Property managers often have a hard time finding quality tenants. They may interview several people who seem great, but a few months later, they find themselves with nightmares. The best way to avoid this is by thoroughly screening all prospective tenants.
But how do you do it? Here are a few guidelines on how to fairly screen tenants without violating their rights.
1. Establish Minimum Tenant Vetting Criteria
The first step is to set minimum criteria for your tenants. It could include credit score, employment history, rental history, and criminal background. With such things in place, you can quickly weed out those who don’t meet your standards.
For example, you may set the average credit score requirements at around 650, depending on the property neighbourhood. You can set the credit score requirement even higher if it’s a luxury apartment or area. It will help up the quality of your tenant pool.
You can also set other minimum requirements such as security deposit (1 month’s rent), income (3 times the monthly rent), and rental history (no more than two late payments in the last 12 months). Just make sure all your requirements are in line with the local laws.
2. Give Tenants a Rental Application and Get Consent For Screening
The next step is to give all prospective tenants a rental application. Potential tenants should complete the form and sign it, authorizing you to run a credit check, criminal background check, and employment verification.
The rental application should have the tenant’s information like:
- Applicant’s full name, date of birth, contact information, Social Security number, and license number
- Previous addresses
- Employment history and income statements
- Name of roommates, children, and spouse where applicable
- Personal references and their contacts
- Any additional questions about reasons for moving houses, past evictions, pets, etc.
- Signature authorizing you to conduct a background check.
Once you have all the necessary information and consent forms, you can start running background checks on all prospective tenants.
3. Conduct a Thorough Criminal Background Check and Credit Check
A thorough criminal background check is a must for any landlord. You can use online resources like County CourtHouse, Police Departments, and even the FBI database to find out about an applicant’s criminal history.
A credit check will give you an insight into an applicant’s financial stability and ability to pay rent on time. You can request a copy of their credit report from leading credit reporting agencies. Also, check for bankruptcy and debt amounts to get a clear picture.
4. Verify Their Employment and Income
The next step is to verify an applicant’s employment and income. You can do this by asking for W-2 forms or pay stubs. If the applicant is self-employed, you can request tax returns for the last two years.
5. Check Their Rental History
It’s also essential to check an applicant’s rental history. Contact their previous landlords and ask about timely rent payments, length of tenancy, number of occupants, etc.
6. Use a Tenant Screening Service
Since you may not have time or the capacity to do all the screening, you can use a tenant screening service. They will verify an applicant’s information and generate a detailed report for you to review. While it may cost you a few dollars, avoiding problem tenants is worth it.
7. Make a Fair Decision
After completing all the screening processes, you should have enough information to make a fair decision. Accept or reject an applicant based on your findings and the information you gathered. Just treat all tenants equally to avoid any legal issues down the road.
Choosing the right tenants can help you avoid payment problems, property damage, and other headaches in the future. Using these tips, you can screen tenants reasonably and make the best decision for your rental property or apartment complex. Selection and acceptance of tenants is one of the most important facets of property management.
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