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Tenant Management

The Ultimate Guide To Tenant Screening For DIY Landlords

Contents:

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 what so ever – and many more only very rarely.

How do they do this? That comes down to having an efficient and effective screening process.

Refining your tenant screening process can seem daunting. And mistakes can be expensive.

Bad tenants might not pay rent for months, they might be trigger happy when it comes to lawsuits. They might, for whatever reason decide to trash the place.

To all of the above issues, we want to stress that they can be solved – but they are costly, time-consuming and we know more than one person who has thrown in the towel and sold up after going through one of the above scenarios.

We interviewed over a hundred of our customers and combined their feedback with our own personal experience to create this guide.

In this article, we are explore not only an in-depth and actionable process for screening tenants but also outline key legal issues that need to be taken into account, and highlight a few red flags that should make anyone stop and reconsider the prospect.

best landlord advice for screening tenants

Finding and keeping tenants

Before we get stuck into the juicy parts of the article we just want to talk quickly about the two other aspects around dealing with your tenancies.

First of all finding your tenants. This has never been easier with the advent of websites like Zillow, and even Facebook listings which we’ve found get great levels of response – fast.

Secondly, once you have great tenants – tenants that pay on time, never complain 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.

You want to go through the process of finding and screening tenants as few times as possible.

Which is why we’ve put together a guide that details “How to find and perhaps more importantly to keep the best tenants.”

When to start looking for tenants

This is a difficult question to answer. We’ve found tenant’s in less than a week that have been perfect. However, it’s also previously taken more than a month.

Ideally, you want to wait for your prior tenant to move out to avoid potential issues. For example, you might arrange the next tenant only to have the current tenant not move out – or perhaps the tenants are messy (to put it nicely), and you know that no one is going to want to move into that mess.

Quite understandably though, a lot of landlords want to keep vacancy periods short by showing the apartment whilst the current tenant is still in residence. If this is something you choose to do here are a couple of things to consider so you don’t disturb the current tenants too much.

  • Give plenty of notice. The law states (depending on your location) that you have to give at least 24 – 48 hours notice before entering the property. We would argue, if possible, give even more notice than that.
  • Limit the number of times you show the apartment in any given week. The tenant will not be happy to have you there every day with a new bunch of strangers.
  • Consider giving a small gift or rent reduction if the showings are a real imposition. This is a thank you to show your appreciation that they have allowed you to show the property whilst they’re still there.
  • Along the same lines of the last point – to sweeten the deal we have previously offered to hire a cleaner for them before showing the property. This has a couple of benefits. It means you’re more likely to get the property back in a good clean condition. It also means that if they’re particularly messy you can spruce the apartment up a bit before people come visit; and who doesn’t like a free cleaner?

When to stop looking for tenants

Don’t. stop. looking.

Seriously, don’t stop looking for tenants until the 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. This could mean weeks of extra work.

Red Flags

1. They ask for rent reductions or mention that the rent is quite high.

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.

2. They ask for a deposit reduction or payment plan.

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 instalments.

Immediately this makes me think 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 months 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.

3. They don’t appear to like their current job.

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 think about bringing the rent down.

4. They want to move in yesterday.

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 because 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 dilligent in your screening process if this is the case. Don’t just let them move in.

Your Tenant Screening Checklist

Before you go off and start showing every Tom, Dick, and Harry around your property you need to know what you’re actually looking for in an ideal tenant.

Create a rental criteria list. You can even share a version of this checklist with potential tenants to clearly outline your minimum requirements for prospective tenants.

know your criteria

Your tenant screening checklist should clearly outline your renting criteria. It should clearly highlight you’re minimum requirements for a tenant.

For example your tenant screening criteria might cover the following points:

  • Their expected minimum earnings;
  • What their minimum credit score should be;
  • Your policies on smoking and pets;
  • Your policies on eviction records.

This criteria can also act as an item of proof showing you haven’t discriminated if you get sued by a rejected tenant.

Download our Free Tenant Screening Checklist
Pre screening questions for tenant screening

The Tenant Screening Process

Okay, so we’re finally getting to the point. The reason that you’re here. 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.

Ours is as follows:

1. Pre-screening questions

Get them on a phone and ask them a few questions to make sure you don’t waste their time and they don’t waste yours. These questions should explore your basic rental requirements as outlined above.

The reason we suggest getting them on the phone is that it allows you to draw more information out of the prospective tenant than if you simply email them. A few topics you might want to explore are:

  • Their current living situation.
  • When and why they are looking to move.
  • Their current employment and income.
  • Your policies;
    • Do they have pets?
    • Do they smoke?
  • Anything that you should know that could cause issues in the screening process;
    • Evictions, criminal history etc.

2. Arranging viewings

Viewings are their opportunity to see the property and your opportunity to meet them in person to get a better understanding and feel of who they are.

When arranging viewings consider the following things:

  • How enthusiastic are they?
  • Talk to them about their jobs.
  • Outline the terms of the lease.
    • Length
    • Rent amount
    • Deposit amount
  • Do any of the red flags discussed above appear?
Arranging a viewing

3. Adding prospective tenants to Landlord Studio

The next thing we do is add the tenant to our software Landlord Studio.

