Find amazing tenants is important. For this to happen, it’s essential that you have a thorough tenant screening process. The quality of your tenants can be the difference between a profitable investment and an investment you wish you never made.
So what do you need to do to select the best tenants from your pool of applicants? We’ve put together a checklist to assist you.
Here’s the rundown:
- Identify what you’re looking for in a tenant
- Make sure your ad listing has all the requirements
- Ask important questions during the first call
- Assess the tenant during the property showing
- Make a rental application necessary
- Contact prior landlords
- Reach out to tenant’s employer
- Conduct a thorough background check on the tenant and analyze the tenant’s credit report
- Accept or deny tenants
Identify what you’re looking for in a tenant
When you know what you’re looking for in a tenant, the screening process becomes much simpler. Therefore, set the criteria. It should be fair and in line with the Federal Fair Housing Laws.
The goal of the Federal Fair Housing Act is to end discrimination in housing. According to the Act, you can decline a prospective renter based on a reference’s information, the tenant’s rental history, income, lifestyle, or criminal history.
Look for a tenant who:
- Has adequate income to pay rent
- Fits your lifestyle requirements
- Has a clean criminal record
- Has a stable employment income to afford your rent
- Has a history of timely rent payments
Make sure your rental listing has all the requirements
Set your expectations in the rental listing. By doing this, you provide transparency to prospective tenants. Plus, you’ll only need to interview tenants who meet your requirements.
Remember, an effective online rental listing doesn’t have to be lengthy. It should be short, sweet and complete. Here are some essentials to include in your rental ad:
- One or more quality photos
- Basic specs of the property
- Monthly rent
- Amount of security deposit
- Property location
- Length of lease
- Date property is available
- Your pet/smoking policy
- What utilities are included
- You contact information
- Descriptive adjectives
Things to avoid:
- Bland adjectives
- Exclamation points
- All caps
- Saying what kind of tenants you’re looking for
Ask important questions during the initial call
The first phone call is important. It gives you the opportunity to pre-screen the tenant. Insist on a phone call even when the tenant makes contact via email. Below are the questions we recommend asking.
- What’s your reason for moving?
This question can be a minefield of information. Listen closely! You want to look for legitimate reasons for moving, such as wanting extra space or swapping jobs. Be on the lookout for red flags.
- What’s your monthly income?
Obviously, you want to know whether the tenant can afford your rental price or not. As a guideline, you would like the tenant to make at least three times the total monthly rent.
- How many people will be living in the rental unit?
The fewer people in your property, the better. Look for a maximum of two people per bedroom.
- Will you have the first month’s rent and security deposit available upon move-in?
Before a move-in, make sure the tenant pays you the full amount. Otherwise, you’re inviting trouble.
- What’s your date of move-in?
If a tenant wants to move in immediately, something may be off. Typically, landlords require 30 days to terminate a lease.
- Can you provide references from your previous landlord and employer?
Getting this information on your own helps prevent forgery by the tenant.
- Do you smoke?
If you have a “no smoking” policy, a prospective tenant who smokes will be a deal breaker.
- Do you own pets?
It’s best to know right away. It’ll also save you valuable time.
- Have you ever been evicted before?
This question is still worth asking even if there’s a high possibility that the tenant will not tell the truth.
- What is your current living situation?
This will give you insights on whether the tenant fits your requirements or not.
- Will you agree to a credit and background check?
This helps eliminate tenants who aren’t consenting to these checks. Preferably, have those who consent to sign a form. Verbal consent isn’t binding.
Assess the tenant during the property showing
You have the chance to meet the prospective renter in person at the rental property showing. First impressions matter. For example, if the prospective renter fails to show up on time, is disinterested, rude, unprepared, then it should tell you something about their personality.
On the other hand, if it turns out to be successful, then you should proceed to the following step.
Make a formal application necessary
Making the rental application necessary helps make the process official. A rental application should paint a clear picture of the tenant’s ability to pay rent.
It’s recommended to have a lawyer when drafting the application. This will help protect you from any discrimination claims regarding your tenant-screening process.
Here is important information to collect from the tenant:
- Contact information from previous landlords
- At least a couple years of residence history
- Dates of employment, employment history, salary, position
- Also, ask these questions:
Has the renter:
- Ever declared bankruptcy?
- Ever faced an eviction?
- Does the tenant smoke?
- Ever denied to make a rent payment?
- Ever committed a felony?
Next, reach out to tenant’s references.
Contact prior landlords
A rental applicant who looks great on paper isn’t necessarily risk-free. Reaching out to prior landlords will give you relevant insights. After all, previous landlords can tell you about the behavior of a tenant.
Here are questions that can help you achieve your goal:
- If you had the opportunity, would you rent to the applicant again?
- Was (applicant) ever served with an eviction notice, a Pay or Quit notice, or asked to move? If so, what was the result?
- Any complaints received regarding (applicant) or their unit while they were there?
- Did (applicant) cause any property damage?
- What dates did (applicant) reside on your property?
- What was the address of the property that (applicant) rented from you?
- Does (applicant) currently owe you money for any reason?
- Did (applicant) ever have checks returned due to insufficient funds?
Make sure to ask these questions each time to avoid discrimination.
Contact the tenant’s employer
These questions will help you verify whether the tenant is responsible as an employee or not:
- How long has the tenant worked at the company?
- What’s the tenant’s position and salary?
A tenant who is responsible and has adequate income is a good candidate.
You could also ask for a pay stub to verify the income if you’re concerned. A few Google searches could also help a lot.
Do a background check and analyze their credit report
The tenant background check will notify you if the tenant has ever committed a crime. Crimes like felonies, theft, arson, and assault should be relevant to any landlord.
The tenant credit report, on the other hand, allows you to check the financial history of the tenant. A credit score of at least 680 is great. It indicates that a prospective tenant is financially responsible.
Additionally, you should check to see if the tenant is making any monthly payments. The difference between the payment amount and income should give you an idea of whether or not the tenant is able to afford rent.
Accept or reject tenants
At this point, you should be in much a better position to assess whether a tenant is a good fit for your rental unit.
By following these steps, you’ll be better placed to pick the right tenant for your property. Just remember to adhere to the Federal Fair Housing Rules lest you be accused of discrimination.
If you’d like professional assistance managing your property, don’t hesitate to reach out to us. At Century 21 Everest Realty we specialize in providing property management services in Salt Lake City and surrounding areas in Utah