Posted by Hannah Lapin ● Feb 27, 2018 10:03:02 AM
Landlord Tips: Understanding the Tenant Screening Process
Landlords want a tenant who can pay their rent without issue and will not cause damage to a property. This should not be difficult to achieve, but a number of landlords have had problem tenants. Interviewing an applicant is not enough. In fact, there are a number of steps to take in order to get the details necessary to decide whether or not to offer a leasing agreement to a prospective tenant. How can a landlord avoid a potentially problematic tenant? The tenant screening process helps landlords become aware of any red flags and issues with an applicant. Understand more about the steps of the tenant screening process today.
1. Start with an Application
Any prospective tenant should complete an application. Rental applications are available from templates online or from a real estate association in a specific area. An application should cover necessary components including:
- Personal information
- Employment information
- Financial details.
The document should make it clear that a criminal history report, background check or credit check may be ordered and that the applicant grants the landlord permission to check into employment and financial histories as needed. Rental applications will often include:
- Current income level
- Contact details for landlords in the past
- Number of occupants and any pets
- Contact information of personal references
This information will help landlords better gauge the applicant and identify any potential issues.
2. Perform a Credit Check
A potential tenant’s credit history may provide important information to a landlord, just as a potential homeowner's credit history weighs heavily on their ability to obtain a mortgage on a home. A landlord may have to pay for the cost of running the check or state laws may make it possible for a prospective tenant to pay the fee.
A landlord will want to look for any financial issues, such as recent bankruptcies, late payments, collection accounts or significant debt. A history of late payments or serious delinquencies should serve as a red flag for a landlord. It is easy to order a credit report and more from the Equifax Identity Report.
3. Complete a Background Check
Get more information about a tenant’s past with a background check. These reports can be ordered from ScreeningWorks, among other companies. A landlord will need to use the social security number of a potential tenant in order to place an order. The report will include a criminal history, credit history, eviction history and information from other public records. A landlord may not want to rent out to someone with a recent eviction, a serious criminal record or to someone who has been sued for an issue such as unpaid rent.
4. Talk to Former Landlords
It is important to find out a bit more than whether or not rent payments were made on time and if the landlord was given notice prior to a move. There are ways to learn more without an invasion of privacy. Questions can include:
- Are you owed any outstanding debt from the tenant?
- Was there any major damage caused to the unit by the tenant?
- Did the tenant receive their security deposit back when he or she moved out?
Other questions may be permissible. However, none of the queries would be about the lifestyle of a potential tenant. Questions about late payments or disruptions to neighbors are within acceptable boundaries and may provide a prospective landlord with more information.
It can be useful to verify the income source of a tenant. In order to achieve this, an applicant may provide a recent pay stub copy or a potential landlord may contact the employer to learn whether or not the prospective tenant is currently employed at the company. After this stage, it may be advisable to perform a quick phone interview with the applicant to learn more about them. In this way, a landlord may learn about pets, general work hours, or any frequent visitors that may stay over. It can be difficult to evict a tenant once a lease agreement is signed. Therefore, it makes sense to take the time to learn more about an applicant’s background prior to having them sign a lease.
Want more tips for managing your rental property? Check out our Investor Resources Page.