Tenant Screening: The Ultimate Guide

Tenant Screening: The Ultimate Guide

22 min read
Brandon Turner

Brandon Turner is an active real estate investor, entrepreneur, writer, and podcaster. He is a nationally recognized leader in the real estate education space and has taught millions of people how to find, finance, and manage real estate investments.

Experience
Brandon began buying rental properties and flipping houses at the age of 21. He started with a single family home, where he rented out the bedrooms, but quickly moved on to a duplex, where he lived in half and rented out the other half.

From there, Brandon began buying both single family and multifamily rental properties, as well as fix and flipping single family homes in Washington state. Later, he expanded to larger apartments and mobile home parks across the country.

Today, Brandon is the managing member at Open Door Capital, where he raises money to purchase and turn around large mobile home parks and apartment complexes. He owns nearly 300 units across four states.

In addition to real estate investing experience, Brandon is also a best-selling author, having published four full-length non-fiction books, two e-books, and two personal development daily success journals. He has sold more than 400,000 books worldwide. His top-selling title, The Book on Rental Property Investing, is consistently ranked in the top 50 of all business books in the world on Amazon.com, having also garnered nearly 700 five-star reviews on the Amazon platform.

In addition to books, Brandon also publishes regular audio and video content that reaches millions each year. His videos on YouTube have been watched cumulatively more than 10,000,000 times, and the podcast he hosts weekly, the BiggerPockets Podcast, is the top-ranked real estate podcast in the world, with more than 75,000,000 downloads over 350 unique episodes. The show also has over 10,000 five-star reviews in iTunes and is consistently in the top 10 of all business podcasts on iTunes.

A life-long adventurer, Brandon (along with Heather and daughter Rosie and son Wilder) spends his time surfing, snorkeling, hiking, and swimming in the ocean near his home in Maui, Hawaii.

Press
Brandon’s writing has been featured on Forbes.com, Entrepreneur.com, FoxNews.com, Money Magazine, and numerous other publications across the web and in print media.

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Instagram @beardybrandon
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[summary]Tenant screening is one of the smartest steps you can take towards making your property management experience as headache-free as possible — and protecting your investments.

  • There are certain qualities you should seek that usually indicate top-notch renters, as well as indicators that an applicant might cause trouble down the road.
  • When choosing the best tenants, all property owners should be aware of protected classes that are illegal to discriminate against.
  • For a well-run real estate business, all landlords should create solid processes for pre-screening, screening, approving, and rejecting rental applicants.[/summary]

Have you heard the story about the tenant who deliberately threw maggots down the stairs to the tenant below? Or how about the tenant who moved in 15 children into a 800 Sq Ft house? These stories are not made up for entertainment – they are true stories taken from actual BiggerPockets members and are just a tiny sample of what a real estate investor often must go through as a landlord.

However – by effectively screening prospective tenants you can reduce the chance of this happening and relieve the stress, headache, and back-aches that often accompany the landlord job. This guide will help you learn to discern a good tenant from a bad one, a responsible tenant from a irresponsible one, and a non-paying tenant from a paying one.

This guide is the authoritative step-by-step guide teaching the process to get your property rented to great tenants with minimal headache, stress, or costs. In this guide, we will look at:

  • The Ultimate Infographic for Screening Your Tenants
  • What Is Tenant Screening?
  • 7 Qualities of a Great Tenant
  • Setting Your Minimum Requirements
  • Pre-Screening Potential Tenants
  • Screening a Tenant in Person
  • Protected Classes, Discrimination, and Fair Housing Laws
  • The Application: Six Must-Include Sections for Proper Screening
  • How to Run a Background and Credit Check
  • Advanced (and Sneaky) Ideas for Tenant Screening
  • Calling Previous Landlords
  • Screening Tenants Through Employment Verification
  • Screening Tenants Through Personal References
  • Should You Allow a Co-signer?
  • Denying an Applicant after Screening

The Ultimate Tenant Screening Infographic

infographic about screening tenants

What is Tenant Screening?

When we talk about screening tenants – what exactly are we talking about?

