How to Approve Tenants Without Meeting Them

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I screen hundreds of renters every year for an apartment complex.

I see lots of background checks.  I am going to show you how to approve tenants without ever meeting them.  I have approved hundreds of renters without ever seeing them.  Are you still stuck on seeing and meeting renters?  Give it up, it is not necessary.  I cleaned up a 120 unit apartment complex by creating criteria that keeps most bad tenants out, without ever even seeing a tenant.

If you are self-managing a rental, it’s almost a given you will have to meet the renter at some point.  I do the management myself, and meet most of my renters in person.  But I have also rented to several that I have never met, that saw my property on-line.  In 2014 alone, I have rented to three renters that the first time I met them was when I gave them the keys.  I typically have one or two that move in from out of state every year.  All have been stellar.

If you are using a property manager, and you have any say over any tenant, you need tenant screening criteria.  If the PM is making all the decisions, they should have a basis for how they select tenants.  If not, they do not know how to screen tenants and you should run away from them.

The Risk is on the Tenant

It is a huge risk for a tenant to rent a place sight unseen, it is not a risk for the landlord.

The tenant sends money to some unknown landlord (or scammer) for an application, and/or a large holding fee.  I charge $40 per adult for the application, and I require $1,000 to hold the unit.  I use a holding fee agreement so I obligate the renter to lease, but I am not obligated to sign the lease with them.

Related: Tenant Screening: The Ultimate Guide

Smart landlords never obligate themselves until the latest possible moment.  Signing a lease too far out front means you have to evict if they never show up.  After all, you have a live lease in effect and the tenant can come back month’s later and move in.   So, I sign lease when they arrive and I give up the keys.

Give Up the False Excuses

Some landlords are hung up on always meeting a tenant before they agree to give up their ‘baby’ to an unknown stranger.

If for some reason they do not like the person, they will decline them.  And they use the excuse of “they felt uneasy”, or it was too awkward, or some other lame reason they have because they do not know what to look for in a great tenant.  Great tenants have certain attributes that non-great tenants do not.  And you cannot tell by looking at them or meeting them.

Have a Plan, and Work the Plan

Before you even start to show a place, you should be ready for someone to ask you “What are your rental criteria to move in?” Figure it out.

If you do not have criteria, and you are showing a place, you are in danger of violating Fair Housing laws and excluding great tenants.  There is no 100% sure way of getting a great tenant, or preventing a great tenant from going bad due to outside influences such as a lost job, but there are ways to put the odds in your favor.  Much the way you split a pair of aces in a Blackjack game.

Have a set credit score criteria that you are looking for.  With the average renter having a 650 FICO score, you should have an idea what you want.

Knowing the average household income in your area, you should know if you want above or below average income.  A criminal record will impact tenant behavior, but not necessarily tenant rent collections.  But you should know the type of person you want to associate with.  The same is true with past landlord references.  No matter what good things the previous landlord says, if it is not reflected in the credit score and income, you are taking a large gamble.

Match Your Plan with Your Property

The condition of your property will also play into the mix, but it affects the price of your rental, not tenant quality.

Having a low quality apartment and attempting to get great tenants is tough, but not impossible.  You have to focus on price.  The other option is a low quality tenant in a low quality apartment.  If you are doing that, tenant criteria are less relevant and you need to focus on your eviction speed and fast rental turns.

Related: Eviction Education: My Cost – $3403.99, Today’s Special – Free!

Once you have set criteria, a tenant either passes, or they do not.  There may be some things that make you uneasy about the tenant, as in they pass the criteria but just barely on multiple items.  It’s OK, you can decline the tenant.

If you get a tenant that passes the criteria with flying colors, you do not need to meet the tenant.  They pass, plain and simple.  When you start to understand the characteristics of what a great tenant looks like on paper, it will put you on the road to your success.

What is your approach to tenant screening, do you have preset criteria?  If you have a PM, who selects your tenants and what criteria do they use?

Be sure to leave your comments below!

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About Author

Eric is a 54 year old, soon to be former, computer professional. He started several years ago to replace his “work income”, with other alternate streams. He is well on his way to retirement at age 56, and is currently making more money at extracurricular activities, than he is working at his full time job. Whether that is Financially Independent, or just old fashioned entrepreneurial spirit, is in the eyes of the beholder.

