The hardest part of being a landlord or a property manager is by far how to find the perfect tenant. The perfect tenant is a person
• who will take care of your property as if it is their own
• who will be a good neighbor to other people living in the same community
• who will have a steady job and will pay their rent on time
• who will commit to renting your property for a longer period of time
• who take care of minor maintenance issues themselves and notify you if something is broken in your property
• who will ask you for permission if he/she wants to make changes to the property
• who will give you plenty of notice when planning on moving out
• who will not engage in criminal behavior
• who is honest
And so on……..impossible to find? ……… maybe…….maybe not!
Choosing a tenant to ﬁll your vacant property shouldn’t be a rushed process! A bad tenant can cost you a lot of time and money, so it is better to take your time finding the right tenant. Every prospective tenant should be screened in a systematic way so in the end you can make a decision based on a set of information that is the same for every applicant. This will also be helpful when trying to stay compliant with all the federal, state and local fair housing laws.
So here are 8 steps to follow to find that perfect tenant;
Step 1: Set standards that every applicant must meet to be “qualified”
Creating a set of standards that applicants must meet to qualify is extremely important. This set of standards can be different for each rental unit dependent on the quality and location of the rental. Standards could include things like verifiable income 3 times the amount of the rent, a credit score of 650 or above, never been evicted, maximum number of people who can live in the property, a pet policy and so on. As a landlord you get to determine what those criteria will be as long as they stay within the bounds of all fair housing laws. Then once you have your set of standards you will have to apply them consistently.
Step 2: Talk to applicants on the phone
When potential tenants contact you to tell you they are interested, make sure you talk to them on the phone before inviting them to visit the property. This is where the actual rental screening process starts. With a short phone interview you can quickly weed out tenants that are not serious and/or not qualified.
Put some effort in asking the right questions based on the standards you have set. Questions like what kind of pets do you have and how many people will be moving into my property are some of the questions to ask. Other questions could be; When are you looking to move? How long do you want to rent for? How long have you lived at your current address? Why are you moving? and so on. Make sure to mention the rent amount and the deposit amount and ask them if they can afford those amounts. Make sure to take notes and listen for inconsistencies in answers and applicants who are trying to avoid answering certain questions.
After ﬁlling out the pre-qualiﬁcation form for all potential tenants that are still interested in the property, review the information and invite the most serious prospects to a scheduled tour of the rental.
Step 3: Show the rental property
It is hard to believe but sometimes applicants want to rent your place without even having visited the property! Please do not agree to this. You do want to meet applicants in person no matter how perfect they sound. Usually you get a lot better idea of what type of person someone is by meeting them. Here are some things to look for during the showing:
• Are they on time?
• Do you like them?
• Do they fit the profile?
• Do they seem to be very interested?
• Re-ask them some of the questions you asked them during the phone interview and see if their answers match?
• Do they look clean, put together?
• What is your gut feeling?
Based on this information you should have a pretty good idea of what type of person you are dealing with. So if it feels right, and the potential tenant is still interested, hand them an application and ask them to fill it out right then and there.
Step 4: Have the applicant fill out a rental application and charge an application fee
Personal information such as name, current address, Date of Birth and SSN of all renters above the age of 18 should be part of the rental app. Other information to request is the current and last two landlords, current and last two employers, monthly income, and pets if any. In addition, a reasonable application fee should be charged. Just make sure you follow all the local laws with regard to the application fee. In addition, make sure the application includes an authorization to do a complete background screening on the tenant including a national criminal and eviction check and a credit history check. The filled out application and the collected fee will be a good indication if the potential tenant is serious about renting your property.
Step 5: Review the applications
When reviewing all the applications, make sure that you comply with both federal laws (Fair Housing Act and Fair Credit Reporting Act) as well as the local ordinances that apply to the location of your property. Some landlords use their gut instinct to select their tenant but when you are facing discriminating charges in court this will not be a good defense. Make sure to store all applications of all interested tenants for several years, use the same rental application and use the same criteria for all applicants. This way you can prove that you did not discriminate and you can also objectively and fairly analyze and compare all prospective tenants to select the best one.
Make sure to read all rental apps carefully and pay attention to all the things that might disqualify an applicant such as no income, no employment, large pets, no previous landlords listed, no employers listed and so on. Do not believe everything you see on an application. Compare the application with the background check you will run in Step 6 and you will get a good idea if the applicant has been honest on their application.
Step 6: Run a comprehensive background screening report including a credit history
So you have pre-qualified the applicant; you like the person, the applicant has filled out the application, paid the fee and passed with flying colors. Don’t stop your screening process here. As previously mentioned, not everyone is honest on their application and during the pre-screening process! Background screenings should include a SSN trace, previous addresses, National Criminal and Sex Offender Search, National Eviction Search and an in depth Credit History. Running a comprehensive background screening report on potential tenants is an absolute must and is pretty easy to do these days.
Houserie.com is an online tenant screening company that will provide you with a comprehensive report that has all the criminal, eviction and credit background information you would need to make an informed decision on a tenant. We offer pay-as-you-go pricing and packages ranging from $19.99 though $29.99. It is all online and you can have the tenant fill out their own information online or you can decide to fill out the tenant information yourself online. When ordered during business hours the report should be available within a few hours sometimes even faster. Check out the Houserie ultimate sample report for more information.
When reading the report please pay close attention to issues that may disqualify your applicant based on your set of criteria such as certain criminal offenses, evictions, poor payment history, low credit score, bankruptcies and many collections/charge offs. The credit score range will tell you if the potential tenant makes payments on time, owes a significant amount of money, the number of tradelines used and the length of their credit history. If applicants have a history of not paying credit payments on time, they might not pay their rent either!
Step 7: Check references
You are almost done finding the best tenant possible, but do not stop here. Checking employment and landlord references listed in the rental application is one of the most important steps in screening your applicant. This should include contacting the last couple of landlords, their current employer, and any personal references if available. This sounds time consuming but it is the best way for you to develop a better picture of what your tenant is really like.
References from previous landlords. If an applicant has listed previous landlords, please call them and ask them questions like “Did the tenant pay their rent on time? Did you encounter any problems with this tenant? How long did the tenant live in your property? Please be aware that sometimes tenants will give “fake” references, meaning they will list a friend as a previous landlord! Also when talking to their current landlord, be aware they might not be always truthful as they might be trying to “get rid” of a difficult tenant.
References from current employer. Hopefully your applicant has been employed for a longer period of time with their current employer. To verify income, please request the tenant to provide you with a copy of the most recent paystub. You should also call the employer to get more insights. Many companies have rules and regulations on what information they’re able to disclose about their employees, so asking questions that require a yes or no answer might get better results than open ended questions. At least try to verify the information given on the application.
Step 8: Make a decision
Finally you have reached the end of the tenant screening process. Now it is time to make a decision. After reviewing all the information in detail and comparing this information with the standards you set, you can now make your decision. Hopefully you have found that perfect tenant and you can have the applicant sign the lease and agree to all the rules and regulations. Congratulations on finding the perfect tenant!