Navigating through the numerous responsibilities as a landlord or property manager can seem like threading a needle in a haystack, don't you think? Now, imagine renting your property to an individual with a questionable background; wouldn't that make it even more complicated?
To keep scenarios like that from developing, employing a smart background check becomes crucial. It brings us a step closer to understanding who our potential tenant is in real life. Fear not; the process of performing tenant screening checks has become significantly simplified.
In this guide, we walk you through all the ways to conduct free tenant screenings and their letdowns to the many benefits of quality screenings; we'll cover it all. Let's begin to help you make better decisions.
TL;DR: Key Takeaways on How to Screen Tenants for Free
Tenant screening is an essential part of the rental management process. It helps landlords and property managers ensure they're leasing to reliable tenants who can meet their rental obligations. Here are the key takeaways on how to screen tenants for free:
- Set Minimum Applicant Requirements: Establishing a clear set of criteria for your prospective tenants helps filter out unsuitable applications early in the process.
- Request a Completed Rental Application: This is a crucial step in gathering vital information about the tenant. It allows you to understand their rental history, employment situation, and financial status.
- Run Credit, Rental History, and Background Checks: These checks provide a comprehensive overview of your applicant's financial and rental history, helping you make an informed decision.
- Check References: References like their current landlord and employer can provide valuable insights into the tenant's reliability for your property.
- Review All Applicants: After gathering all the information, it's time to assess each application and decide on the most suitable tenant.
What Is Tenant Screening?
Tenant screening helps you select the best tenants for your properties. This process involves verifying a tenant's financial stability, rental history, employment status, and criminal background. It is a critical step in ensuring that you're renting your property to responsible and reliable tenants who will pay rent on time and take care of your rental. Following a good screening process can save you untold problems down the line, from late or missing rent to property damage and even legal troubles.
Understanding and Complying with the Fair Housing Act
The Fair Housing Act promotes equality and prevents discrimination in housing based on race, color, religion, sex, disability, familial status, or national origin. As a property manager or landlord, understanding and adhering to Fair Housing Laws is what will help you avoid unnecessary exposure to legal risks.
Not to mention, it's just the right thing to do. Discrimination isn't cool.
How to Comply with the Fair Housing Act During Tenant Screening
Complying with Fair Housing Laws during the tenant screening process requires a few critical steps:
- Set Clear Applicant Requirements: Establish clear, objective, and consistent requirements for evaluating rental applications. This could include income requirements, employment verification, and credit score minimums. Apply these criteria uniformly to all applicants to avoid accusations of discrimination.
- Avoid Discriminatory Questions: Be cautious about the questions you ask during the application or interview process. Questions about race, religion, marital status, or plans for having children can be seen as discriminatory.
- Keep Records: Maintain a record of your interactions with applicants, including your reasons for accepting or rejecting them. These records can be crucial if a discrimination claim is made against you.
- Stay Updated on Laws: There are also Fair Housing Laws at the state (and even city) level. You'll need to stay updated on the laws applicable to your area.
Property management software allows you to customize rental applications so that you can ask questions that are applicable to your rental and are permitted by federal, state, and city laws. We help you maintain accurate records of all your tenant interactions, making it easier to provide documentation if required.
Using Rental Applications to Pre-screen Tenants
Before delving into the specifics of a rental application, it's crucial to understand its role in the tenant screening process. It offers an initial glimpse into your prospective tenant's background. A well-structured rental application can help you weed out unqualified applicants, saving you time and resources. It sets the groundwork for a more detailed screening process, which includes credit checks, background checks, and interviews. Essentially, a rental application is your first line of defense against potential problematic tenants.
What to Include in a Rental Application:
In most cases, rental applications should have a set of standard requirements that all applicants must provide.
- Name
- Contact Information
- Date of Birth
- SSN
- Drivers License #
- Expected Move-in Date
Additional information may be necessary for financial pre-qualification, such as:
- Monthly/Annual Income
- Employment History
- Proof of Current Employment/Income
- References
It's important to ensure that a tenant has a positive rental history. To do so, you should gather the following information:
- 5 Years of Prior Addresses
- Property Manager Contact Info (past two years)
- Monthly Rates of Previous Rental(s)
Now that you have all of the core information needed to pre-screen the applicants, you can proceed with the screening process.
Free Tenant Screening: Pros and Cons
Landlords and property managers often consider the option of free tenant screening as a way to save cash. Compromising tenant screening may seem like a way to cut corners, but the cost of a bad tenant screening can easily outweigh the cost of paying for a proper screening. Following a good screening process can save you untold problems down the line.
Let's go through the free screening process step-by-step.
The Manual Process of Free Tenant Screening
A free tenant screening typically involves manually checking various aspects of a potential tenant's past. This process includes contacting previous landlords for references, verifying employment status and income, and even attempting to conduct a criminal record check independently.
While this method might initially seem cost-effective, it's important to remember that the process is time-consuming and can often lead to incomplete or inaccurate results. Just be aware that if you decide to screen your tenants manually to save money on screening costs, it might take up a good chunk of your time.