How to Add a Tenant to Landlord Studio

  1. Open the left-hand menu bar and click on the tenant’s section.
  2. Click on the tab that reads prospective.
  3. Add Prospective Tenant.
  4. Enter their details and save.
  5. To email them from the app hit the email icon and select the template you want to send.

There are a couple of reasons we do this, not least of which is to run our tenant screening report later. However, at this point, we do this so we can easily send them a rental application email as soon as they have visited the property.

How to Create an Email Template in Landlord Studio:

  1. Login to the app.
  2. Tap on the More button on the bottom right-hand corner.
  3. Select General.
  4. Tap on Email Templates.
  5. Add New Template.

You can create your own rental application email template in the software and use our {Tags} to auto-fill their name and your name. Doing this makes it really simple to send out an email following their viewing, and you can do it from your phone without having to worry about attachments or retyping any of it.

4. Corroborate their story

If they pass your screening, and application process the next step is to corroborate their stories. 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 Search – 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.

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Check your tenants references online

5. Landlord References

I generally call the previous two landlords (or the landlords from the last four years, whichever is less) and just ask a few routine questions:

  • What were the start and end dates of the lease?
    • This is to determine they are the real landlord
    • It may also be worth your time looking up the owner of the property on public records or doing a quick online search to verify the landlord is who the prior tenant say they are.
  • Did you have any payment issues during their tenancy?
  • Did you have to deal with any noise complaints or other disturbances?
  • In what condition did they leave the property?
  • Did they try and sue you?
    • A lot of tenants feel they are entitled to the full amount of their deposit no matter the condition they leave the property. If they are this kind and are trigger happy like that, you want to know. It may be that their previous landlord wasn’t great and they were genuinely mistreated. If you think that may be the case, talk to them about it. But you don’t need or want the stress of a lawsuit on your hand at the end of your lease.
  • Would you rent to them again?

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.

In our experience landlords are happy to offer up information that could be important to the tenancy. We highly recommend not skipping this step as many landlords do.

Look out for tenants that put their friends numbers down or don’t put anything down on this section of the rental application. This is a major red flag!

Checking landlord references

6. Running a tenant screening report

The next step is to run a tenant screening report using a tenant screening service provider. We have integrated with Rentprep whose Smartmove report comes with a full Transunion credit check on your prospective tenant.

These reports are thorough, comprehensive and much faster and more accurate than checking all the details independently.

This is the second reason to have added your prospective tenants to the Landlord Studio app earlier. You can easily run a tenant screening report directly from the app.

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.

This in-app feature is currently only available in the US. If you are in the UK we recommend using one of the following services.

OpenRent Tenant Referencing
Letting a Property Referencing

How to run a tenant screening report with Landlord Studio

Step by Step Process for Running a Tenant Screening Report with Landlord Studio

  1. Open the app
  2. Tap on the tenant screening button on the bottom menu bar.
  3. Select the property.
  4. Select the tenants.
  5. Fill out your details.
  6. Hit “Done” to send it to your tenants.
  7. Once your prospective tenants have entered their details and paid you will receive an email notifying you that the report is ready.
  8. Head back to the tenant screening page in the app to view and download the report.

What's Included in Landlord Studio's Tenant Screening Report

  • a Full Credit Report,
  • a ResidentScore, and
  • a Rental Background Check.

What’s Inside:

  • Full Credit Report with ResidentScore
  • SSN Verification/Address History
  • Nationwide Criminal & Sex Offender Search
  • Nationwide Evictions
  • Bankruptcies
  • Applicant Pay Option

Additional Notes

  • This service is also available on our desktop portal.
  • You need to add the prospective tenant details to the software with a correct email address.

How To Run A Background & Credit Check using Landlord Studio – a lesson from our Tenant Screening Secrets coaching program.

7. Double Check and Final Review

The very final step is to choose from your applicants the most qualified tenant.

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 outsiders 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.

However, don’t rush to fill your property.

Understanding Tenant Screening Legal

When screening tenants it’s important – as with every aspect of being a landlord that you are in full compliance with the law.

The federal legal protection covers 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:

  1. Race
  2. Color
  3. Religion
  4. Nationality /Ethnic Background
  5. Gender
  6. Familial Status
  7. Mental/Physical Disability

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:

  • Age
  • Sexual orientation
  • Gender identity and expression
  • Citizenship
  • Veteran status
  • Source of income
  • Medical condition
  • Immigration Status

Landlords MUST Know Legal Responsibilities – a lesson from our Tenant Screening Secrets coaching program.

Other things to consider

Lease duration

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.

Your property as a business

Run your property as a business. Treat you tenants like 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?

Dealing with less-qualified tenants

Sometimes, perhaps 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 of that lease for the rest of the leases term.

To reduce 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.

never be the landlord

Final Words

Set some 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 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 like Landlord Studio will help you manage your prospective tenants and tenant screening reports.

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Thanks for reading and we hope you found this blog interesting! However, do note that the purposes of this article is 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 are in need of financial or legal assistance please seek the help of a competent professional.

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Ben Luxon

"Ben is an author and real estate enthusiast. His interest in all things entrepreneurial has led him to work with real estate professionals all over the world, distilling their knowledge into articles and Ebooks. His love of travelling has taken him to over 10 countries in the last year, where he has sampled the craft beer of them all."

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