Screening tenants is about digging into a potential tenant’s background and discovering who they really are. An application (which we’ll discuss in this guide) can only tell you so much – and can be easily manipulated or falsified. Screening your tenant means looking into the information they provided, as well as analyzing outside information you can discover, and coming to a reasonable estimate on the kind of tenant they will be. I say “reasonable estimate” because there are no sure-fire ways to know the future quality of a tenant. As a landlord – it is our job to simply screen effectively and choose the best possible applicant for the property.

7 Qualities of a Great Tenant

As mentioned above, there are no guarantees when it comes to the future quality of a tenant. However – there are several key metrics that will help you decide what kind of tenant they will be. To make your life as stress-free as possible, it is imperative that you only rent to the best tenant possible. The following is a list of the seven traits that make up a perfect tenant:

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Their Ability to Afford the Rent Payment

The first and foremost quality of a good tenant is their willingness to pay the rent. Without proper payment, you’ll be forced to evict and be faced with potentially thousands of dollars worth of legal fees, lost rent, and damages. Most landlords require that a tenant earn at least three times the monthly rent from their (documentable) job. Many tenants believe that they can afford more than they really can – so it is the job of the landlord to set the rules. Three times the monthly rent usually is sufficient.

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Their Willingness to Pay on Time

While some landlords look at late rent as simply a benefit (and the late fee as a financial bonus to them) a late-paying tenant is more likely to stop paying all together. The stress involved when the rent doesn’t come in is not a pleasant experience and can be avoided by only renting to tenants who have a solid history of paying on time.

Not-Available-for-Work-iconThe Long-Term Outlook for Their Job Stability

While a tenant may be able to pay the rent and pay it on time right now – their ability to do so in the future is often determined by their job situation. If they are the type to switch jobs often or have long periods of unemployment – you may find long periods of missed rent.

broom-iconTheir Cleanliness and House Keeping Skills

No tenant stays forever – and when they leave you want the property back in good condition. As such, it is important that the tenants day-to-day living be clean and orderly. They must take good care of the property you have entrusted them with.

pill-icon (1)Their Aversion to Crime, Drugs, and Other Illegal Activities

I don’t need to expound too deeply on this. Tenants who engage in illegal activities will cause nothing but stress and expense.

Emotes-face-sad-iconThe “Stress Quotient” – How Much Stress Will They Cause You?

The final quality of a great tenant is something I call their “stress quotient” or the amount of stress a tenant will cause you, the landlord. Some tenants are very high maintenance and constantly demand time and attention. Unless you are having a hard time finding quality tenants – these types will only cause more problems.

This ultimate guide is designed to help you find and sift through the information about the tenant to find one who most closely fits the above seven qualities of a perfect tenant. Obviously, no tenant is going to be 100% perfect, so deciding how close to perfection you will require is a personal choice that largely depends on your desired involvement level and the community in which your property is located in. If tenants are difficult to find – it may be financially advantageous for you to rent to a less-than-perfect tenant in order to fill vacancies. However – if you have plenty of tenants to choose from, you can be significantly more picky.

Setting Your Minimum Requirements

One of the most important steps in screening your tenants and finding the best qualified is by coming up with your list of minimum requirements for the property. This list of standards should be told to the tenant on the telephone, placed on the application, placed on your Craigslist ad, and told in person to eliminate those who simply will not qualify. The following four standards are commonly used by landlords on BiggerPockets:

Number-1-iconIncome Must Be Three Times the Monthly Rent

Tenants rarely know how much they can afford. By giving an exact minimum income requirement, you can keep out those who might believe they can afford to pay the rent but really can’t. Requiring income to be three times the monthly rent has been used by landlords for many years – as well as banks and other financial institutions that supply loans.

Number-2-icon Tenant Must Have Good References

The references you receive from past landlords are the best indication of the way the tenant will behave for you. A bad review from a past landlord is a huge red flag for most landlords. Also – bad references from personal friends or family are also huge red flags.

Number-3-icon No Evictions

A tenant who recently faced an eviction is unlikely to ever rent from me. I realize that many people change – but I’m not willing to take that risk.

