Screening Tenants – The Process

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Every state is going to have different criteria surrounding anti-discrimination laws so you should be familiar with and abide by the guidelines in each respective state in which you do business.  With that said, there are some general criteria that would apply for anyone involved in the process of screening tenants.  

The “Easy Three” when it comes to best practices are to perform the following:

  1. Credit Check
  2. Employment & Income Verification
  3. References

The Credit Check

First and foremost, a credit check is going to provide you with a fairly comprehensive snapshot of the prospective tenant.  The report will reveal identifying information of the prospect which includes their name and perhaps any other names they have gone by which may not be on the application.  This is important as it provides you with an opportunity to validate the information on the application.  Other identifying information will include the social security number, current and previous address (also an opportunity to validate information and seek references) and of course the actual credit score(s).  The credit scores provide insight into the prospects payment history, or lack thereof and should be heavily scrutinized prior to approval.  Other information that could be useful in a credit check is any public record information that exists such as state and county court records, bankruptcies filed, tax liens or monetary judgements.  Any recent inquires are also important as you can determine if the applicant has been seeking credit.

Employment & Income Verification

These steps are simple but important.  Verifying the candidate’s ability to pay the rent can likely be determined by checking their income, but it does not stop there.  Looking into the prospective tenant’s employment history while understanding the consistency in their income will allow you to really gain insight into the applicant.  This could come in the form of requesting W2’s in addition to 2 months worth of paystubs.  For candidates who are not self-employed, an employment verification request is standard practice and an excellent way to continue on with your due diligence.

For self-employed tenants, the request of a 4506-T form is a request for a transcript of the prospects tax returns.  This is a quick and easy way to understand whether or not a self-employed prospect is earning consistent enough income to satisfy your criteria for renting a property.  

References

References are an obvious way to verify that a candidate is telling the truth but they can be a moving target as you are relying on a 3rd party to field your call and answer a few questions.  However, it is worth the time and effort to reach out to previous landlords who have worked with the prospective tenant in the past.  If they are difficult to get a hold of or fail to call you back, that on its own could be quite revealing.

It is good practices to seek out 3 references from previous living situations although some candidates may not have 3, either because they have lived in only one or two homes for a very long time (which is probably good thing), or they have yet to make multiple moves.  Regardless, it is good to have more than one person to call on to ask a few questions about the prospect.

What to ask?  Here are a few good questions to help you learn more:

  • Would you rent to this person again?  If not, why?
  • Were there any behavior patterns that were concerning?  Noise complaints?  Parties?
  • Did you find the home in good condition upon move out?
  • Was rent paid on time?  Were they ever late with their rent?

These steps are all important and consistency is imperative.  These steps, in addition to any other processes you have in place should be repeated for every candidate.  If you have a staff, the process should be uniform across the entire organization so that you and your team are consistent and always abiding by state and federal rules & regulations.  While these guidelines are not foolproof, they are certainly good practices to implement.  Happy Screening!

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