16 Comments

  1. Eric,

    I use the same procedure you pretty much use bro, the application fee down to doing background checks. But most of all my renters, have been tenant buyers so I took the process a little deeper than an a regular renter.

    But what I learned over the past 10 years is that you can’t judge anyone by their FICO score or monthly income. Just don’t know what you got until they get in there and start paying.

    Eric, have you ever had a renter that wouldn’t pay, and just didn’t want to leave?

    Antonio Coleman “Signing Off”

    • Thank you for the comment!

      In my early days as a landlord, i had several that I had to evict. I did the research to determine what characteristics my good renters had, and what ones the bad ones had. Credit score was key. As well as income. I just got rid of my last Section 8 renter, she was there almost 8 years, always paid, but did not get out until the 9th of the month.

      I also screen tenant for a 120 unit complex. I see the police reports. I know the information about the ‘bad’ tenants. And I know credit score is a great indicator.

      You can absolutely tell, with a high percentage, with only FICO and income. Once you start to have more renters, the formula will start to become clear. If you are not using FICO score, you are going to wind up with issues.

      If you have all tenant buyers, then you are probably getting higher FICO scores and most of your issues are eliminated.

      No one method is 100% fool-proof, but you can certainly put the odds in your favor by going with a hard line on credit score.

    • My screening criteria might be different than yours, but here is a rough idea of what I use.

      • All applicant(s) must have a credit score of at least 625+.
      • Foreclosure applicants can have a slightly lower score, but all other accounts must be paid. A higher deposit may be required.
      • Rent must be no more than 30% of verifiable gross income. For a $1,050 rent monthly rent, that is at least $42,000 in annual household income.
      • No criminal activity.
      • No eviction history.
      • Each adult (18+ years of age) over 2 adults, is an additional $50 per month.
      • If you are at the bare minimum of credit score and income, you may be rejected.

      • Thank you Eric for making it clear.
        I am thinking of demanding for renters to have savings that are enough to cover several months of living expenses. What’s your opinion on that?

      • While it is a good goal, I think you might be requiring too much in terms of qualifications. If you have a very high end rental, it may be OK.

        Income will tell you the tenants ability to pay, Credit score will tell you the tenants desire to pay.

  2. “Smart landlords never obligate themselves until the latest possible moment.” I love that!

    My process is simple unfortunately. I interview the people and ask questions. That’s about it. I really need to start doing more. I see your comment above about your criteria. As far as getting their credit score and verifiable income reports, etc., how do you do that? Do you use a service/website to put in their info and get their score and income or do they bring you documents?

    • Use a screening service that can at least get credit score, and county level criminal check. Never believe your tenants documents. Use them as a guideline to fail them, but do not pass them based on the papers.

      Income is tough to verify if the employer doesn’t give you the documents. W2s and bank statements help.

  3. Eric,
    1) Why the additional $50/mo per adult?
    2) Can you explain the holding fee? Is it required or only if they don’t want to lose the unit? Is it refundable if they don’t take the unit? Does it go towards deposit if they do?

    • If I have extra adults, they can pay more. I cannot charge extra for kids, but 18+ I can. Solid renters generally do not have more than two adults. If it is a few college kids, they can pay more, or go somewhere else. If the kid is 18, he should be working and help pay. If you need multiple families to pay rent, you can pay more too.

      The holding fee is so that the renter can hold the place, otherwise I keep advertising and showing. It is non-refundable, and is applied to the deposit at lease signing. If I decline them, they get it back within 7 days.

  4. You raise an interesting point about getting good tenants in low quality housing. I lived in a relatively “bad” neighborhood for a year, and it was actually a good experience imo. I think I was one of those renters that landlords would love to have in a lower quality house/neighborhood. I did it because it was relatively close to my school and the rent was uber-cheap due to the four bedroom setup the house had (3 stories, they don’t make houses like that anymore.

    • Thanks for the comment Dave!

      You definitely need a cheap price, in a downtrodden neighborhood, to attract the best tenants. And you still need a quality unit.

      he plus side, is you get rent paid, every time.

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