We all know that one of the best ways to protect your investment is to carefully screen tenants before choosing who you’ll rent your property to. Trouble is, not every landlord or property manager knows how to do this effectively. Asking for a credit report is easy enough, but what exactly should you look for and what are the warning signs of a potential problem tenant? We’ll discuss below.
First of all, what should I definitely ask for to properly screen a tenant?
There will always be some variation here depending on your area and particular property, but there are a few things it’s always a good idea to ask for. Credit reports are at the top of the pile, though you shouldn’t rely on credit score alone. We’ll go into more detail below. You’ll also want to ask for a background check and income verification. Additional reports may provide useful and you should tailor your requests to your given property, but these are the big ones.
Are there other things I should consider?
It all comes down to the individual property and what you decide will work for you. Are you going to accept Section 8 or housing vouchers? Will you accept people with a history of bankruptcy or foreclosure? Will you allow pets? Whatever you choose, make sure you’re not basing your guidelines on something discriminatory, like disability or ethnicity, which is illegal.
What are some barometers I can use to determine who the “good” tenants are?
Tenants who will treat your property with the respect it deserves are people who can’t just pack up and move at the drop of a hat. They’re people who need the housing and don’t have a history or nonpayment or eviction. There’s no 100% foolproof test for finding a “good” tenant — you have to consider them on a case-by-case basis. If you have two applicants and one makes more money but has a checkered history with other landlords, while the other is a young professional who’s just starting out but doesn’t have any red flags in their past, then the latter may be the better option.
What about “bad” tenants?
Again, there’s no completely foolproof test for this, and it’s a good idea not to rely too heavily on things like credit score without additional context. Someone may be rebuilding their credit from a rough patch, but has great references and a steady income. Another person who makes a ton of money but has a history of missing bill payments is showing signs of an issue that you probably don’t want to deal with. Don’t rely on a single factor to make your call.
How do I make sure I have a good variety of tenants to choose from?
For better options, get a bigger pool of applicants. In order to do that, market your property well! We’ve written posts with tips from marketing your property. Give them a look! It’s always better to have ten applicants to choose from rather than two. Schedule several open houses for groups of people.
How do I make sure I’m not forced to choose a less-than-ideal tenant?
Besides having a large pool to choose from, as detailed above, it’s a really good idea to start keeping reserve savings so that you can float a property for a month or two if you have to. This way, you don’t feel financial pressure to fill a unit with the first tenant who comes along. There’s more time to find the best fit!
Okay, I’m ready to accept applications. What should I require?
Once again, this is entirely up to you, your area, and the property! However, here are a few general guidelines that many other landlords often require to consider a tenant: an income of 2-4x the monthly rent, depending on area; a specific credit score (see our other post on reading credit scores for more insight); the applicant’s track record with other rentals (we recommend contacting their current AND previous landlord for a better picture); and be sure to verify any and all information you receive — don’t just take people at their word!
For an affordable screening service, try our RentalConnect program, which offers property owners and landlords a great alternative to the expense of full tenant screening. This service requires no on-site visit, sign-up, or membership fees, making it extra convenient. The $34.95 service fee is paid by the applicant. Available 24/7, RentalConnect is fast, easy, secure, and delivers reports needed to make an informed decision, including a credit report, a national criminal search, and a national eviction search. Reach out to us for more details!
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