Guide To Tenant Screening For Rental Properties
If you’re going to be investing in rental properties you want to make sure you’ve got a system to get good tenants.
There is plenty to talk about when it comes to tenant screening but in this post we will be focused on how to weed out bad applicants through the tenant screening process.
It all starts with your listing…
Make Your Criteria Known In Your Listing
Tenant screening is a process of elimination. You want to get a lot of interest in your rental so you can begin to pick away applicants that don’t meet your criteria.
Your listing of your vacant rental is the first opportunity to deter the wrong suitors.
It’s up to you but I’d recommend considering some of the following items in your listings:
- Smoking policy
- Pet policy
- Rent to income ratio standard
- Whether your run a background check or not
Let’s break down each of these items.
Smoking policy – Smokers are not a protected class and you can state if you allow smoking in or around your rental. If you don’t allow smoking I’d suggest adding that to your listings to deter smokers from applying.
Pet policy – You can have a no pet policy in place but understand that it doesn’t apply to service animals, emotional support animals or assistance animals. If you do allow pets make sure you never charge a pet fee for an assistance animal.
Rent to income ratio – Most people require a 2.5 – 3x standard. If you adopt a 3x standard this means that the renter must make three times more than the monthly rent with their gross monthly salary. An easy example would be that if your rental is $1,000 a month your renter must make $3,000 a month. Making this criteria known will weed out many applicants.
Running a background check – Sometimes just saying you run a background check can be as effective as actually running one. If an interested renter has some red flags in their background, they may not bother applying if you mention you run a background check.
Pre-screening Phone Call
You always want to make sure you get the chance to talk to an interested renter on the phone before you show them the vacant rental.
This won’t come as a surprise but many renters look at photos and price and they don’t look at your criteria. This call is an opportunity to gauge their interest and remind them of your screening criteria. It’s not uncommon that they don’t qualify but didn’t read your listing completely.
One way to circumvent this issue is to have a stipulation or speed bump in your process. If you require interested applicants to email you with a specific subject line it will tell you that they actually read your entire listing.
This isn’t a recommended strategy if you’re in a slower market but if you are in a hot market you could add this speed bump in and only reply to those who follow the proper steps.
When you schedule your call, I’d suggest using a service such as https://calendly.com/ to make it easy to schedule. This will eliminate a lot of back and forth.
At this point your listing and your pre-screening conversation should eliminate a good chunk of the tire kickers or non-qualified applicants.
You should be showing your rental to people who know you run a background check and they pass your other initial criteria. When you’re showing the rental be sure to pick up on any clues they leave you.
Did they show up on time, did they ask odd questions, did they look prepared and interested? These aren’t make or break items but they all give you a clearer picture of their tendencies.
If you have two renters that appear equal but one showed up five minutes early and the other was five minutes late who would you put your money on to pay rent on time?
Make sure you have a stack of rental applications handy and make sure interested renters fill out 100% of the application. Do not allow them to hand in an app with blank spaces on it.
The simple act of instituting a “no blank space” policy will weed out a few applicants. These applicants typically have something to hide.
Run A Background Report
A background check can cost from $10 – $50 typically and depending on your state you might be able to charge an application fee with your rentals. Some services will also allow you to have the applicant pay directly for the report.
My one piece of advice with a background check is to make sure that it includes a national eviction search. If your applicant has a reportable eviction this means they’ve been evicted from a prior resides within the past seven years (five years in Oregon). An eviction on record is a bad sign and I’d recommend to go to the next applicant in line.
It’s recommended that before you run a background check you have a written criteria or a tenant screening criteria. This document is something you use as your answer key when grading an applicant. It will list out what you will and won’t accept in an applicant and if you do a Google search of “tenant screening criteria” you’ll find various free forms to get you started.
One thing to note is to not to do a blanket criminal policy such as “no criminal past.” There are efforts to make landlords pick and choose what crimes are deal breakers and which ones are ok. If your applicant has a violent crime or sexual crime that can create a nexus to why they would be a bad renter whereas an applicant with a DWI might be a different scenario. You want to be specific in what crimes you will not consider and what crimes are acceptable.
Take A Look At The Entire Story
You want to take a look at the entire story of the applicant. If you just focus on the background check you’re going to miss other details.
Someone might look amazing on a background check but one phone call to their previous landlord might sway your opinion of renting to them.
Due diligence is so important when it comes to tenant screening because your tenants are so important to how your business is going to run. Think of your rentals as a business and not a hobby because an eviction can costs thousands of dollars in lost rent, court fees and attorney fees.
One of the simplest tips is to take your time. If you go through the whole process and you don’t find a good renter don’t just give up and pick the least worst applicant. Take another month and make sure you get the right person in your rental.
Once the tenant gets into your rental, even if it’s just one day… you have to go through the entire eviction process.
This also leads to a good point on why you should only be accepting certified funds for security deposit and first month’s rent. Once you’ve identified your tenant you don’t want to accept a check from them for the previously mentioned funds.
If they get the keys and THEN their check bounces you’re going to go through an eviction process (at least in NYS that is the case).
Good tenants make for great landlords (and investors). Take your time and do your homework and you’ll find a great renter.
Other Helpful Resources For Tenant Screening & Tenant Occupied Home Sales
- PROs And CONs Of Selling A Tenant Occupied Property via Michelle Gibson
- Tips For Selling A Home With Tenants
- Should I Sell My Home Or Rent It? via Bill Gassett
- How To Sell A Multi-Family Property
- Guide To Selling Tenant Occupied Homes via Debbie Drummond
About The Author: The above article “5 Tips For Tenant Screening | How To Weed Out Bad Tenant Applicants“ was written by Eric Worral. Eric has been a landlord of over nine years and an employee of RentPrep.com a tenant background check service. Eric also co-hosts the popular podcast “RentPrep For Landlords” where they discuss tactics for growing your rental income and managing your portfolio.
About Rochester’s Real Estate Blog: Rochester’s Real Estate Blog is owned and operated by Kyle Hiscock of the Hiscock Sold Team at RE/MAX Realty Group.
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