Tenant screening is a vital responsibility of landlords; it’s the step that allows you to weed out prospective tenants who are unlikely to pay rent in full or on time, or those that might cause other problems. If an applicant has an extensive criminal background, if they’re currently unemployed, or if they’re not making enough money to cover rent in this area, you can reject them without any problems.
But in the course of reviewing tenant applications, you’ll need to be on the lookout for other troubling signs. For example, some applicants are known to fake their references, and others may even go so far as to steal someone else’s identity.
What’s the best way to review tenant applications, and what should you be looking for?
Hiring a Property Management Company
One of your best options is to simply hire a property management company. Property managers will market your property on your behalf, collect tenant applications, and screen those tenants for you. They’ll be in charge of finding the best candidates for your rental property – and verifying their information’s accuracy before allowing them in.
Important Items to Review
These are some of the most important items to review on a rental application:
- Identity and contact information. First, you’ll want to verify the applicant’s identity and listed contact information. You may require a copy of their driver’s license or a similar form of photo ID to have on file, proving that this person is who they say they are. You may also want to verify their current email address, phone number, and address.
- Credit score. You’ll also want to run a credit check on your tenant, evaluating their credit score and credit history. If the tenant’s credit score is in “fair” or “poor” territory, they may represent a higher financial risk. You’ll also need to know if they have an extensive history of failing to pay their bills on time.
- Eviction history. Has this tenant ever been evicted in the past? Prior evictions aren’t a guarantee of future inability to pay rent, but they’re not a great sign. If a tenant has multiple evictions in their history, or if they’ve been evicted once with other troubling signs on their application, it may not be worth renting to this tenant. It’s a risk factor you’ll need to take into consideration.
- Rental history. What has this person’s rental history been like? Where was the last place they lived, and who was their landlord or property manager? Be sure to contact the tenant’s previous landlord to verify information such as the property address, the length of time and dates when the tenant lived there, and their reason for leaving the property. The landlord may not be able to disclose any information beyond verifying what the tenant stated on the application.
- Criminal background. You’ll also want to review this applicant’s criminal background. For example, has this tenant ever been convicted of a felony? Most felonies come with a jail sentence of at least one year, and could be a sign of problematic behavioral patterns. That said, it’s illegal to reject a tenant only because of a prior felony conviction – and some cities in the United States have local laws that prohibit inquiring about criminal records altogether.
- Current employment information. No matter what, you’ll want to thoroughly verify this person’s current employment information. Who is their employer? Who is their immediate supervisor? How much money do they make? How long have they been in this position? Be sure to contact their employer directly so you can verify all this information.
- Co-signer information. If the applicant is co-signing with another party, you’ll want to review information related to the co-signer. For example, you may want to verify this person’s identity, evaluate their credit score, and explore other application variables in this list.
A Note on Housing Discrimination
Thanks to the Federal Fair Housing Act of 1968, and subsequent amendments, it’s illegal to discriminate in housing based on protected classes, including “race, color, religion, sex, national origin, familial status, or disability.” Because of this, it’s illegal to include questions on your tenant application that require a tenant to disclose any of these statuses. If you’re found to discriminate your rental practices based on these factors, you could be found guilty of a criminal act. Be sure to consult with a lawyer before finalizing your tenant application and review practices.
Investing in real estate and renting properties can put you on the fast track to building wealth, but if you want to turn a profit, you need to be proactive and thorough. Collect applications from your prospective tenants and review them completely, verifying all important pieces of information before allowing a tenant to rent your property.