5 Things to Check for When Screening Tenants
To choose the highest quality tenants, landlords need to conduct thorough tenant screening. But what exactly does this entail?
While property management software can help with gathering the information you’ll want from your applicants, it’s important to know what you’re looking for from your potential applicants.
Here are 5 things to check for when screening tenants.
Income
When choosing a tenant, one of the most important questions to consider is: Can they consistently pay rent on time? On the rental application, you should ask applicants to provide their employment history, as well as their current employment. You want to make sure that it’s stable and verifiable.
You’ll also want to ask your applicants for proof of income. This can be in the form of W-2 tax forms, 1099 tax forms, recent pay stubs, bank statements, social security statements, annuity statements, or other such documents that verify the applicant’s income.
Generally, it’s recommended that a tenant’s monthly income be at least three times the price of rent. This is a good baseline to ensure that your tenant doesn’t have trouble paying rent.
Residence History
You also don’t want a tenant who is prone to jumping around from property to property. A more ideal tenant is loyal and prefers to rent long-term. A tenant likely to renew a lease minimizes tenant turnaround which saves you the time and money (vacancies aren’t cheap) required to find a new tenant.
By checking an applicant’s residence history, you’ll be able to spot past rental patterns and decide if this is the kind of renter you’d like to take on.
Another key part of researching residence history is reaching out to the potential tenant’s current and previous landlords. These references will have relevant information regarding the person’s character and temperament.
Credit Report
A credit report provides valuable insight regarding a potential tenant’s payment history and reliability. It’ll almost always come from one of three sources: Equifax, Experian, or TransUnion.
A credit report is made up of the following information: basic information, fraud indicators, tradeline summary, inquiries, and credit/resident score. You can use the information you gain about an applicant, such as the frequency and severity of late payments, to assess whether or not they’d reliably pay rent on time.
Criminal Records
Criminal records are public information containing an individual’s encounters with law enforcement. There are a few ways to obtain criminal records: county records, state records, federal records, and the National Multijurisdictional database (each varies in cost, speed, and how up-to-date they are).
You’ll want to check an applicant’s criminal records to make sure they don’t have a history with crimes that put neighbors, other tenants, or the property at risk.
It’s important to know that many states do not allow landlords to deny someone’s application based on their criminal report, unless it contains relevant crimes. It’s a good idea to review your state’s legislation to learn what crimes you’re legally allowed to consider in your tenant screening.
Eviction History
An eviction history is exactly what it sounds like: a public record of an individual’s prior evictions (if any). They’re compiled in both state and national databases, and you can access them instantly through third-party tenant screening services. An eviction history report will usually give you information such as dates, locations, and reasons for the eviction.
When an applicant has an eviction history, that can oftentimes be a red flag. However, you shouldn’t automatically deny an applicant if they’ve been evicted. Learning about the conditions of the eviction or considering when it occurred may influence your decision on the matter.
Conclusion
Trying to find great tenants is not an impossible task. But, in order to do so, you need to screen tenants thoroughly and know what to check for through your screening process. Making these 5 pieces of information part of your process will help you choose the best tenants.
