Landlord’s Guide to Tenant Screening

One of the most important steps in running a rental property is learning how to screen tenants who fill out applications for units in your building. So why screen tenants? The screening process involves a series of steps that give you a general idea of each applicant.

Without these steps, you could end up with some tenants who can’t pay their rent. With this tenant screening guide, you can eliminate these problems and run a fully-occupied property.

Tenant screening is a series of steps that make it possible to qualify people who fill out applications for apartments, townhouses, office spaces and residential properties. This way, you can identify reliable renters. When you first meet face-to-face with new applicants, it can be difficult to tell whether an individual is reliable and trustworthy. Even if you ask thorough questions, the individual could still conceal certain traits, such as job-hopping and financial instability.

When you screen a tenant, you can pull up the individual’s records and learn of any arrests or employment instability.

The process of tenant screening is essential for gaining the full financial picture of a prospective tenant. If the tenant has changed jobs four times in the last six months, you can see that in the applicant’s job history. If the applicant cannot give an answer that would indicate anything other than an inability to stabilize, you could turn your attention instead to the next applicant. Once a tenant has been properly screened, the chances are low that they will lapse on rent.

Tenant screening also helps you learn basic facts about an applicant and how to identify patterns that would indicate their lack of qualifications. At the same time, it can help you maintain full occupancy and consistent rent payments. For example, if you wish to rent out apartment units in a college town and flip each unit every few years for maintenance purposes, screening can help you find those renters.

Tenant screening allows you to vet prospective renters before you accept them as tenants, ensuring full occupancy and paid rent at your properties. One way to determine if someone will be a good tenant is by examining their prior patterns as a renter, employee and spender. By running these screenings, you can find people who rarely, if ever, miss rent payments or cause problems with fellow tenants.

The greatest advantage of tenant screening is that the process allows you to find reliable tenants who will pay their rents on time. If an applicant earns double or triple their rent and has few, if any, credit blemishes, you can tell the individual is financially responsible and unlikely to overspend on frivolous purchases.

Financially responsible people generally never fall behind on rent because they are almost always gainfully employed with money in the bank. Even if they do lose their job, they are likely to have several thousand in the bank to cover the weeks or months that come between jobs.

Screening can also help you reduce the risk of allowing difficult tenants into your property. By screening all the applicants, you can increase the likelihood that you’ll have full occupancy and on-time rent payments. If they have a history of paying rent late or missing payments, you’ll be able to get that information by speaking with the applicant’s previous landlords.

Tenant screening can also help you filter out people who would be at odds with other tenants. For instance, if you are renting out units in an apartment complex that is mostly inhabited by quiet individuals, you might filter out the people who are looking to use units as studio spaces for band rehearsals. If you are renting out office space and an applicant states a vague or confusing business category, yet a search on this individual reveals a history of unlawful business practices, you may want to continue your search.

With tenant screening, you can avoid all types of tenant issues. If an applicant makes good money but is typically late paying rent due to overspending, the applicant’s current or prior landlord is likely to tell you. If an applicant has low funds due to an inability to hold the same job for very long, this pattern will likely be self-evident once you examine the individual’s recent job history and credit score.

Before you start looking for and screening tenants, it’s essential to know what you legally can and can’t do or ask during the application process. While each state has slightly different laws for landlords and tenants, some are universal.

According to the Fair Housing Act, you cannot deny housing to anyone based on:

However, there are still several legally compliant reasons to reject a potential tenant’s application. You can refuse housing because of:

When an interested party answers your ad or comes to your office to inquire about open townhouses, apartment units or office space, a few key questions can help you determine whether or not the applicant would be a responsible renter. To gain the necessary information, you must know what to ask prospective tenants. Before you process an application, pre-screen the applicant by gathering some of the following pieces of information:

One of the most important things to learn about a prospective tenant is the person’s reasons for moving. Is the individual looking to live in a more convenient area for their work or daily activities? Is the move prompted by a change in jobs?

This would also be the time to ask for contact information for the applicant’s current and prior landlords. If the applicant has a spotty record as a tenant, the prior landlord might be more forthcoming about the details. The current landlord, by contrast, might simply wish to see the tenant leave as soon as possible and withhold details just to get that person off the property.

It’s crucial to know about the applicant’s employment and financial situation before you hand out paperwork and process an application. Is the individual currently employed? If so, how long has the person been with their current employer? What is the individual’s monthly income? A tenant should earn between double and triple the monthly rent amount.

If you accept applicants who live on static fortunes or receive rental assistance benefits, you will need to know about the individual’s net value.

An applicant’s credit score can say a lot about the individual’s financial responsibility and ability to meet payment obligations regularly. Does the applicant have any credit blemishes, such as unpaid balances or loans? This would also be the time to ask whether the applicant is ready and willing, if accepted, to pay any upfront sums, like the security deposit or first month’s rent.

The size or type of rental space could limit the number of people who could live there. For example, if you are renting out one-bedroom units in an apartment building, no unit should be occupied by more than two adult applicants.

