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3 Key Tips For Screening Tenants

by Sharon Vornholt on September 10, 2012 · 8 comments

  

Everyone has their own method and criteria for screening tenants. Many folks use a formula that is a percentage of gross income to determine if they make enough money to qualify for the property. There will also be other factors such as length of employment and previous landlord recommendations. But the sad fact is that after all that due diligence, you may very well still end up with a tenant that doesn’t pay the rent and doesn’t take care of your property.

Perspective tenants often know just what to say; they know the “correct answers” to the questions. Tenants also give out false phone numbers for their previous landlord and current employer. So what can you do? There are several steps you can take.

Sorting Out the Truth in Their Application

When it comes to employers, I don’t like to call the numbers the perspective tenant “John Smith” gave me. For instance, if he told me that he works at Ace Electric, I would simply look up the phone number and call the company. I would ask the person answering the phone if John Smith worked there. On several of occasions I was told they had no employee by that name. If they verified that he worked for the company, then I would ask who their supervisor was and ask to speak to that person. Hopefully, that would actually be the person listed on my rental application.

I had the same process for the landlord. I wanted the company name. This was pretty easy to verify if they came from a big apartment complex. It was sometimes more difficult to determine if I was actually talking to their previous landlord if it was an individual that was the property owner. Asking the proper open ended questions such as, “can you verify the dates John Smith lived at your property” or “can you verify the starting and ending rents during the time this person was your tenant” would often trip up a relative or friend that was pretending to be his landlord.  Be sure to call all of the persons listed as being previous landlords. You will often find that these folks were problems at many different places.

You can also often find the name of the owner of the property on the public records such as the tax assessors’ site. Another good place to get information is the National Tenant Network. This costs about $22.00 for the credit report and additional information, but it is well worth it. This report won’t give you a credit score, but you will get a good credit report. In addition you will get several years of rental history complete with names and numbers on this site if the landlord reports to them.

This process took a little longer, but I was able to avoid leasing to several people that were almost certainly going to be a problem.

Surprise Home Visits

One of the best tips I ever got was from a seasoned landlord that had a huge portfolio of single family homes. He told me that one of his favorite strategies was to make the tenant wait a couple days for a phone call to say whether their application was approved. If he had decided to approve their rental application, there was one last test they had to pass. He would show up unannounced at their home for a surprise visit. At this visit he would have some piece of paperwork he had “forgotten” to give them. Getting a look at how they were living in their current home, would be the deciding factor as to whether or not he would ultimately rent to them.

Get A Criminal Background Check

Often when landlords run a credit report, they skip the criminal background check to save a couple of bucks. Don’t be tempted to do that. You can save yourself a lot of headaches down the road, by spending a few dollars on the front end. The same goes for checking the free sex offender registry. The last thing you need is this kind of problem in one of your rentals.

It’s A Crapshoot

Even if you have carefully done your due diligence, it still can be a crapshoot when it comes to finding the perfect tenant. I believe that any additional steps that you can take to weed out a bad tenant in the beginning, is well worth the trouble in the end.

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Photo: Ben Zvan

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{ 8 comments… read them below or add one }

Dale Osborn September 10, 2012 at 12:52 pm

Prescreen Prescreen – Prescreen should be the mantra of all landlords to protect their properties. Very informative article. Jeffrey Taylor spoke one time at out investment group and he stated that when you go to visit them at their current residence if there are pennies strewn all over the floors – it is a red flag that you do not want them in your property.

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Trina September 11, 2012 at 7:17 am

Pennies? Why pennies?

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Dale Osborn September 11, 2012 at 8:02 am

If they do not care for the pennies, they will not make much effort to make sure you get paid the rent check. I could understand it as the numerous units we cleaned up after that had moved in the middle of the night always had coins strewn everywhere. I would pick them up put into coin rolls & deposit in the business account. Usually $20-$50/year, but this does not even begin to cover all the repairs and cleaning after these tenants moved out. It is better to leave it vacant than to put the wrong person into the unit. After 10 years we sold the apartmentt and moved into MHPs.

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Sharon Vornholt September 10, 2012 at 1:26 pm

Dale-

Visiting them at their current property unannounced is a great way to find out how they REALLY live. This is how your property will look after they move in. It’s definitely worth the time and the trouble.

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Marc September 10, 2012 at 5:06 pm

The best advice I ever received is to prepare a great lease agreement that spells everything out. The main part of the agreement is making sure that everything is in working order for move in. After that, major repairs such as AC unit, roof, busted pipes are the responsibility of the landlord. Any other minor issues like door hinges, stuff toilet, or anything deriving from negligence is the responsibility of the renter…

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Sharon Vornholt September 10, 2012 at 7:13 pm

Marc – There is nothing as important as a rock solid lease once you get the screening done. There is no such thing as being “too specific”.

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Hassan Emam September 11, 2012 at 1:40 am

What about interviewing the tenants? i think interviewing is giving the initial impression if they deserve living in your housr or not. Moreover, adding some clauses in the tenancy contract may enhance your chance of getting payment on time. such clause as disount of 10 percent if the rent was paid on time.
Note: this 10 percent is initially added to the rent value.

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SHaron Vornholt September 11, 2012 at 10:36 am

Hassan –

I absolutely think tenants should think of it as an interview. People need to think that it is a privilege to be chosen to live in your rental; they need to know that you will only be interested in having “great” tenants not just tenants that are OK or good.

I have known a couple of landlords that use the increased rent strategy with success. I would be careful not to price yourself out of the market with that strategy. I think 10% might be a little high. On an $800 house, that would be an extra $80. That might cause some potentially good tenents to skip right over your property. Most landlords just use late fees. Those that enforce late fees from day one, have better luck getting tenants to pay on time.

In the end, I think you have to figure out what works for you.

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