The best landlords in the industry typically have airtight tenant screening processes that allow them to consistently onboard high-quality tenants who pay on time and protect their properties. If you don’t currently have a process that allows you to do this, now’s the time to re-engineer your approach.
The Importance of Tenant Screening
A troublesome tenant is more than a minor annoyance. They can create a host of serious issues, financial problems, and legal ramifications for you and your properties. Thankfully, you can reduce the likelihood of getting stuck with a terrible renter by conducting thorough due diligence and screening on the front end. A good screening process will help you:
- Determine each applicant’s financial situation, which can be used to make a clear determination on whether or not they have the resources to reasonably afford the monthly rent and utilities. (In a study of landlords, 84 percent say payment problems are one of the top concerns with new tenants.)
- As a rental property owner, you have a duty to your neighbors and the surrounding community to avoid bringing in someone who could pose a threat to their safety or well-being. A good tenant screening process checks each applicant’s criminal history to ensure there’s no record of violent crime.
- At the end of the day, tenant screening provides peace of mind. It gives you the sense that everything is going to be okay, which allows you to sleep easier at night.
5 Helpful Tenant Screening Tips
No two tenant screening processes are the same. However, if you study what most successful landlords do, you’ll find a number of consistencies.
Here are a few of their top recommendations:
1. Develop Written and Documented Criteria
Every landlord has his or her own preferences, concerns, and needs. Thus, it’s important to develop a set of written and documented criteria for what you want in a tenant. This helps eliminate bad candidates from the start and ensures all of your energy is focused on the right applicants.
A documented set of criteria can also protect you in situations where someone tries to claim discrimination or unfair treatment. Having a document that clearly outlines the fact that you run a gender-neutral and race-neutral screening process strengthens your defense and gives you a stronger foundation to stand on.
2. Use a Tenant Screening Service
Tenant screening is a serious ordeal. Not only does it impact the quality of your tenants, but it can also protect you from serious legal ordeals that threaten your finances and reputation. Unless you have a ton of free time on your hands (and experience to boot), there’s no sense in managing this process on your own.
Hiring a tenant screening service is one of the smartest decisions you’ll ever make as a landlord. Not only will it save you time, but it’ll significantly increase your ability to onboard honest, reliable, and financially sound tenants who protect your property and pay on time.
3. Always Verify Income
Asking a prospective tenant to tell you how much money they make can be an awkward thing to do. However, it’s no different than a mortgage banker or lender asking a prospective borrower for their income. As a landlord, you deserve to know if the applicant has the financial resources to afford your property. But here’s a little pro tip: Always verify the income with their employer. This may sound pessimistic, but it’s entirely necessary.
4. Contact at Least 2 Previous Landlords
Previous landlords can prove to be a wealth of information. Speak with at least two of them to get a feel for what kind of tenant the applicant is and whether they have a history of paying on time. One landlord might gloss over some details or forget something. But two landlords will give you the full picture.
5. Require an Application
Never offer someone a lease without first having them complete and sign a rental application. Tenants who refuse to sign an application or ask to simply move on with a lease agreement typically have something to hide. If nothing else, an application gives you another important piece of paperwork that may be used to protect yourself against future claims.
Putting it All Together
Screening tenants can take time. And depending on the steps you take, it could cost you money.) But when it’s all said and done, any extra work or effort you put into screening tenants on the front end will yield significant dividends over the life of tenancy.
Take this aspect seriously and good things will happen for you.