Number-4-iconClean Background

I want tenants not problems. If a tenant has a background filled with criminal activity, I am very hesitant to rent to them. Again – people do change, but it is not a risk I’m willing to take.

Pre-Screening Potential Tenants

You’ve begun advertising for your property and have begun receiving calls. Contrary to popular opinion – screening doesn’t begin with a background check or an application – it begins with the initial contact. This is known as “pre-screening.”

As you can probably tell by the length of this guide – screening is not a flippant activity that you can do in a few seconds. Screening can take a considerable amount of time – and you don’t want to waste that time on every person who shows interest in your property. This is why pre-screening is so important. Think of the screening process as a funnel – like the kind you would use to pour oil into your vehicle. At each step of the process, you are able to narrow down the pool of applicants until only a small few – or just one – match. Pre-screening is the widest part of that funnel and will help to keep away those who obviously won’t qualify.

Pre-screening Through Your Advertising

Your pre-screening efforts begin with your advertisement. Whether you are using the newspaper, Craigslist, Zillow, or another service to market your property – the information in your advertisement can help to weed out time wasters. For example, by placing the location in your ad, you are able to screen out individuals who are looking for another location (don’t worry – if you don’t feel comfortable putting in your exact address, just put a general location or a nearby landmark.)

Also – putting the price in the advertisement also helps to keep those who can’t afford that price range from calling. I often see ads with no monthly rent listed – and have to wonder how many wasted calls they are receiving or how many potentially great tenants they are missing out on?

Pre-Screening Through Your First Phone Call

phone-iconThe initial phone call is the next logical step in screening tenants. The first thing you hear is often an indication (though, not proof) of the kind of tenant they might be. If the first words you hear after saying hello is a voice yelling into the phone

“How much do I have to have to move in?”

you can assume the tenant might not be a great fit. After all – they are more concerned with getting in anywhere than even asking to look at the property.

When a tenant calls about a property I have for rent, I like to ask them “What can I tell you about the property?”

This open ended question allows the tenant to begin talking and asking questions. The typical questions are generally,

  • “How much is it?” (Even though I always include it in the advertising)
  • “What’s the address?”
  • “Do you accept Pets?”
  • “How much is the security deposit?”
  • “Will you work with me on my security deposit” (No.)
  • “Can I get inside to see it?”

The kind of questions asked by the tenant are great indications of the kind of tenant they are going to be. I’m not suggesting that you judge a tenant solely on their ability to ask good questions – but it does help point me in the right direction as to the type of person they are. Are they orderly? Do they care about where they are going to live? Do they sound broke?

In the conversation, I also always include a few of my minimum requirements, as we discussed earlier. Usually, this is easily worked into the conversation such as, “Now, the property does have a minimum income requirement of $____ per month and we do a full background and criminal check to make sure we only rent to upstanding people.”

Many, many times I simply get a *click* after stating this information. If not, they usually will volunteer how much money they actually make and re-assure me that they have never done anything bad in their entire life.

This simple two-minute phone call does two great things:

  1. Get’s rid of 80% of the “bad apples” and prevents them from wasting my time.
  2. Let’s the good tenants know I am not a slumlord and only rent to good people.

In both cases – a win for me. This is what makes pre-screening so important. It allows you to save time, avoid nuisances, and project a good image. I’d also recommend leaving your minimum requirements on your voicemail as well – so when you can’t get to the phone, your tenants still get the message and your pre-screening still works.

Screening a Tenant In Person

The next step of the screening funnel is to meet with tenants and show them the property. This is also a great opportunity to screen the tenant before any paperwork is done. I always re-state my minimum requirements to the tenant in person, just in case they didn’t understand (or chose to ignore) when I told them over the phone.

At this point, many tenants will admit that they don’t quite meet the requirements but ask if I’ll work with them anyways. If I need time to think about it – I always tell them that I will have to check with the owner (or partner, or any other higher authority) and let them know. If I know they immediately won’t qualify, I let them know why but still offer the opportunity to apply. Why? I don’t ever want to be accused of being discriminatory for any of the protected classes. Let’s talk about those now.

