While screening a tenant may not be as exciting as casting the lead role for a blockbuster movie, it’s one of the smartest ways to protect your rental property. Finding the right tenant can ensure a steady experience as a landlord, whereas making the wrong choice could mean a variety of stressful situations and headaches.
In this article, let’s go over how to screen tenants for your rental property, whether or not to use online screening applications, what type of background checks to request, and more.
What to Know Before You Start:
- Landlords must consider all rental applications equally, following housing laws as well as local and state laws.
- When screening prospective tenants, it’s important to understand that there are protected classes that, legally, cannot be discriminated against.
- Utilize a trustworthy screening tool to skip the guesswork and ensure that you don’t cut any corners or step on anyone’s toes.
How to Screen Tenants for Your Rental Property
As a landlord, you get to decide which potential tenant you’d like to be your renter, which is exciting! However, it’s important to remember your local, state, and federal fair housing laws before you make that choice.
What do we mean by fair housing laws?
These are laws that have been put into place to ensure that tenants are treated equally and given fair opportunities to find a place to live. While it’s perfectly legal to base your rental criteria on things like income, credit score, eviction history, and which pets you will or won’t allow, there are some things you can’t discriminate against.
According to the Fair Housing Act, a federal law that landlords must follow, there are several protected classes, including race/color, nationality, religion, gender/orientation, familial status, and disabilities.
Additionally, local and state laws may prevent discrimination based on language, age, political affiliation, gender identity, and more.
1. Decide Minimum Requirements for Applicants
Before you even meet your potential tenant, you need to decide your criteria for potential renters. Will you require a specific income requirement? No smoking? Pet-friendly? Credit score? Lay it all out. This not only saves you time but also prevents the awkward "It's not you, it's me" conversation later on that could have been avoided from the start.
Not sure where to start setting your own application guidelines? Check out our guide on establishing your rental criteria.
Just like setting the bar too low could mean signing yourself up for problems, having the bar too high may mean having a harder time finding someone to fill the role. Pay close attention to what’s realistic in your area and adjust as necessary. It’s a learning process, so do your research and give yourself grace as you go along.
Tip: Certain property management software can help you determine the right price for your rental, which may help you understand the profile of the neighborhood your property is in.
2. Receive a Rental Application
Once you've got interested candidates, it's time to request a rental application. This is where you get to know the important details about a potential tenant to decide if they’re a good candidate for your rental property.
Here are some examples of the information you should be requesting:
- Employment information and length of time at the job
- Employment history
- Total household income
- Rental history
- References including previous landlords
- Personal references
- Monthly debt payments
- Details about other members of the household, roommates, pets, etc.
3. Run a Background Check
A thorough background check includes credit history, criminal records, employment history, eviction history, and other similar details. Depending on what’s on their record, a background check can be a significant deep dive into their past, minus the creepy stalker vibes.
When you have received their background check, pay attention to their credit score, which can be a good indicator of how responsible a tenant is with their finances. A prospective tenant with a negative credit history due to too many late bills may mean that they’ll pay your rent payments late, too.
Other important details to consider are whether the details on their application, such as their income, previous addresses, and current employer, match with the information in their background check. You may also notice criminal records along with public records such as a lawsuit.
Tip: You can choose several different types of background checks for your rental using property management systems like TenantCloud, making screening tenants thorough and hassle-free.
4. Call Their References and Current Employer
This is where your verification skills come in handy. It’s a good idea to call your potential tenant’s previous landlords and employers so they can shed light on their character. It can also be helpful for collecting information not included in their background check.
5. Meet with the Applicant
When you’ve made it this far with a prospective renter, the next step is to talk directly with them. If you allow pets, it’s important to meet with them in person to ensure that the pet is well-behaved and fits your rental criteria for animals. In some situations, a phone call or video call can also work.
An interview with the applicant is your chance to see their behavior in real-time. Are they punctual to the meeting? Do they seem like they'll treat your property like their own? You can also use this opportunity to kill two birds with one stone, such as:
- Verify the information on their application and get more details about who will be staying in the rental with them
- Give the tenant a chance to discuss any discrepancies between the data you found and the details they provided
- Provide the potential tenant with more details about the home, how to pay rent, what utilities are available, any policies, etc.
- If you prefer to show your vacant rental to the potential tenant while you interview them, you may also consider that here. However, many landlords prefer to wait until the application process is complete.
6. Review and Make a Decision
If you have one applicant and they fit the bill, congratulations. You’ve found your star tenant and can send over your lease agreement, request a security deposit, and get them ready to move in.
If you have more than one tenant and need to narrow them down, consider these tips:
- You want to maintain an equal chance for every eligible applicant, so an easy way to do this is to choose one or two specific criteria, such as credit score and total income, to make the selection process as smooth as possible.
- Another way to narrow it down is to choose the first qualified applicant that hit your inbox.
- Ensure your narrowing process is the same for everyone, regardless of race, color, national origin, religion, sex, familial status, or disability.
How to Say “No”
If you’re turning down an applicant due to their credit history or something you’ve found on their background check, you must notify them, according to the Fair Credit Reporting Act (FCRA) and the Federal Trade Commission (FTC). You’ll need to provide an adverse action letter when turning down a potential tenant. This letter must include the following:
- Name, address, and phone number of the credit reporting agency
- Contact details of the credit reporting agency
- Statement that the credit reporting agency didn’t make the adverse decision and can’t explain why the decision was made
- Notice of the consumer's right to a free copy of their credit report if requested within 60 days
- Notice of their right to dispute the accuracy or completeness of any information provided by the credit reporting agency
- The consumer’s credit score, if a score was used
Conclusion: Screening Tenants in the Real World
When it comes to screening tenants, know that it is both an art and a science. Being able to choose a qualified renter requires a blend of intuition, due diligence, and preparation ahead of time. Now that you understand every step of the process, you can conduct your own background checks and rental applications with ease.
Whether you're a new landlord or a seasoned property manager, remember that the right tenant will feel at home in your rental home. If you want a fix-it-and-forget-it screening process, check out our screening tools on TenantCloud. You can customize your own application process and choose from several thorough, detailed background checks for an affordable price. Try a free TenantCloud trial today.
