Jesse Sasomsup is the founder and president of Earnest Homes, a Los Angeles-based residential property driven by technology.
As the founder of a property management company that has an eviction rate of less than 1%, I know firsthand how the success of your rental property hinges on finding trustworthy and reliable tenants who will not only pay rent on time but also take care of your property.
In today’s competitive rental market, I’ve found that mastering tenant screening has become more critical than ever before.
In this comprehensive guide, I hope to equip you with the knowledge and tools necessary to navigate the tenant screening process with confidence, ensuring that you attract and secure the most dependable renters for your property.
The Importance Of Tenant Screening
One of the most crucial tasks of the landlord is screening tenants. This process holds significance for several reasons.
First and foremost, thorough tenant screening ensures that the property owner’s investment is protected. By carefully evaluating potential tenants, landlords can mitigate the risk of renting to individuals who may cause damage to the property, fail to pay rent or engage in disruptive behavior that can result in an expensive lawsuit or eviction.
Additionally, tenant screening helps maintain a harmonious and safe living environment for all residents. By conducting background checks, verifying income and contacting previous landlords, property managers can identify applicants with a history of responsible tenancy.
Establish Your Rental Criteria
Most criteria for property management companies include having credit scores of at least 650 and three times the amount of income to rent ratio. They typically require no felonies or aggressive behavior and no eviction history. You may require a higher standard, but you have to apply the same criteria to all prospective tenants.
Pre-Screening Tenants
The pre-screening process involves several key steps that can help you assess the suitability of potential tenants.
First, you collect basic information from interested applicants, such as their full name, contact details, social security number, income, employment information and current and previous residence history. This allows for initial contact and verification of the applicant’s identity. I recommend looking for an online application service to make it easy for prospects to fill out and keep their information secure.
Following the rental application, you can now conduct background checks on potential tenants. These screenings may include criminal history checks, credit checks and employment verification.
Reference And Personal Checks
The information obtained from the reference check can help you evaluate the applicant’s track record of punctual rent payments and responsible tenancy, as well as determine their overall suitability for the property.
Oftentimes, it can be a challenge to verify employment if the prospective tenant works for a big corporation. You may be able to search their LinkedIn profile or the company’s website directory.
As for the landlord references, the previous addresses are usually shown in the screening report. You can verify if the prospective tenant gives you a false address on the application, which usually raises a red flag.
Once the reference check and verification are complete, it’s time to evaluate the gathered information to make an informed decision regarding the applicant’s suitability. Factors such as positive references, income, satisfactory credit history and criminal records contribute to a fair evaluation.
On the other hand, negative feedback from references, false information, poor credit history or criminal records may raise concerns and potentially disqualify the applicant from renting the property.
If the prospective tenant fails only one of the criteria but you feel that they will make a great tenant, you can approve the applicant with conditions and raise the security deposit to two months’ rent instead of a standard one month’s rent.
Legal Considerations
Once you are ready to approve or decline a tenant, there are several legal considerations you must keep in mind when selecting tenants. These considerations help ensure fairness, prevent discrimination and protect both landlords and tenants. Here are some important legal aspects to consider:
• Fair housing laws. Familiarize yourself with fair housing laws that prohibit discrimination against individuals based on race, color, religion, national origin, sex, familial status, disability or any other protected class. These laws vary by country and region, so it’s essential to know and comply with the specific regulations in your area.
• Consistent decision-making. Make tenant selection decisions based on the established screening criteria and objective evaluation. Avoid any personal biases or preferences during the decision-making process to maintain fairness and avoid discrimination claims.
• Documentation. Keep detailed records of the tenant selection process, including application forms, screening criteria, background check results and any communication with applicants. These records can serve as evidence to demonstrate fair and consistent practices in case of any legal disputes.
Final Thoughts
Mastering the tenant screening process is an essential skill for any landlord or property manager seeking to secure reliable renters.
By carefully implementing the steps outlined in this guide, you can effectively evaluate potential tenants, reduce the risk of problematic occupants and create a safe and prosperous rental environment.
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