TENANT SCREENING TIPS
TENANT SCREENING 101
Congrats on finding a potential tenant!
Did you verify that they are who they say they are? Did you perform a thorough tenant screening?
Before you start signing the rental agreement, here are six tips on how to screen and how these steps keep you (and your property) safe.
TIP #1: THE CREDIT SCREEN
A credit score means very little without context. A 600 credit score, for example, doesn’t tell you if the potential tenant is rising from the ashes of financial troubles or if they’re spiraling downward from an 850 score. You need a full credit screen.
Unlike a flat credit score number, a full credit screen will show you everything they have past due—whether it’s 30/60/90 days past due or credit available now, you can see all the way back to seven years.A full credit check reflects both installment accounts and revolving accounts, big or small. You can look for past due, collections, any repossessions they’ve had, foreclosures—literally everything. That includes bankruptcies. And you absolutely do not want a tenant tied up with an open bankruptcy. because they can tie the rent into that.
TIP #2: CRIMINAL BACKGROUND
A criminal background shouldn’t just be a local record search; it should be a national records search. Look for both misdemeanors and felonies, sexual predators, eviction history. All of that is very big, and you want a full picture of the potential tenant’s criminal background and history.
A word of warning: Be careful how you screen tenants with criminal history because of the impact it could have on you and your property. There’s a huge difference between someone being arrested for carrying recreational marijuana and a pedophile.
TIP #3: EMPLOYMENT
Always review a potential tenant’s employment. Inconsistent or scattered employment history can be a major red flag. Is their employment current right now? Do they have pay stubs that they can show you?
If they’re moving from out of town, review what their guaranteed take home pay would be as of right then.
If they’re self-employed, you’ll need to review pretty much everything— pay stubs, bank records, tax statements, etc. Anything that helps to prove they can pay for the home they’re looking to rent.
TIP #4: PAST RENTAL HISTORY
Reviewing rental history is more than just the last place a potential tenant lived; it’s the last few places they have lived. An unfortunate reality is that people do lie on their applications. Just because a phone number was provided for a past landlord does not mean that’s actually the past landlord’s number. So be thorough.
When reviewing with the previous landlord or property management company, have something they can fill out with questions like:
Did they pay on time?
Were they ever late?
Did they ever miss any payments?
Did they fulfill everything that was on the lease?
How much was their rent?
Did they ever bounce a check?
How big of a deposit did they make?
How much of their deposit did they get back?
Did they damage the property?
Did they have any pets?
If yes, did the pets damage the property?
And on the topic of pets, be sure to conduct a full background check and interview with the potential tenant’s pet, too. Petscreening.com is a great resource in figuring out what questions to ask. Know the behavior of the pet, shot history and current shot status, and bite history along with size, weight, type of animal, and breed (if applicable).
TIP #5: FAIR HOUSING RULES
If you, as a property manager or a DIY landlord, own more than four homes—or you’re a real estate agent and you’re managing just one home as a licensed realtor—you have to follow all the fair housing guidelines. There is a lot of information regarding fair housing regulations. Case and point, real estate agents must take a three hour class on fair housing guidelines, laws, and best practices.
TIP #6: WATCH FOR MOVE-IN URGENCY
If a potential tenant comes up to you and says, “Hey, I have full cash, I can pay cash upfront for the entire term of the lease,” that may be a warning sign.
Listen for the urgency in needing to move. “I have to move right now. The owner is selling the property, it’s closing right now,” or something along those lines. Phrases like that can be a warning sign.
Don’t get railroaded by fast talk. Instead, slow down and ensure that you screen your potential tenants carefully. Review their social media. Even a basic Google search could bring up some additional red flags depending on what results you get back.
The most important things are to:
Conduct a full credit screen: Don’t look just at a score. Get a holistic view.
Criminal background: While not every tenant may have a criminal background, carefully review the ones that do. Depending on the nature of the crime reported could affect your property’s reputation and/or make you uncomfortable.
Review employment: Make sure everything is current, accurate, and accountable—especially if your potential tenant is unemployed.
Past rental history is important: Review the previous landlords, check any provided phone numbers, and have a questionnaire ready. You want the real facts of how this person behaved in a rental property. Make sure they are someone that will respect your property, its rules, and you.
Fair housing laws: Comply with and educate yourself with fair housing laws to avoid ending up in legal hot water.
Be on the lookout for warning signs: If something doesn’t seem right, do a little more digging. You have the right to protect your investment property.
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