Finding the right tenant is crucial to the success and ease of managing your rental property. A good tenant can mean steady rent, lower maintenance costs, and less stress, while a poor choice can lead to missed payments, property damage, and potential legal issues. Here’s a detailed, step-by-step guide on how to screen tenants effectively to ensure you find the best match for your property.
Step 1: Set Clear Rental Criteria
Before you begin the tenant screening process, establish a clear set of rental criteria that complies with the Fair Housing Act. Criteria may include credit score minimums, income requirements (typically that the tenant earns at least 3 times the rent), no prior evictions, and acceptable rental history. Be consistent and non-discriminatory in applying these criteria to all applicants.
Step 2: Use a Written Rental Application
Require every potential tenant to complete a detailed application form. This form should request information such as full name, current address, employer details, salary, previous landlords, and references. It’s also advisable to ask for permission to run credit and background checks. Ensure the application complies with local laws regarding tenant screening.
Step 3: Conduct Credit and Background Checks
Once you have the applicant's consent, use a reliable tenant screening service to conduct credit and background checks. Services like MyRental or TransUnion SmartMove provide comprehensive reports that include credit scores, history of evictions, criminal records, and past address history. Assess the credit report for payment history and outstanding debts, which can be indicators of financial irresponsibility.
Step 4: Verify Employment and Income
Stable income is critical for ensuring that the tenant can afford the rent. Contact the employer listed on the application to verify employment and salary. For self-employed applicants or others, request copies of bank statements or tax returns for income verification.
Step 5: Contact Previous Landlords
References from previous landlords can provide insight into the tenant's behavior and reliability. Ask specific questions about the tenant’s payment history, how they maintained the property, and whether there were any complaints from neighbors. Also, inquire if they would rent to this tenant again. This can be one of the most telling factors in the screening process.
Step 6: Interview the Tenant
Once the tenant passes the background checks, arrange a face-to-face or virtual interview. This is a chance to ask any additional questions about their rental history and discuss expectations. Pay attention to details such as communication style and timeliness, which can indicate how they will interact with you during the tenancy.
Step 7: Make Your Decision
After completing all the steps, review all the gathered information against your initial criteria to make an informed decision. If you decide to decline an applicant based on information found in the credit report, you are required by the Fair Credit Reporting Act to provide them with an "adverse action" notice that explains the reasons for their rejection.
Step 8: Prepare the Lease Agreement
For approved tenants, prepare a lease agreement that outlines all terms and conditions of the tenancy, including rent amount, payment due dates, security deposit details, maintenance responsibilities, and any other pertinent rules. Ensure both parties understand and agree to the terms before signing.
Conclusion
Effective tenant screening is a multi-step process that, when done correctly, can lead to reliable tenants and a smoother rental experience. By following these specific and actionable steps, landlords can protect their investment and build a positive, professional relationship with their tenants.
