If you’ve been renting out your property for a while, you’ve likely done a fair amount of tenant screening.
Have you been thorough?
You’ll know by the quality of tenants you place. When they pay rent on time, take care of the home, and report maintenance as soon as it’s needed, you likely did a good job with your screening. If they pay late, avoid phone calls and messages, violate the lease agreement, and make frequent messes, you might want to take a closer look at how you evaluate applications.
Screening tenants is one of your most important responsibilities when you’re renting out a property. This is where you can most influence the type of rental experience you’re going to have.
Choose your residents carefully.
To effectively screen tenants and enjoy a pleasant and profitable rental experience, you’ll need a thorough and detailed application as well as an established set of rental criteria. Once that’s in place, you want to put together a fair but rigorous screening process.
If you’re working with a Roseville property management company, all of this will be taken care of for you. If you’re an independent landlord, you might worry that your tenant screening process is missing something or your screening report is incomplete.
Here’s why your tenant screening report might seem incomplete, and what you can do about it.
Have you Established Qualifying Rental Criteria?
You’re not screening as well as you can if you have neglected setting up the standards you expect your tenants to meet. Create a consistent list of what you’re looking for in a tenant. This will help you move through the screening process efficiently and with consistency. You will be far more objective, and there’s less risk that you’ll discriminate unintentionally.
Your qualifying rental criteria might include:
- Minimum income standards
- A minimum credit score
- Zero-tolerance for felony convictions
- No recent evictions
Provide this criteria to applicants before they submit their application and fee. This will help them to self-screen and decide whether or not they have a chance at being approved before they apply. It saves you time and it saves them money.
National Eviction History Search
What kind of digging are you doing into eviction histories? Your screening report is incomplete if you are unable to conduct a national eviction search. Typically, you can check for evictions in the local area by reviewing the records kept by local law enforcement. However, tenants are more transient than ever, and you may have applicants who have lived in different states. A national eviction search will show you if they’ve been removed from their homes in other areas.
Without access to these databases and records, you could be at a disadvantage. An applicant who has been evicted in New York or Chicago, for example, could simply choose to leave that residency off the application. Checking the nationwide eviction database is an important way to protect yourself against unqualified tenants.
Review the Entire Credit Report (not just the score)
The credit score has its merit. You can use that score as a threshold for deciding who you will approve and reject. It does not tell you everything that you need to know, however.
Instead of settling just for the score, walk through the entire credit report and look for potential red flags that could tell you this tenant is a bit of a risk. A few late payments should not worry you. A large credit card balance isn’t even terribly scary, as long as it is being paid on time. Sources of concern might include:
- Money owed to former landlords or apartment buildings.
- Utility and other housing-related accounts that are overdue or in collections.
- Repossessions and foreclosures.
If the derogatory credit issues are older and the tenant can demonstrate they’ve been doing better over the last few years, you can likely feel comfortable approving them as tenants. However, if there is a lot of recent financial chaos, you might want to deny that applicant and look for someone with a record of responsible financial management.
Gathering a Complete Rental History
Always talk to the landlord references your applicants provide. This can be uncomfortable, but the information you’ll gather is invaluable, and it can’t be found elsewhere.
On your application, ask for contact information for at least two or three references. These should be landlords or property managers that they are currently renting from or previously rented from. Confirm that they are, in fact, the owners or managers of the property. You can check local records for this information. Then, get in touch.
Ask the landlords to confirm the dates of residence and the amount of rent that was paid. Then, ask questions such as:
- Was rent paid on time?
- Was the lease followed?
- Was proper notice given before the tenant moved out?
- Did the entire security deposit get returned to the tenants? Was there property damage left behind?
- Were there any complaints from neighbors, vendors, etc.?
- Did the tenant have a pet? Was the pet well-behaved and was there any pet damage?
The answers you hear from the current or former landlords will be very telling. End the conversation with a question about whether or not that landlord would rent to the tenants again.
If you’re not feeling great about calling these landlords, you can always send an email. Give them a response deadline; you don’t want your applicants to be left hanging.
Make sure your application is also complete. You’ll need to have all of the tenants residing in your rental property complete an application if they are 18 years of age or older. You’ll need them to complete every field and sign the application, which I should grant you permission to check credit, background, and references.
Do not leave your tenant screening report incomplete. These are important data pieces you need to collect when you’re trying to choose a tenant for your investment property. The more information you can gather, the better of an idea you have about who is living in your property.
If you’d like some help with tenant screening, we’re here to provide it. Please contact us at Action Properties for all of your Roseville property management needs.