Protected Classes

It’s okay to screen people upon some criteria but not other.

For example – discriminating against someone who won’t pay rent is acceptable, as is discriminating against someone with a violent criminal history. However, discrimination against someone in a protected class is not only morally wrong – it’s also illegal. This section will let you know what those protected classes are.

Federal Fair Housing Lawsblack_house

The following was taken directing from the US Department of Housing and Urban Development’s Fair Housing Website, which states (emphasis mine):

In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status or handicap:

  • Refuse to rent or sell housing
  • Refuse to negotiate for housing
  • Make housing unavailable
  • Deny a dwelling
  • Set different terms, conditions or privileges for sale or rental of a dwelling
  • Provide different housing services or facilities
  • Falsely deny that housing is available for inspection, sale, or rental
  • For profit, persuade owners to sell or rent (blockbusting) or
  • Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.

In case you missed it, here are those classes again:

  • Race
  • Color
  • National origin
  • Religion
  • Sex
  • Familial status
  • Handicap

While it is vitally important that you don’t discriminate against those classes, it is also important that you don’t even ask questions about those topics. This means don’t ask what their race is, how many children they have (you can ask how many people will be living there,) or if they have a husband or wife. Save yourself the legal trouble and simply do not ask. This also applies for advertising: DO NOT advertise for “no kids,” “great Hispanic neighborhood,” or “home great for families.” This is against federal law.

State and Local Fair Housing Laws

In addition to Federal Fair Housing Laws – your state may also have landlord-tenant laws that must be followed regarding fair housing, which might include:

  • marital status
  • sexual orientation
  • gender identity
  • age
  • participation in the Section 8 Program or other subsidy programs

Be sure to check with your State and local laws to ensure compliance to your fair housing standards. A simple Google search for “your state” and “fair housing” should give you the answers you need.

A Note on Age and Children Discrimination

As mentioned above, Federal Fair Housing laws prevent discrimination against family status and it is illegal to prohibit children. However – there is an exception to the law which states that certain properties that are designated as a “55+ Community.” According to HUD:

In order to qualify for the exemption, the housing community/facility must
satisfy each of the following requirements:

  1. At least 80 percent of the occupied units must be occupied by at least
    one person 55 years of age or older per unit;
  2. The owner or management of the housing facility/community must
    publish and adhere to policies and procedures that demonstrate an
    intent to provide housing for persons 55 years or older; and
  3. The facility/community must comply with rules issued by the
    Secretary for verification of occupancy through reliable surveys and
    affidavits.

In other words – if 80% of the units in a community owned by you have someone older than 55 living in them, and your visible intent is to provide housing for an older age bracket, and you abide by the laws that govern this exemption – you have the ability to exclude a familial status to include only those who are 55+ in age – thus discriminating legally against those with young children.

For more information on Fair Housing laws – see How to Market Properties without Violating the Fair Housing Act and speak to a qualified attorney.

The Application: Six Must-Include Sections for Proper Tenant Screening

The application is the window into your tenant’s life. It is important that you ask the right questions – and don’t ask the wrong ones (see Fair Housing, above.) The following is a list of must-have sections to include and ask on your application:

  1. Name, address, phone number, driver’s license number.Apps-accessories-text-editor-icon
  2. Social security number and date of birth.
  3. Current and past landlords with contact info.
  4. Employer and job details with contact info.
  5. Have they ever had an eviction filed upon them or broken a lease?
  6. Release of information signature

These questions are the most important for knowing the past history of your potential tenant. A good strategy to use is to not ask “have you” but instead “how many” or “when.” This makes it tougher for a tenant to lie. For example, by writing “have you been evicted” a tenant will more easily write “no” than if it said “how many evictions have been filed against you?”

