Finding tenants is one of those familiar pains for landlords around the country. With over 48 million rental units across the country, tenant screening is a time-tested practice.
Fortunately, that means you can benefit from other people’s mistakes. Here’s how to screen tenants for the best results in 2022!
Market on the Right Platforms
Get listed on the right platforms online, as this will help limit the number of spammers and unwanted candidates. For example, some landlords prefer to stay off of Craigslist and Facebook Marketplace. Some even stick to paid platforms, as they’ve had better experiences with them.
However, this largely depends on your market and who you’re trying to attract. There’s no such thing as a “perfect platform” for everybody.
Make Your Needs Clear
Tenant screening starts before you ever hear from prospective tenants. Tenants should understand basic expectations just from your listing, which should help weed out potential candidates. For example, if your listing clearly states “No dogs, no smoking, cats negotiable,” then you likely won’t hear from several potential candidates.
This is a great way to narrow out the list of contacts and showings, allowing for an easier time during the screening process. Always ensure your listing is clear, concise, and thorough. If someone contacts you, ask if they’ve read the entire listing.
Check Credit and Rental History
Credit checks are important for tenant screening, as they can give you an idea of how the candidate has managed their payment agreements over time. Generally, it’s best to ask for a full report, but you should at least look at the score. If you only need the score, free apps like Credit Karma should do the trick, but they aren’t as thorough or accurate.
The reason the full report is so advantageous is that it tells you have they’ve managed their debt and other payment arrangements. For example, you’ll see if they neglected to pay their utility bills, have any delinquent marks, or have evictions on their record. These are all relevant for tenant screening.
Rental history is also important. If a tenant was evicted, then they are considered much riskier than comparable candidates. Verifying their rental history is important.
Background Check
No landlord wants people dealing drugs out of their apartment buildings. While they aren’t for everyone, tenant background checks can be very helpful, especially if you have families living in your properties. This can help you prevent unwanted tenant behaviors or unreputable people from entering your building.
Ask for References
Previous landlords can tell you a lot. It’s best to ask for two previous contacts, as their current landlord may simply want to get rid of the applying candidate. References are even more important than credit checks, as you can control the questions, including:
- Can you verify that this tenant rented from you?
- How long have they rented from you?
- Were they disruptive to other tenants?
- Did they pay rent on time?
- In what condition did they leave the unit upon leaving?
The list goes on, but these are great to start. Remember that anybody can give you their friend’s number to lie to you, so ask their name or company name and verify the phone number online if possible. References are your best bet for ensuring you’re finding the right tenants.
Verify Income
Everything above can be flawless, but it won’t mean anything if the candidate doesn’t have income. Without income, they can’t pay rent. Always ask for pay stubs and verification of transactions into their bank accounts, especially if they are self-employed.
Uber drivers, freelancers, and other self-employed people should be able to verify the income source and the deposit into their bank accounts. Anybody can find a screenshot online, so double verification is important. Also, make sure to deduct taxes out of this yourself, as self-employed individuals will owe taxes at the end of the year.
Ideally, you want their gross monthly income to be 3x to 4x the rent. If they don’t meet the minimum standard, ask if they have supplemental income like rental stipends or government subsidies.
Get Professional Help
We know this sounds like a lot to handle, and it can be challenging for a first-time landlord to get down. However, one mistake can be quite costly with tenants. In real estate, your only defenses are preemptive.
What we mean is that the property or the neighborhood can go downhill, which could cost a lot. Your only defense is to find the right property in the right neighborhood before committing. The same goes for tenants.
One bad tenant is all it takes to ruin your profits for a year. If they refuse to pay rent or if they trash the place, you could lose a large sum of cash. For this reason, it’s best to be thorough with your vetting process.
The best way to protect yourself is with the right tenant screening services. An experienced property management company can help you market your property most effectively, balance your budget, and find the right tenants. This will save you money and headaches in the long run, and it only costs a small percentage of your rental income!
Learn How to Screen Tenants Like a Pro
Now that you know a little more about tenant screening, learn how to screen tenants from the best in the business. The right tenants will ensure your investment stays secure for as long as possible, while the wrong ones can cause irreversible damage.
Stay up to date with our latest real estate tips, and don’t hesitate to contact us with any questions!
