What to Look for When Screening Tenants

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What Look Screening Tenants

When managing rental property, one of the most important responsibilities you’ll have is screening tenants. You’ll collect information from tenant applicants, including information on their criminal background, financial status, and renting history, and decide whether you want to bring them in as paying renters. In this article, you will get to know What to Look for When Screening Tenants.

This process is designed to protect you from financial risk and potentially problematic behaviors. The better you screen your tenants, the fewer issues you’ll have and the more profitable your rental property will become.

The question is, what exactly should you be looking for?

Hiring a Property Management Company

One of the best ways to handle tenant screening is to hire a property management company. A property management company will handle tenant screening on your behalf, selecting the best possible tenants without requiring anything from you. They’ll also handle things like property maintenance, repair requests, and evictions (should they ever become necessary), making them well worth the cost of service.

Avoiding Discrimination

In the course of tenant screening, it’s important to remember anti-discrimination laws. Generally speaking, landlords are legally required to not discriminate on the basis of factors like ethnicity, gender, or family status. 

While it’s perfectly acceptable to screen and reject tenants based on factors like credit score, you don’t want to end up with a discrimination lawsuit on your hands. Make sure you consult with a lawyer to ensure you’re in compliance with these laws.

Important Signs to Look For

When screening tenants, make sure you look at the following, at minimum:

  •         Credit score. First and foremost, check the credit score. Your applicant’s credit score is a relative measure of their financial trustworthiness, as determined by major credit institutions. The higher the score, the more consistently they’ve made payments in the past (and the more reliable they are, financially). However, you shouldn’t expect your tenants to have perfect credit – otherwise, they’d be more likely to buy a house instead of renting. Search for a balance and consider credit score in combination with other factors.
  •         Criminal background. You’ll also want to conduct a brief background check. Being convicted of a crime shouldn’t preclude a person from ever finding a place to rent again. However, you may be reluctant to bring a repeat violent offender into an apartment building where other loyal tenants reside.
  •         Eviction history. Has this person ever been evicted in the past? If so, that’s a major red flag. You may also want to find out the previous reason for eviction; this can help you figure out the context of the issue.
  •         Current income. If you’re charging $1,200 per month in rent, you need to make sure your tenant is making at least that much. If their income doesn’t seem to support this rent payment, you can pretty much count on them being unable to pay on time in the future. Most tenants screen themselves in this regard, but you’ll still occasionally find applicants attempting to rent a place they can’t truly afford.
  •         Employment history. The on-paper income may look good, but how is their employment history? Have they worked for this company for the past ten years? Or did they just start last week, after quitting another job where they only worked for a month? The sketchier the employment history is, the riskier the tenant will be.
  •         Landlord information. Be sure to ask your tenant applicants for the contact information of their previous landlords. Call them up and ask them if there were any issues. You might hear a glowing review – or you might find out that the tenant was destructive and there’s still a pending lawsuit against them.
  •         Reasons for previous departures. Ask about the reason for their previous departure. Did they move from the last place because they got a new, better paying job? Or because they had a child and needed more space? Or do they just like bouncing from place to place on a whim?
  •         Attitude and communication. When it’s time to interview the tenant, pay attention to their overall demeanor. Do they seem polite, respectful, and eager to take good care of this property? Or do they seem standoffish and hard to communicate with?
  •         General lifestyle. You should also consider their general lifestyle – at least in some circumstances. For example, if this person is a rock musician, they may be considered a nuisance by their neighbors.

There aren’t firm rules for which factors should lead to a rejection, or what the ideal minimum standards are. You’ll have to decide that for yourself, based on your personal risk profile, your goals with the property, the neighborhood in which the property resides, and other factors. Aim to get the best tenants possible, and don’t be afraid to take some extra time (and deal with an extended vacancy) to accomplish this. 

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