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ContinueTenant screening is an essential step in selecting a tenant. In this article, we explore how to screen tenants and what to look for in a great tenant.
Written by
Ben Luxon
PUBLISHED ON
5
May
2024
Before we get stuck in, we wanted to start on a positive note.
It’s perfectly possible to be a landlord and never have to go through an eviction process. Many people go their entire landlord careers without any tenancy issues whatsoever – or only very rarely.
How do they do this? That comes down to having an efficient and effective screening process.
Mistakes can be expensive. Bad tenants might not pay rent for months, cause extensive property damage, and in the worst-case scenario, you could end up having to pursue an eviction.
At the end of the day, prevention is the best medicine, which is why your tenant screening process is so important.
In this article, we take an in-depth look at the tenant selection process, from setting your criteria to running a tenant screening report.
Finding good tenants has never been easier with the advent of websites like Zillow, and even Facebook Marketplace which we’ve found get great levels of response.
To make rental listing easier you use Landlord Studio. With Landlord Studio you can create a free listing and syndicate it to top channels with a single click, including, Zillow, Zumper, Trulia, and Hotpads. Plus centralize the process for managing leads, collecting applications and running tenant screening reports.
Once you have found great tenants – tenants that pay on time and report maintenance issues in a timely fashion – you want to keep them around. The process of finding and screening tenants can be time-consuming and whilst the property is vacant you are losing money.
Learn more about how you can find and screen tenants with Landlord Studio →
This is a difficult question to answer. We’ve found tenants in less than a week that have been perfect. However, it’s also previously taken more than a month. Generally speaking, you will want to create your rental listing and start the process at least 30 - 60 days before the lease expiry date. This should give you enough time to find a new tenant, and for your current tenant to find themselves a new home.
Below we outline a few tips to manage viewings when you have an existing tenant in your property:
Don’t. stop. looking. Seriously, don’t stop looking for tenants until the new lease has been signed and the deposit collected.
Circumstances can change fast, and if for any reason a prospective tenant backs out at the very last minute you do not want to be going all the way back to square one
If they think the rent is high the chances are they don’t fit your minimum income requirements. This should be an immediate red flag. The chances of them making late rent payments or not paying at all are pretty high.
Whilst we’ve never had people ask for a deposit reduction, we have had several seemingly good tenant prospects ask about paying the deposit in installments.
Immediately this makes me think of two things. The first, seeing as my deposit is generally one month’s rent if they can’t afford the deposit how are they going to afford the first month’s rent?
Secondly, this means they have no savings. It’s not uncommon for people to live paycheck to paycheck – however, this means that if they hit hard times, lose their job, get hit with medical bills, they won’t be able to pay rent.
When talking to prospective tenants I like to try and establish how they really feel about their current job. Asking questions about their current work will allow you to establish their emotive feelings towards their current employment. Essentially, you want them to be enthusiastic. The more enthusiastic the better, because it means that they probably work hard, and want to stay at that job for longer.
All of the above should be considered in the context of the scenario. For example, if you’re charging way above average rent for the area and they point this out – maybe you need to think about bringing the rent down.
We’re talking about people that want to move their stuff in as soon as possible. The reason this raises a red flag for us is that there are many slightly less than salubrious reasons that a tenant might want to get out of their current apartment as quickly as possible.
Maybe they’re planning on breaking their current lease and skipping out without telling their landlord. Maybe they’ve had an ongoing dispute with them and decided to trash the place and then get out. Or perhaps they’ve overstayed their current lease and the landlord is trying to get them to move as quickly as possible.
Whatever the reason we always recommend being extra diligent in your screening process if this is the case. Don’t just let them move in.
Before you go off and start showing your property you need to know what you’re actually looking for in an ideal tenant.
Setting a tenant criteria is one way to quickly establish the minimum requirements for a tenant. You can even share a version of this with potential tenants to clearly outline your requirements. When setting your requirements you must only use allowable factors such as credit and eviction history.
Your tenant screening checklist should clearly outline your renting criteria, highlighting your minimum requirements for a tenant.
For example, your tenant screening criteria might cover the following points:
These criteria can also act as an item of proof showing you haven’t discriminated against a tenant and can be used in court if that becomes necessary.
How do you actually go about screening tenants? What are the steps that you need to take to identify who is going to be a bad tenant? And who is going to be a good one?
Everyone has their own methodology, and of course, every situation is slightly different.
Below we outline the key aspects of the tenant screening process.
Before you waste time showing the property and screening a tenant, you want to make sure they meet your minimum criteria. Get them on the phone and ask them a few questions, or send them an online prescreening questionnaire for them to fill out. You can use Landlord Studio for this step. Send our in-built prescreener to all your leads and quickly gather essential information.
A few topics you might want to explore are:
Create your free account with Landlord Studio and streamline the rental listing, lead management and tenant screening process.
Viewings are an opportunity for potential tenants to see the property, but also your opportunity to meet them in person to get a better understanding of who they are.
When showing the property talking to tenant prospects can reveal a number of important factors. Ask them about their jobs, the length of lease they're looking for, and whether or not they're comfortable with the rent and deposit amounts. Keep in mind the tenant red flags we outlined above.
The next thing we do is get your top prospects to fill out an application form. Centralizing this process in the Landlord Studio software will help you streamline the process.
If you haven't already, the first step is to add the tenant details to Landlord Studio. If you use our rental listing feature, your tenant leads will automatically be uploaded to the system.
Next, send them your application form. This should collect all the important and formal details including:
You may also require their SSN at this point. To reduce liability though it's best not to collect this unless absolutely necessary.