Other Questions to Ask

The following is a list of other questions you may want to ask your tenant to find out more about them:

  • Requested move in date?
  • How many animals do you have and what kind?
  • What may interrupt your ability to pay rent?
  • Are you on Section 8?
  • How much money do you have?
  • How many felonies do you have?
  • Do you have enough cash to pay the first month’s rent and security deposit?
  • What kind of car do you drive?
  • Do you have a checking account? Savings Account?
  • How many people will be living here?
  • Emergency contacts?
  • How is your credit? Explain…
  • How did you hear about this listing?

The application must be completed completely. If it is not, I send it back to the tenant and ask them to finish it. Obviously, if they forgot one small section, I can make a phone call to find out – but I believe training your tenant to follow your policies begins here.

How to Run a Background and Credit Check

Let’s get down to the nuts and bolts of running background and credit checks – but first, allow me to explain the difference.

A background check looks at the tenant’s criminal and eviction history, as well as looking for fraud or deception.
A credit check looks at the tenant’s ability to pay their bills and obligations responsibly.

Several years ago, a law was passed in the United States that made checking the credit of a tenant much more difficult and cumbersome. Where before any landlord could simply enter in the applicant’s information and get back their credit report – there are now several hoops a landlord needs to jump through, including an on-site inspection. If this is an approach you want to take, there are several reputable companies you can use.

However, at BiggerPockets- we recommend using a screening service to avoid that hassel. A popular company is called SmartMove, they provide the following:

  • No site inspection is needed
  • Includes BOTH criminal and credit background
  • The Tenant applies and pays online
  • The vital information from the Tenant’s report is sent to you, the landlord.
  • No application process, no site inspection, no waiting period

To run a background and credit check through SmartMove you’ll need to set up an account with the service which should take less than two minutes. Next, you’ll enter the property information and the potential tenant’s email address.

Your potential tenant will receive an immediate email prompting them to head to SmartMove and set up an account of their own which, again, should take them less than two minutes. They will be required to enter their name, current address, social security number, and a few other pieces of information. After doing so – they will submit their credit card number for processing (though – as a landlord, you can choose to pay for this service rather than the tenant.)

Almost immediately – you’ll receive an email letting you know their information is ready to view. At this point, simply log into your account and search for the tenant via the property address. You’ll see the following screen, letting you know SmartMove’s recommendation for renting to the tenant, as well as links to their Credit Report and Criminal History.

smartmove screening

The image above has two things I wanted to quickly point out, labeled with a blue and a red arrow:

  • Blue Arrow: This is the recommendation given by SmartMove. I’d recommend adding this into your determination – but don’t solely rely on it. It’s important to dig deeper and find out what else the Credit and Background Checks have to say
  • Red Arrow: This is the area where you can access both the credit report and the background check. Notice it also lists their credit score here as well. We’ll look at both these areas, separately, next. Notice also that the above photo says “current address mismatch: input does not match file.” This means that the address that the credit reporting agency TransUnion has on file doesn’t match the address that the tenant entered for their current address. This is not uncommon – but be sure to verify what their current address actually is.

The Tenant Credit Report:

The tenant credit report will contain a wealth of information related to the tenants credit history, including a detailed list of all the tenant’s open or closed credit cards, car payments, monetary judgements, late payments, and more. This information can be overwhelming, but I recommend looking for the following items:

  • Credit Score: Depending on your criteria, you may establish a minimum credit score for your tenants. The particular score may depend on your location and cliental.
  • Current and Former Addresses: Often times, a tenant may conveniently “forget” a past address. Verify that the addresses given by the tenant on the application match the addresses on the credit report. The credit report may not include all the addresses, but any listed should be verified. You can ask the prospective tenant about the addresses or simply do a Google search for those addresses and, if it belongs to an apartment complex, you can call the apartment to see if the tenant ever lived there.
  • Public Records:This part of the credit report will list any judgments levied against the tenant -which includes garnishments or evictions that have a monetary claim. Note: This does not included evictions without a monetary claim. To find these evictions the process can be a little more complicated. Each state and county has a different way of finding out, but it should be public info in each county. You should be able to search (if your county has online records) for your tenant’s name and/or all previous addresses listed on the tenant’s credit report. Look for any cases that involve a rental company or have the words “eviction” in them. It’s not an easy way – and most landlord’s simply rely on the credit report findings- but it is possible. You’ll also find out when you talk to previous landlords.My policy is to never rent to a tenant with an eviction on their record, though some landlords put a time limit on it such as “no evictions in the past five years.” This is a personal choice and depends largely on your risk tolerance level and the current demand for rentals in your area.
  • Vehicle Repossessions: Having a vehicle repossessed is strong indication that a tenant cannot handle their money very well. If you notice a vehicle repossession – definitely ask more questions about this. An important note about screening a tenant using credit: In the United States of America, a law known as the Fair Credit Reporting Act states that:

    “Anyone who uses a credit report or another type of consumer report to deny your application for credit, insurance, or employment – or to take another adverse action against you – must tell you, and must give you the name, address, and phone number of the agency that provided the information.” Source: www.consumer.ftc.gov

    In other words – if the tenant’s credit history causes you to deny your tenant – then you must tell them why and give them the name, address, and phone number of the credit reporting agency you used.

    The Tenant Background Check

    At this point, you can check the second report generated by SmartMove – the Background Check (See the Red Arrow in the photo above.)

    The photo below shows what the background check looks like with SmartMove. Background Check DropShadow

    In the photo above, the prospective tenant does not have any criminal background; if they did, it would show up here.

    Advanced (and Sneaky) Tools for Tenant Screening

    You’ve already learned about pre-screening through your marketing and over the phone. We then looked at the importance of screening a tenant in person and the rules of Fair Housing. Next, let’s look at

    Screening on Social Networks

    facebook-iconIn today’s world, people often put more information publicly on their Facebook, Twitter, Google+, or other social network than they would even tell their own mother. I always do a search for my potential tenants and see if I can find any information that would help me make an informed decision. For example, a young couple once applied for one of my apartment units which does not allow pets. However, upon checking her Facebook profile page, we discovered she had a brand new puppy that she did not disclose and was attempting to hide.

    Drop By Their Current House Unexpectedly

    For extra verification as to the tenants cleanliness – you can drop by their home unexpectedly to ask for an additionally signature or to drop off a form. This surprise visit will often tell you interesting things about the way they live and can help you decide if this tenant is worth renting to or not.

    Calling Previous Landlords

    One of the most important things, if not THE most important verification, you can do for your prospective tenant is the previous landlord verification. In general, the way a tenant has behaved in the past is probably the way they will behave in the future.

    It’s not enough to simply call their current landlord – because many times, a landlord of a problem tenant will lie and give a stellar review just to get rid of a bad tenant. It’s always worth talking with their current landlord, but it is important to take their words with a grain of salt. Always call their previous landlords as well.

    As discussed earlier, be sure to take notice of any addresses on their credit report and ask the tenant or simply search Google for the owner of their previous addresses to discover any deception. Additionally, keep in mind that sometimes a tenant will give you the name and number of a friend or family member – with the intent that that individual will lie and claim to be their landlord, just to give a stellar review. To combat this, it is a good idea to call the current landlord first and ask if they have any vacancies. If the person has no idea what you are talking about – you can assume you are being tricked and you can deny that tenant immediately.

    When talking with their landlords, there are a few questions you might want to ask, such as:

    • When did the tenant live there?
    • Did the tenant always pay on-time
    • Did you ever have to serve a legal notice?
    • Did the tenant have any pets?
    • Did you ever have any trouble or damage?
    • Did the tenant give you proper notice to vacate?
    • Did the tenant leave the unit clean?
    • Was the tenant asked to leave by you or your company?
    • Would you rent to this tenant again.

    You may find that some landlords, especially larger property management firms, will require you to fax them over the tenant’s release of information (which you should have on your application) along with your questions.

    Tenant Screening Through Employment Verification

    It is also important that you verify your prospective tenant’s source of income. Just as when talking with their previous landlords, you will also likely need to fax over the “release of information” signature from the application before they agree to discuss the tenant. Always be sure to speak with the supervisor or human resource manager when verifying employment – not simply an employee (who are often willing to lie or stretch the truth for their friend.)

