Last Updated: January 18, 2022
Finding the right tenant for your property may be a harder task than you initially thought. You would want someone responsible and reliable who would take care of your property and pay their rental fee on time.
Knowing how to screen tenants will help you make the right choice. Here are some tips on how to find the perfect tenant for your requirements.
What Is a Tenant Screening?
In order to choose the right tenant, it is important to conduct a thorough tenant screening. Its purpose is to help you evaluate the prospective renter, assess the possible risks, and ultimately, help you decide whether they fulfill the requirements of your lease agreement.
The process begins after the prospective tenants complete a rental application, which aims to collect personal information. Even though you’re allowed to provide your own evaluation parameters, there are certain criteria you should always bear in mind when conducting the screening. You will receive a tenant screening report on each applicant which gives you information about the tenant’s income, credit, and criminal history, along with their eviction record and previous landlord’s references. This will help you determine which of the applicants best meets your expectations and requirements.
|DID YOU KNOW: In some states, screening tenants in terms of their criminal history is illegal. That’s why you should make sure you are familiar with the local laws before asking your applicants for report authorization.|
The Fair Housing Act
When purchasing or renting a home, the property manager or landlord can request information such as income verification, eviction records, or criminal history. These and some other items on the tenant screening criteria list help them decide who of all the applicants they should choose.
What they are not allowed to base their decision on is what type of person a prospective tenant is. Race, color, religion, sexual orientation, and marital status are just some of the factors landlords used to take into consideration in the past. Luckily, this type of discrimination is illegal now, thanks to the Fair Housing Act.
Signed in 1968, the Fair Housing Act is a federal law that forbids discrimination against home buyers and renters. It also gives the discriminated parties the right to file a complaint and take legal action. The Act protects from discrimination by:
- National Origin
- Family Status
Every tenant screening process should be consistent in its requirements for every applicant. Landlords or property managers should avoid any type of discriminatory language, i.e, they cannot express preferences for a certain type of tenant. The Act prohibits refusing to rent or sell, making housing unavailable or lying about its availability, changing the terms and conditions of the lease agreement, providing different housing, or evicting tenants based on the above characteristics.
State law also forbids the following to be a factor:
- Prior convictions
- Gender identity
- Marital status
- Veteran status
- Participation in the Section 8 Program
- Political orientation
- Sexual orientation
There are many laws, on both the state and local level, that offer some kind of protection for people facing discrimination for the factors listed above. That means that a person might be able to file a complaint with the US Department of Housing and Urban Development (HUD) if they feel that the reason they are being rejected is discrimination.
|DID YOU KNOW: There are certain circumstances under which an owner is exempted from abiding by the Act. These include homeowners selling their homes without the assistance of a broker, members-only private clubs, and religious organizations. Still, there are no circumstances under which race discrimination is allowed when tenant vetting.|
Requirements You Should Take Into Consideration
Choosing the right tenant for your rental unit means that you should conduct a detailed screening, bearing in mind several very important factors. Looking into your applicants’ rental history, income, credit, and criminal background would make it easier for you to choose a reliable renter. Here’s why each of the following factors is crucial in the tenant vetting process:
An ideal tenant’s rent-to-income ratio should be three times the rent fee. This would mean that they will be able to pay rent on time even if unexpected expenses occur.
A high credit score indicates that the tenant has a positive financial history, making payments on time, which makes them a more reliable candidate.
Running a background check can help you discover your applicants’ eviction records and ultimately protect you from choosing a tenant with a record of evictions.
Screening renters for criminal history can help you avoid exposing yourself to unnecessary risk, or alternatively, decide for yourself whether a prior conviction is relevant or not.
References from the employer and previous landlord
Having good references means that the applicant has been a responsible and reliable tenant, which means that getting references is a great way to find good tenants.
In the process of screening renters, you may come across some signs that could be an indication of potential future problems. Some of the red flags are:
- Unstable employment history
- Missed or late payments
- Criminal history
|You should conduct a thorough tenant screening in order to choose a tenant that best fits your tenant criteria.|
|The process of screening begins after the tenant has completed a rental application.|
|The Fair Housing Act protects tenants from being discriminated against.|
|The requirements you should consider when screening your applicants are: salary range, credit report and criminal history, prior evictions, and landlord references.|
How to Screen Tenants?
Conducting a thorough tenant screening allows the landlords to protect themselves from exposure to risks such as late or non-payment, tenant eviction, and property damage. Here are some of the steps you should consider implementing when proceeding with the tenant screening process:
Decide on Your Criteria
Since the rental unit is owned by the landlord, he has a right to add their personal requirements. Whether you have a strict no-pet or non-smoking policy, it is important to provide this information right from the start, as it will save both you and the prospective tenants valuable time.
