A house is one of the largest investments that you will make in your lifetime, so choosing the right tenants is an important decision. Not only do you want to choose tenants who will make their monthly rent payment on time, but ones that will also take care of your investment, as if it were their own.
Additionally, by taking the appropriate screening steps before renting your property, you can reduce your chances of having to go through an expensive eviction process after choosing the wrong tenant. These steps will help you screen potential tenants and choose the right one for your property. Tools like Instant Social Report help track down their social media/email information in a legal way.
Require an Application From All Potential Tenants
Initially screen interested tenants with an application. An application will provide you with basic information about each interested tenant. You could draft your own rental application or use a template found online. Be sure to review the application to ensure that it covers all information you want to know.
Your application might include information like:
- Employment information
- Length of time at current address
- Important residence information (pets, number of residents)
- Rental history
- Reason for moving
- Requested move-in date
- Personal or professional references
This information will help you narrow down your applicants to a few, based on your salary and rental history requirements.
Interview Your Potential Tenant
You can learn a lot about a person through a personal interview. While you don’t need to schedule a formal interview with each potential tenant, it can be helpful to ask a few questions that allow you to better understand their property needs.
A few questions that you might ask include:
- Have you ever rented a property?
- How long have you been at your current residence?
- Why are you looking to move?
- When would you like to move?
- Will you have any roommates?
- What type of work do you do?
- Does anyone living with you smoke?
- Will you be okay with me running a background check?
However, it is important to know what you can and cannot ask. Federal Fair Housing Laws prohibit landlords from asking questions related to:
- National origin
- Disability status
- Familial status
Additionally, in some states, you cannot ask, or turn down approval, for marital status or sexual orientation.
You don’t have to set up a separate interview to gather this information. Instead, you can interview potential tenants when showing them the property. By interviewing renters ahead of time, you can also cut down on the number of applicants who do not meet your minimum requirements or who are not interested in the property.
Complete a Thorough Background Check
Conducting a complete background check gives you more in-depth information about your prospective tenants.
A thorough background check might include the following:
- Credit check
- Reference check
- Rental history
- Criminal record
A credit check is an important tool that will allow you to evaluate a potential tenant’s payment history. Specifically, look for any red flags that could lead to missed payments, such as recent foreclosures or bankruptcies. Recent evictions could also mean that they stopped rent payment with another landlord prematurely. A high amount of debt with little income could also indicate that the tenant will have difficulty making their payments each month. Public records like pending child support cases could also mean that the tenant’s financial situation will change in the future.
While a lower credit score doesn’t mean that you have to deny rental, it does mean that you should also consider other factors, like the applicant’s income or reference checks.
A rental history report will also help you to evaluate a potential tenant’s rental history. Find out if they have any previous evictions. If you do have to evict, you will find that it is an expensive and timely process. You could end up waiting many months for rent, while working through court proceedings to evict.
Whatever documents you decide to include in your background check, make sure you get a signed agreement from potential tenants. The Fair Credit Reporting Act (FCRA) requires landlords to receive permission from individuals before running a background check. Include a section notifying potential tenants that you may run a credit report in your initial application.
To be even more thorough or to ensure that you are following FCRA requirements, you might also decide to outsource each background check to a professional company. This ensures that you gather all of the necessary information to make your important tenant decision, in a legal manner.
Speak to Previous Landlords
Speaking to other landlords is a good way to learn more about a potential tenant’s rental and payment history. In order to follow all housing regulations, make sure you are only asking questions that are related to their ability to pay or that are directly related to the property. But, be aware that you can ask for more detailed financial information.
You might ask previous landlords the following questions:
- Has the individual rented from you?
- Did the tenant make their payments on time, and in full?
- Did the tenant leave you with any costly repairs?
- What shape did they leave the rental?
- Would you rent to the same tenant again?
- Were there any noise or city complaints about your tenant?
Protect yourself further by applying the same screening requirements to all tenants. If you decide to check the references of one potential tenant, make sure you check references of all potential tenants. The best way to screen potential tenants and protect your investment property is to take a multi-screening approach. Consider each part of the application process including the application, background check, reference check, and the initial interview.
When you take the time to screen potential tenants, you can learn more about the individuals who will potentially be living in your house. The ideal tenant is willing and able to pay each month, on time. They will also respect your property and leave it in the same condition in which they moved into it. Eviction can be expensive and lengthy, so it is best to choose the right tenant from the beginning.