How to Screen Tenants for Your Rental Property

A big part of proactive vacancy management has to do with performing your due diligence when screening tenants. There are certain things we always encourage property owners to check – and we always check when we’re screening tenants. 

Remember, this is your investment and you’re trying to protect it. You must choose a tenant who can prove they can pay rent and will be responsible. 

Look At Credit, Criminal History, and Pay Stubs

Verification of income is critical. You must make sure that someone can pay rent – and you need to see those pay stubs to be sure. Don’t just look at what someone writes down on a rental application; they might just have gotten a job. You want them to bring you at least three pay stubs to show that they have been making the money they say they make, as that’s a good indicator that they’ll be able to, again, pay the rent comfortably. 

• Do not skip on a criminal background and credit check. 

We do this on behalf of our owners, but we also encourage owners to do it if they’re managing themselves. In some cases, especially in lower-income areas, a credit check may be less helpful than in higher-income areas. However, a criminal background check may alert you to any red flags that you’ll want to take into consideration before potentially renting to someone. 

Sometimes things happen to people, but past evictions should always be taken into consideration. Now, was the eviction 7, 8, or even 10 years ago, but the person has had a steady job or jobs and clean rental history since? You don’t know what has gone on in a person’s life, so it’s important to judge some things that pop up on a background check on a case-by-case basis. But, if someone has a more recent eviction – say, 2-3 years prior – you might want to tread more carefully. That could be a major red flag. 

• Get references from someone’s previous landlords. 

We strongly recommend checking someone’s references, especially from prior landlords. We’ve even gone as far as to drive by someone’s current address if we’re on the fence about them to see if we can notice anything about that property’s current condition. It’s a positive sign if a property is clean, taken care of, and seems to be in good repair. But, if it’s trashed on the outside, that’s not a good sign. 

You’ve got to dig a little bit deeper and do your due diligence to ensure you’ve weighed all the pros and cons and feel like you’ve got a solid candidate before choosing to sign a rental agreement with someone and let them move in. 

Putting an ad somewhere like Craiglist can get you decent applicants, but you might also end up being bombarded with phone calls – and some of those calls will be scams. 

If you go to our website, we’ve got all the vacancies listed and prospective applicants can schedule a showing. This is also something we do for clients. But, before we let someone schedule a showing, we have a preliminary screening. 

Some examples of the questions on the screening include:

• Do you have a dog and/or other pets?
• Have you ever been evicted?
• What’s your gross income?

Based on someone’s answer, the screening then prompts them to schedule a showing immediately, asks them for a few more questions so we can get a better idea of their potential candidacy, or asks them to complete their application, etc. 

This type of screening is critical, and you don’t want to cut corners. 

So often, we run into situations where owners are extremely thrilled to get a tenant because they have the first month’s rent and deposit ready in cash. I don’t know how this works, but there are so many times when someone will be able to get together enough cash for rent and a deposit despite having a spotty work history and income. 

• Sometimes, you have to be comfortable turning down cash. 

I get it, it’s difficult to turn down someone who seems great and has a couple of thousand dollars in cash at the ready, but if you aren’t comfortable turning down cash in imperfect situations where the tenant might not be the best fit, you’re going to end up in the same situation down the road where you’re dealing with a vacant property and looking for a new tenant. 

Use Screening Services and Management Systems to Simplify the Process

Today, most property management companies have a tenant portal, an owner portal, and a management portal. Honestly, if I was trying to do all of this for myself, I don’t know how I’d get it done. 

Back in the day, you’d get applications in the mailbox that had been filled out manually. You’d have to show up to show someone a property after getting their application in the mail. You’d have to sort through all of this physical mail to get people’s income verification or pay stubs, which is always difficult because people often don’t keep those. You’d have to make phone calls, run credit checks, and check the county sites to see if anyone had been evicted. It was a process and honestly, I’ve blocked it out of my mind. 

Today, it’s much easier to screen tenants. Most companies, ROOST included, use specific services to make this process easier. For example, we do all of our accounting through a program called AppFolio. That’s how we manage our properties on behalf of all our owners. 