You will also need to be upfront about your policy on pets . If you don’t allow pets, inform each applicant about this policy during your initial discussion. Even if someone does not currently have a pet, they might consider getting one, depending on the policy of their current residence.

A person’s noise habits could impact whether they would make a good fit for an apartment, townhouse or office space. If the place is occupied by quiet
tenants, musicians and party-hosts might not be good fits.

During your initial conversation with a new applicant, provide information about the neighborhood, and ask if they have any questions. If the applicant does not have a car, nearby bus availability could be a deal-breaker, especially if the person needs to bus into town each day. If the end of the block has a bus stop that leads directly to town, point that out to the applicant. If the applicant is unfamiliar with the neighborhood, mention any nearby parks and supermarkets that would enhance the convenience of living at the property in question.

Knowing how to select tenants is crucial to running a rental property. Only with a stringent tenant selection guide can you ensure a reliable tenant roster. From the initial contact to the final approval, you can accomplish this with a tenant screening checklist:

The following tips for screening prospective tenants should be followed in sequence each time someone submits an application. More details on each of
these steps are as follows:

To screen tenants who apply for townhouses, apartment units or space in an office building, you will first need to establish a set of screening criteria. This way, you will have a list of qualifications that you want to be met before you can accept a given applicant. The purpose of having a set of screening criteria is twofold, as it makes the screening process uniform and straightforward while also protecting you, the landlord, from accusations of discrimination.

To find applicants for your rental units, you will need to advertise the building in your local area. It is important to advertise in any media that would attract the attention of serious potential renters. By advertising, you could bring each opening to the attention of people who might otherwise never scope your end of town. Many of these people might turn out to be among the most qualified applicants in your local community.

The screening process should include some form of pre-screening to identify those who might be good tenants. This way, you can save time and reserve appointments and property tours for tenants who do make the pre-screening cut. Key financial questions should be raised during this initial pre-screen.

For example, if an interested renter is unemployed or has a recent history of drugs, crime or eviction, you may want to inquire further. On the other hand, if the prospective applicant is gainfully employed and has a good credit score and a glowing recommendation from their previous landlord, you could go forward with the process, knowing that negotiations could be fruitful for both parties.

You can conduct tours of your rental property in several different ways. The most obvious way is to take each applicant on an individual tour of the house, townhouse, apartment unit or office space that is open for rent. Another method is to take assorted applicants on a tour at the same time, such as holding an open house on a specific day. You could even arrange your appointments in blocks, holding several individual tours back-to-back on select days of the week. The last option might be preferable if the property is situated across town from your business headquarters.

As you’re giving the tour, take advantage of the face-to-face time with the applicant. Ask questions and get to know them a bit. Now would also be a great time to communicate more specific information about the rental, like your policy on having pets, which utilities are included, which aren’t, any application fees, parking information and guest policies.

Some tenants may not think to ask for this information, so it’s important you volunteer it to make sure they have all the details they need to make an informed decision.

Once an interested renter has passed the pre-screening qualifications and expressed their interest upon viewing the place in question, the next step will be to take that person’s application. At this point, you will need to clarify any additional documentation that the individual will need to submit, along with the application, for processing purposes. Examples of additional documents may include recent pay stubs and the applicant’s I.D. or driver’s license. Once the applicant hands in the paperwork, give each page a once-over to make sure the applicant filled out every line properly.

With the applicant’s paperwork in hand, you will now have all the necessary documentation to run a background check on the individual. When you run the user’s Social Security number through the system, you will know within minutes whether the individual has a good credit score or a history of debt. When you submit the information about the applicant’s previous addresses to a third-party investigator, you will likely get a call back within an hour about whether the applicant has or has not been evicted from a property in the past five years.

In addition to running a formal background check on the applicant to make sure the individual meets the proper requirements, you will also want to get some personal feedback from the parties who interact directly with the individual — their current landlord and employer.

Has the applicant been an upstanding tenant who always pays rent on time? Have there been any disturbances or complaints involving the individual?

If the applicant meets all the pre-screening, background and personal criteria, you might be ready to accept the applicant and arrange a move-in date. Then again, you might have received applications from several hopefuls simultaneously and now need to whittle things down to one candidate.

Once you have narrowed the candidates, you need to inform them of your decision. The formal process for notifying applicants that you have selected someone else is to issue an adverse action.

Now that you have chosen an applicant, it’s time to welcome the person as your new tenant. This will be the point at which you arrange the move-in date and accept the security deposit. If the individual is set to move in immediately, you will also collect the first month’s rent and hand over a copy of the keys to the townhouse, apartment unit or office space. From here on out, it will be a matter of collecting rent monthly and inspecting the space for maintenance purposes annually.

For rental properties, tenant screening is one of the most crucial aspects of filling townhouses, apartment units, rental homes and office spaces with reliable renters. That said, the process is complex and often difficult for landlords to accomplish on their own.

At American Heritage Property Management, we provide tenant screening and selection services for landlords in central Pennsylvania and Maryland.

Contact us today to learn more about how we can help with your tenant screening processes.