Deciding on the amount of security deposit you require from the tenant, or whether their previous criminal record will affect your decision is also up to you. But keep in mind that, while as a landlord you can decide on the best way to screen tenants, you are obliged to be aware of the local and state laws and adjust your requirements accordingly.
|DID YOU KNOW: Every state has different rules and limits regarding security deposits. In Michigan, for example, an owner cannot require a security deposit of more than 1 ½ of the months’ rent.|
Being transparent in terms of your rental unit’s facilities and your expectations from the prospective tenant starts with the rental ad. You should disclose all the necessary information in your advertisement. This will help you pre-screen your tenants and save both sides time. Here are some tips you can follow in order to make the screening process more efficient:
- Include all the information you feel is necessary for the ad (describe the apartment as it is, state your requirements in terms of smoking or pet policies, etc.)
- Tenants should be informed whether the landlord checks criminal and credit records when screening tenants
- Be transparent about the amount of security deposit and monthly rent
- Once you narrowed down the applicants, call them over the phone and ask some qualifying questions
- Checking their social media accounts may also help you get some useful insight into their personality and lifestyle
The best way to screen tenants before you even let them see the rental property would be to request a tenant application from those interested. The application will help you learn more about the prospective renters, providing the following information:
- Name, contact information, date of birth, license number, and Social Security number
- Previous addresses
- Names of other occupants such as children, roommates, partners
- Employment information
- Contact information for personal references
- References from previous landlords
- Any kind of additional tenant screening questions you may have
|DID YOU KNOW: Although the information provided in the application is sufficient to run a credit and background check, you cannot proceed with the research before getting your applicants’ written consent (make sure you keep a copy so that you have a record of it).|
Credit and Background Check
By conducting credit and background check done by one of the companies offering background check services, you will get a more clear picture of who you’ll rent your premises too.
If you’re wondering what is a tenant screening going to show you, here’s what it will help you find out:
- The credit check will show you their overall credit score, whether the tenant has paid their bills on time, and whether they have any kind of financial problems.
- The background check, on the other hand, can help you find out whether the applicant has a criminal record. Then, you can decide whether their criminal background would affect your decision.
It is best to have a conversation with the applicant if you spot any red flags, as sometimes, it all can be a misunderstanding that their explanation can clear up.
Verifying Other Tenant Information
When running the background and credit check, you will not only get information about the applicant’s criminal and credit history, but you can also use it to check:
- the accuracy of the information they’ve given, such as their name, date of birth, past addresses, and other personal information
- verify their current employment status and income
- any past or present financial problems, bankruptcy, or debt
If you feel that the information you’ve collected is insufficient, you can proceed with conducting an interview with the candidates you’ve narrowed down.
Reach a Decision
After reviewing all the information, the only thing left is to decide which candidate best fits your requirements. It is also advisable to have a second, or even a third choice, just in case your first choice has found a different place to rent in the meantime.
How long does tenant screening take? It normally takes about 24-72 hours. However, once you’ve made the decision, you should inform the tenant right away and talk about the details of signing the lease agreement. This way you will make sure that you don’t miss good prospective tenants.
|DID YOU KNOW: The lease agreement should not only clearly define the tenant’s responsibilities and rental rules, but it should also comply with state and local laws in order to avoid any legal issues.|
Choosing the right tenant is a multi-step process, from creating a transparent ad and making a tenant screening criteria list to running a background check and deciding which of the applicants best fits your requirements.
Another thing you should keep in mind is that you must comply with federal and local law in order to avoid accusations of discrimination or other legal issues.
Even though the process of tenant screening isn’t always simple, determining your personal tenant criteria will make it easier. Choosing a good tenant screening service is also important as it provides the landlord with insight into the credit, criminal, and eviction records of a potential tenant.
The price for using a tenant screening service ranges from $25 to $75. As a landlord, you should always be careful and look for approved companies offering tenant screening services, as not all of them are accredited.
Tenant screening is used by landlords in order to evaluate prospective renters. It is crucial for the landlord to know how to screen tenants, as the main purpose of this procedure is to evaluate the applicants and decide which one of them is most likely to fulfill the terms of their lease agreement.
It usually takes 24-72 hours to complete the process. However, note that the time needed may also depend on the landlord’s ability to verify the information tenants have given, as well as on the screening service the landlord uses.