Cons of Free Tenant Screenings
As of September 25, 2023, 44 million of U.S. households rent their homes. The sheer volume of rentals on the market and the vast number of renters applying for them highlight the importance of an effective tenant screening process.
However, relying on manual tenant screening methods may have several pros and cons. Let’s dive deeper into each of them.
- Time-Consuming Process: Manual tenant screenings often require significant time investment, such as contacting references, verifying employment, and conducting interviews. This can delay the rental process and slow down property occupancy.
- Limited Scope: Manual screening may not provide a complete view of the tenant's background. It relies heavily on the information provided by the tenant and may not uncover critical details or discrepancies.
- Subjectivity: Personal interviews and reference checks can be subjective, as they depend on individual perceptions and interpretations. This subjectivity may lead to biases or inaccuracies in the screening process.
- Potential for Error: Human error is inherent in manual screening methods, increasing the risk of overlooking important details or misinterpreting information provided by references or employers.
- Inconsistent Results: Without standardized procedures, manual screening methods may yield inconsistent results across different applicants. This inconsistency can make it challenging to compare and evaluate potential tenants effectively.
- Limited Resources: Small-scale landlords or property managers may lack the resources or expertise to conduct thorough manual screening processes, leading to gaps in due diligence and increased risk of tenant-related issues.
- Legal Compliance Challenges: Manual screening processes may pose challenges in ensuring compliance with fair housing laws and regulations. Without structured procedures and documentation, landlords may inadvertently violate anti-discrimination laws during the screening process.
Pros of Manual Tenant Screening
- Cost-Effective: Manual screening methods do not usually involve additional expenses, making them a budget-friendly option.
- Personalized Approach: Direct communication with previous landlords and employers allows for a more personalized evaluation of the tenant's history and suitability for the rental property. But, of course, you'll need to be comfortable communicating with complete strangers.
- Immediate Feedback: With manual screening, landlords can often receive immediate feedback from references and employers, which can help make quick decisions.
- Builds Relationships: Direct engagement with applicants and their references can help build positive relationships, trust, and open communication channels throughout the tenancy. Just remember, sometimes first impressions can be deceiving, so be sure to look deeper.
Key Screening Questions to Ask Prospective Tenants
Interviews provide a chance for landlords to build rapport with potential tenants. When interviewing applicants, it's vital to ask the right questions. The answers can provide insights into their reliability, financial stability, and suitability for your property. Here are some key screening questions to ask:
- Why are you moving? This can reveal potential red flags, like eviction or disputes with previous landlords.
- When do you plan to move in? If the tenant wants to move in immediately, it might indicate a lack of planning or an eviction.
- What is your monthly income? This helps confirm if they can afford the rent. Generally, their monthly income should be at least three times the rent.
- Can you provide references from your previous landlords and employers? References will provide an additional layer of information about the applicant's reliability and behavior.
- Do you have any pets? If your property has a no-pets policy or certain restrictions, find this out upfront.
- How many people will be living? Overcrowding can lead to unnecessary wear and tear on your property.
- Have you ever been evicted or broken a rental agreement? Previous eviction or broken agreements can be a significant warning sign.
Making the Final Decision: Accepting or Rejecting Applicants After Screening
Once you've completed the screening process, it's time to make the final decision. This involves assessing the information you've gathered about the applicant's financial stability, rental history, and overall reliability.
How to Make an Informed Decision After Screening
The first step is to review all the information gathered during the screening process. This includes the credit report, background check, income verification, and eviction history. Also, consider any red flags that may have arisen during the interview or from references.
When reviewing this information, consider the applicant's ability to pay rent on time and take care of the property. Their past behavior is often a good indicator of future conduct. If the applicant has a history of late payments or evictions, for example, they may not be the most reliable tenant.
But, if, like many other landlords before you, you have a bad tenant experience as a result of only using free screenings, it's important to consider moving to a formal tenant screening service to help you select better tenants going forward.
How TenantCloud Helps Streamline the Tenant Screening Process
At TenantCloud, we understand that screening tenants can be a time-consuming and complex process. That's why we've developed a comprehensive tenant screening feature to help simplify this task for landlords and property managers at affordable rates.
Our property management software offers three main screening packages that are powered by TransUnion and TazWorks. These packages include Basic Full Check ($39), Basic Background Check ($30), and Credit Check ($30). If you want to enhance the basic packages, you can add Essential ($15) or Premium ($25) County Search to the Basic Full Check and Basic Background Check reports. Additionally, you can include Income Insights information in the Basic Full Check report for an extra $6.
The best part is that you can access all of this information in one place, making the decision-making process faster and easier.
Plus, with our automatic accounting features and customizable reports, you can easily keep track of all your rental income and expenses. This makes it easier to assess an applicant's ability to afford the rent and helps you make a more informed decision.
Screening tenants is one of the most important parts of managing rental property. But don't worry, it doesn't have to be a hassle! With the right tools and information, you can make the process stress-free and even enjoyable.
If you'd like to learn more about how TenantCloud can help you screen tenants for free, just click here. We're always here to help!
