Tenant screening is important as it allows you to select the perfect tenant for your Fairhope rental. Which by extension, means more profit for you. The right tenant pays rent on time, takes care of your property as if it’s their own, and respects your house rules.
Quality tenants are also more likely to renew their lease, helping you maintain a high occupancy rate, which translates to consistent cash flow.
Here at the Level Property Management Group, we believe that tenant screening is incredibly important which is why we have put together the following guide:
Create a Tenant Screening Checklist
When screening tenants, you must prepare a checklist and be consistent when following it. Consistency in tenant screening helps you avoid violating the Fair Housing Laws.
Include these steps in your screening process:
- Create and follow your renter screening outline.
- Establish your minimum tenant criteria.
- Require interested prospects to submit supporting documents such as a background check, credit report, rental application.
Conduct a Pre-Screening
Pre-screening prospects can help you filter those who are not interested in your property quickly. So, use your property marketing to your advantage. Here you can set proper expectations by including your requirements, limitations, and restrictions.
When a potential renter reaches out, make sure to ask the right questions. Identify early on if your property is big enough for the number of people planning to stay there, or gauge if there is a possibility of the prospect violating the house rules.
Review the Applications
The goal of reviewing rental applications is to ask the right questions and collect information. In this part of the screening process, you can check if a potential renter is financially capable of paying the rent.
Generally, income that is 3x the rental rate is considered acceptable. Depending on other tenant criteria and situation, you can still accept a renter even if their income falls below that rate.
Ask your potential tenants for:
- Their contact information
- Authorization to conduct background and credit check
- Previous and current residence addresses
- Prior and current landlord names and contact information
- Job history highlighting past and present employers, job title length of employment, salary, and reference contact info
After getting this information you should thoroughly check their background and credit information. After which, cross-reference the data provided by reaching out to their references.
Verify Prospect Income and Employment
Validating income information and employment history is crucial in the tenant screening process. To choose the right fit, you have to confirm if they are being honest about their ability to pay rent using their declared income.
Contact Prior Landlords
As part of your screening process, you should contact all landlords listed by your potential renter. Talking to a prior landlord can let you know the behavior of your potential tenant. They can tell you if they missed payments and caused disturbance or damaged the property.
A good tip when calling their current or previous landlords, is to start the conversation with a specific question about their property before asking about the interested applicant’s professional relationship with them.
Evaluate Background Checks and Credit Reports
In this step, it is important that you gain the potential tenant’s authorization to conduct a background and credit check. When you get this information, you will want to check the following:
- Prior evictions: If the prospect was ever evicted, you will want to know why as this will definitely impact your decision on whether to rent to them or not.
- Credit score: As a landlord, you would want a tenant with good credit standing. Most use 680 as a good baseline. You should decide if you’d like to consider interested applicants that have a credit score lower than 680.
- Record of financial transactions: Check their spending habits and if they lead you to believe they can consistently pay rent.
- National sex offender check: Confirm if the prospect has the potential to put other tenants or their neighbors at risk.
- Police record: Your tenants have the right to quiet enjoyment, so you have to make sure that new tenants won’t be a nuisance to neighbors and put your property at risk.
You must take this step carefully as this can show you if your property will be in good hands and if the prospect is reliable in terms of paying rent and keeping your property safe.
Accept or Reject Potential Tenants
All these steps will lead you to decide whether their application is accepted or not. Most landlords inform tenants that they are accepted via email or call. Whatever options you choose, always inform the tenant of the next steps.
If you accept a tenant, ensure that the lease agreement is in writing and discuss all the terms with them before asking them to sign. Be clear and accurate with the details and amount whenever applicable. You need to be sure that they will report things like storm damage, and the lease agreement will go along way assuring that.
Similarly, put your rejection message in writing, this can help you avoid any disputes. There is no need to elaborate on the reason but be ready in case they ask for an explanation.
Be compliant with the Fair Housing Act and remember to refuse applicants for justifiable reasons. You cannot decline a tenant because they are a member of a protected class under the Federal (or your state’s) Fair Housing Act. It is always best to base your judgment on income, credit score and rental history.
Protect your investment and choose the right fit by conducting a thorough screening process. If these steps seem daunting and you’re unsure how to choose wisely, we at the Level Property Management Group are here to help.
Contact us at the Level Property Management Group today regarding your rental property management needs! We can handle anything from helping you with your marketing to renovations.