.

Lean on the five tips we’ve outlined to refine your approach.

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