    When talking with the employer, you may want to find out:

    • How long has the individual been employed there?
    • How much does the individual earn?
    • Is this part time or full time?
    • Is this position temporary or expected to continue?

    To help speed up the process, you can also ask that your prospective tenant submit recent pay stubs with their application, allowing you to ask fewer questions to the employer.

    What If the Tenant is Self Employed?

    Obviously, if the tenant is self employed you cannot call an employer. In this case, you can ask for and verify income through the prospect’s tax returns. It is recommended that you ask for at least the previous two years, to ensure consistency. Keep in mind, however, that many self-employed people deduct a large amount of expenses, so it can be helpful to have someone knowledgable with tax returns to help you look over the results.

    Calling Personal References

    Finally, it can be a good idea to call the personal references put on an prospective tenant’s application. While the tenant is able to hand-pick those references, thus making them extremely biased, it still is a good idea to call. While a good reference probably won’t help your decision process much (due to the inherit bias) – a bad reference can help immediately disqualify a tenant. After all – if the tenants own family or friends can’t give a good reference, what kind of person do you think you are dealing with?

    Should You Allow a Cosigner?

    A cosigner is an individual who agrees to become legally obligated for the payment and condition of an rental. A cosigner is used when the tenant can’t qualify by themselves, usually due to income or a lack-of-rental history. Whether or not you choose to accept a co-signer to help bolster your potential tenant’s qualifications is up to you, but if you do, be sure to:

    • Screen The Cosigner Like a Tenant – background, income, employment, etc.
    • Be sure the cosigner owns property in the county in which you are renting (so they can’t simply disappear like a tenant might)
    • Require an application fee from the cosigner as well
    • Fully explain to the cosigner that they are financially responsible for the property and you will hold them responsible should the tenant cause damage or refuse to pay rent.

    No matter how great the cosigner, they cannot stop a bad tenant from destroying a property. Don’t use a cosigner as an excuse to put in a terrible tenant that will cause you headaches.

    Denying an Applicant

    ID-10086052 (1)If you decide to deny an applicant, it is vital that you document your reasons why so there can be no question as to whether or not there was discrimination involved. By having carefully defined standards (see above) you have the ability to easily deny a tenant that does not meet your standards.

    When I deny a tenant, I like to avoid complication by having the tenant “disqualify themselves,” a trick I learned from Landlording on Auto Pilot by Mike Butler. If a tenant doesn’t qualify because of a bad landlord reference – you have two choices. Which sounds easier to you:

    1. “I’m sorry Jerry, but your landlord gave you a terrible review and I can’t rent to you” or
    2. “Hi Jerry, I ran into a bit of a snag in getting positive feedback from your previous landlord – so what I need you to do is go and speak to that landlord and get him to call me with a positive review and we can move on. Can you do that for me Jerry?”

    Jerry will, most likely, mumble “oh – okay, sure” and then disappear, never to be heard from again. You never disqualified Jerry – he simply gave up due to the work you needed him to do.

    When you do disqualify an individual, I always send a letter to them stating exactly why they were dismissed. This can be as simple as a form letter which you check a box stating why they weren’t approved.

    Typically, if a tenant applies for a property and fails to qualify – they forfeit their application fee due to the time and cost associated with working their application through. However, if you deny them simply because someone else came first, then you must return their application fee to them.

    Final Thoughts

    This has been the BiggerPockets ultimate guide to tenant screening. If you have any questions, please feel free to leave a comment below or jump into the BiggerPockets Forum and ask questions to receive back responses from dozens of qualified and seasoned landlords.

    At this point – you will have learned the exact process for screening tenants. Customize this guide to fit your own style and location, but refer to this guide for reference if you need a reminder or refresher on how to screen your tenants.

    Finally – for more information on landlording, be sure to check out:
    How to Rent Your House: The Step-By-Step Ultimate Guide
    How to Be a Landlord: Top Ten Tips for Success.

    Leave your comments below! Am I forgetting anything? Do you do your screening differently? Let me, and other readers, know how you screen your tenants.

    Peace.