Knowing how to screen tenants legally and effectively is crucial when it comes to your rental income.
In fact, in their book “Property Management”, experts Walt Huber and William Pivar explain that having a problem tenant can actually be worse than having no tenant at all. For example, difficult tenants can result in loss of rent, damaged property and legal issues. Not to mention, occupied rentals cannot be leased to good tenants.
Therefore, screening potential lessees should include both their reliability to make payments as well as their positive and negative character traits.
Of course, you want to use a professional lease application to obtain important job, income and credit information. If you want to save money on paperwork but still get qualified tenants, use an online service like LawDepot.com.
They can provide you with a free rental property application form that you can customize, download and print in under 5 minutes. Obtain all of the important details about your new potential renters without accidentally leaving out any crucial questions.
In addition to apartments and condos, you can use these application forms to screen applicants for other rental properties such as vacation units or rooms in a home.
Expert Tips on How to Screen Tenants:
- To avoid wasting time, pre-qualify prospective tenants on their credit and financial abilities to pay the rent BEFORE you show the property.
- Check with previous landlords and references to learn more about the characteristics of the potential tenant. In addition, have the references refer you to other references who know the applicant.
- Follow the Fair Housing Guidelines. Know the rules for proper advertising and application questioning. Understand how to legally screen tenants.
- Some landlords choose to use screening services because they can save time when collecting applicant details. Plus, some services offer “risk scoring” as well. That said, meeting prospects in person can usually help you make the right decision.
- Read through the rental rules again at lease signing. Specific, written out rules can help prevent issues and misunderstandings down the road. For example, building codes, property use, cleanliness, tenant conduct, rent payments, etc..
Credit Screening: How to Screen a Tenant’s Credit:
According to Robert S Griswold in the Property Management Kit for Dummies, there are 3 main factors to look for when reviewing a tenant’s credit history. This can be a quick way to screen out bad tenants.
- A pattern of regular payments and not excessive overspending.
- Accurate previous addresses because you can further verify application information.
- A social security number that is real. (Have your credit reporting service conduct a social security number search to give you this information).
Use Experian, Equifax or Transunion to run a search. In addition to credit history, you also want to obtain a tenant history, eviction search, criminal records search, verification of prior employment and income and social security number search.
Note: If you choose to use a screening service, you can often get a price cut on credit report submissions. Therefore, if you have a large amount of rental properties, you may be able to save some money, not to mention time.
How to Screen Tenants (Questions):
1. Rental Interview Questions/Questions to Ask a Potential Tenant References?
Speaking with references over the phone can provide even more valuable information on the potential tenant. That said, which questions should you ask previous landlords?
In addition to verifying the address, rental amount and other tenancy questions, Pendo also recommends asking a few other questions. Ask about timely payments, neighbor complaints and if the landlord would rent again to this person.
You can also ask previous employers several questions to further screen the applicant. For example, what are the terms of employment, does the person show up to work on time, have they been reprimanded at work?
2. How to Screen International Tenants?
Although a little more challenging and time consuming, you can still run a background check on people from outside the country. LandlordStation LLC suggests doing a credit check with a Individual Taxpayer Identification Number rather than a SSN.
In addition, landlords can request 12 months of bank statements and proof of income.
3. How to Screen Section 8 Tenants?
Use the steps listed above under “How to Screen a Tenant’s Credit”. In addition, Section 8 tenants must qualify in order to obtain special housing, so they will have already gone through a basic background check (or pre-screening) through the Public Housing Authority.
4. Where Can I Download a Free Pre-Screening Form/PDF?
As I mentioned above, you can use LawDepot.com for free rental background check forms. In addition, eForms offers a downloadable tenant screening application form for landlords.