Don’t just take everything they say at face value. You can learn a lot quite easily just by doing a few online searches.
What you’re looking for is A) that they are who they say they are, and B) that they haven’t told you any obvious lies.
Google – Do a quick Google search and see what comes up. Some people have bigger digital footprints than others.
Facebook – Facebook is always a good place to check. Find their profile and you’ll be able to see a few basic details and their profile picture. They might, for example, say they don’t smoke, but have a picture of them holding a cigarette in their profile picture.
LinkedIn – LinkedIn is a professional platform. This then is a good source for double-checking their career history to make sure it aligns with their current employment. Don’t spend too long doing this. But often you can quickly glean some interesting information.
If you do find holes in their story from any of these sources, for example, maybe they said they work for Google but their career history doesn’t line up, remember there may be a good explanation and it may be worth having an honest conversation with them about it.
As part of the application prices you should have collected several references. Always make sure to double check these. When you call their previous or current landlord a few things to check include:
This last one is the most important question in my book. It is a summation of the whole tenancy and whether or not the previous landlords were happy with their tenant.
Look out for tenants that put their friend’s numbers down or don’t put anything down on this section of the rental application. This is a major red flag!
The final step is to run a tenant screening report using a tenant screening service provider. You can get a full TransUnion SmartMove report through Landlord Studio. This report provides comprehensive details on:
This tenant screening report is free for Landlords with costs being passed to the tenant. One thing to note though is that you can only pass $20 of tenant application costs onto tenants in the state of New York.
How To Run A Background & Credit Check using Landlord Studio – a lesson from our Tenant Screening Secrets coaching program.
The very final step is to choose from your applicants the most qualified tenant. If you have more than one qualified applicant, choose the first one that completes the process.
Sometimes if you have concerns over a tenant, perhaps it’s just a gut feeling, then it’s worth talking about the prospects with someone. Getting an outsider’s opinion can help you make the best choice.
Remember that the best tenants are probably looking at multiple places at once, so you need to make your tenant screening process as smooth and fast as possible. If you don’t then a landlord with a better process might just snap up your tenants before you do.
When screening tenants it’s important – as with every aspect of being a landlord that you are in full compliance with the law.
Federal laws covers the rights and protections for applicants and tenants to ensure they get fair consideration. The Department of Housing and Urban Development, or HUD, administers and enforces the Fair Housing Act.
You are not legally allowed to discriminate or make tenant decisions on the following information:
State laws must consist of these protected classes but also typically add to these principles with additional regulations and restrictions. For example, in California, it is not legal to ask for the immigration status of a potential tenant and discriminate on those grounds. Because of this, we recommend doing state-specific research.
Here are some other state and municipal protections that you might encounter:
You can check out our tenant screening course here.
Always make sure your lease is air-tight and you have all the proper legal documentation.
Longer leases are better – however, we prefer to lock people in for one year first and then renew. You can put a break clause as six months and try and get tenants locked in for years after that once you’ve determined they are good tenants.
Run your property as a business. Treat your tenants as customers and they are more likely to want to stick around.
Evaluate your applicants without any prejudice and entirely as a business decision.
Remember the most important question is always: are they able and willing to pay rent, full and on-time, every month?
Sometimes you need to fill your property fast – or you simply don’t get great tenant applicants for whatever reason – you might need to settle for less qualified tenants.
When you do, you will want to ensure you take precautions. The main precaution you take should be to get a co-signer on the lease.
When you get a co-signer on a lease you want to also screen the co-signer to make sure that if the tenant does default on the terms of the lease that they have the resources to take full responsibility for that lease for the rest of the term of the lease.
To reduce the chances of incorrect payments you can also specify how you will be collecting rent. We would recommend using an online service to collect rent online. No cash or cheque payments. Simple online transactions will reduce stress.
If anything goes wrong with the payment you will be notified and you can quickly address the issue.
Plus, you can then easily reconcile your income in Landlord Studio with our integrated bank feature.
Set stringent standards and hold all your applicants equally to those standards.
Pick the most qualified applicant, but also remember that every property is unique and not all prospective tenants will be a good fit for certain places. What this means is you absolutely have to assess each candidate on a case-by-case basis.
If you do find yourself stuck with a less qualified tenant, try and mitigate risks with a larger deposit (if legal), a clearly outlined online rent collection process, and a co-signer.
Using property management software can help you streamline this process. Landlord Studio provides end-to-end tools for managing rental listings and tenant screening process. Create a free rental listing and syndicate it to top channels with click to maximize exposure. Manage leads in a centralized location and easily prescreen prospects. Finally, collect applications and run tenant screening reports. All in one place.
On top of the rental listing and screening features, you can collect rent online, track leases and store documents, manage property maintenance, and utilize our CPA-approved rental accounting and reporting features.
Manage every aspect of your rentals. Say good buy to drawn-out vacancies, reduce your overheads, and increase your portfolio ROI.
Disclaimer: Thanks for reading and we hope you found this blog interesting! However, do note that the purposes of this article are for general information. We are not licensed financial or legal professionals and as such nothing in this article should be understood to be financial or legal advice. If you require financial or legal assistance please seek the help of a competent professional.
Landlord Studio is an easy property management and accounting software and app designed for landlords.
Track income and expenses, run reports, collect rent online, find and screen tenants, manage property maintenance, and more.
In this free webinar, Landlord Studio's Logan Ransley and Zumper Co-founder Taylor Glass-Moore discuss essential strategies for creating and marketing your rental listing, so you can fill vacancies faster.
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