We use another service called Tenant Turner, which actively screens and schedules our property showings. Tenant Turner comes up with the questions that the screenings prompt people to answer, and those can be a great way to weed out anyone who potentially wouldn’t – or wouldn’t be able to – pay the rent. 

Likewise, it’ll also screen for people who have pets for properties where we don’t allow pets, and so on. 

• Another factor in screening is application fees. Ours is $45. 

With our service, it costs $45 to fill out an application. This happens after someone has passed the first hurdle – the screening process – and the system has gotten a better candidate pool. Those people will have to pay us $45 via credit card or money order and then we’ll submit and run their application to get people to the next phase of the process. After that, they have to get through the AppFolio process, and then our process, which includes checking references and calling past landlords. 

It may sound like a lot, but all of these screenings are critical to ensuring your next tenant is going to be responsible, pays rent on time, and takes care of your property. 

• No matter what, you have to make sure your property is priced at a rate your community can afford. 

This is the most essential part of the whole process. Pricing your property above the neighborhood standards and putting it into a category most of the people in your community can’t afford is a way to severely limit your screening funnel. If everyone knows that the average rent price tends to run around $800 and you’ve priced your property for $900, here’s what will happen. 

People either aren’t going to apply at all, or the applicants you do get will be less and less qualified – and eventually, you won’t have anyone, and you’ll have a vacant property. 

If you have questions about how to price your property and make sure you’re setting the rate at a fair, correct level to your neighborhood standards, we’re happy to help. 

However, this is the key to getting people to the top of that funnel so you have an ample amount of solid candidates to consider and better chances of finding the right fit. 

Fair Housing Concerns

To avoid any Fair Housing concerns, you have to make sure to follow the same steps with every single applicant. You have to follow the same procedure and document everything because the last thing you want is to run afoul of Fair Housing laws. 

• It’s important to be able to prove your process is impartial and you do the same process with every applicant and every property. 

While some areas are a bit more obvious, other questions that might come up – such as with service animals – can be confusing for some people. In general, there’s a lot of confusion about service animals vs. emotional support animals. We absolutely cannot discriminate. If you’re careful and diligent about having the same criteria – and establish those criteria clearly – with every applicant, it will be more difficult for them to say you discriminated against them for something like a service or emotional support animal. 

• Work the process, be consistent, be able to show your work, and you should be fine. 

A part of being able to stay within your rights and not potentially come across any Fair Housing legal issues is knowing the basics regarding the laws in your area. Just like you and your property manager should be savvy regarding the legalities of service animals vs. emotional support animals and where/when you can ask questions or potentially charge for that animal to live on a property, you also need to know about ADA laws. 

For example, if someone needs to install a ramp – at their expense – to get a wheelchair in and out of the property, you have to allow them to do that. Keep in mind that they also have to be able to remove it when they stop renting, and must still leave the property in the same condition in which they found it, but you cannot discriminate. 

• Licensed real estate agents and property managers have to continue their education on legal matters related to tenants and rental properties, so this can offer another advantage for property owners. 

Continuing education is a fantastic tool because it allows you to learn the nuances and ever-changing landscape of the legal world where tenant rights laws are concerned. That’s why I recommend it for property owners as well, even if it’s not a requirement for you.

Final Thoughts

Every owner-investor wants to make money on their investment. Tenant management – and, by proxy, managing vacancies – is a massive part of ensuring your investment pays off. You must factor the time your property will be vacant into your overall budget but, ideally, if you’re putting the right tenant in place, you could end up in the golden situation of a long-term renter. Sometimes, we get lucky. We find the perfect person, they stay for years, and they take care of our property. 

However, that’s not always the case. 

While not a perfect system, tenant screening is key to making an informed decision about who you are putting in your property. Keep an open mind, be willing to give people chances, but be smart about your decision. You have to be fair, but you can also make educated choices based on all the available information. And that information has to come from a fair, regimented screening process. 

Your property management team can help you through this process. It’s to your benefit to ensure all your i’s are dotted and t’s are crossed, after all. When in doubt, don’t be afraid to ask for help. After you secure the perfect tenant, you’ll be glad you took the extra time to do it right.