Landlording & Rental Properties

This Is What to Look for When Screening Prospective Tenants

Expertise: Mortgages & Creative Financing, Business Management, Landlording & Rental Properties, Commercial Real Estate, Real Estate Deal Analysis & Advice, Real Estate Investing Basics, Personal Development
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Screening-tenants

If you’ve spent any time on the landlord forums here at BiggerPockets, you know that the No. 1 piece of advice is: “Screen, screen, and then screen some more.”

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It’s better to have a vacant property than a bad tenant who will smash up the unit and stop paying rent. Evictions are no fun to go through and quite expensive. And turnover tends to be one of the biggest expenses that property owners have.

Unfortunately, screening requires some work and is not simply a box you get to check off.

Screening Tenant Prospects

First things first, you should always do a background check on every applicant no matter how good or bad a feeling you have about them. And Fair Housing does not look kindly on landlords telling prospects they should not apply.

Now, most property managers and landlords wish screening prospects was something like this:

Unfortunately, there are multiple things we are looking for. Namely:

  1. Eviction history
  2. Criminal history
  3. Rental history
  4. Income verification
  5. Employment history
  6. Credit check

So it looks something like this, with each line representing the minimum acceptable standard for each of the six items we are investigating.

That being said, you probably do not want to accept someone who only meets the absolute minimum standard in each category. This is when screening tenants gets complicated. I will return to this scenario at the end after we cover the basics.

A Few Notes

Before digging into each item to screen for, a few quick notes. The most important is a simple one: DO NOT DISCRIMINATE!

HUD lists seven protected categories that you may not discriminate against:

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

Related: The Fair Housing Act and Landlords—What You Should Know

In addition, many states, as well as some cities and municipalities, have additional categories you cannot discriminate against. Missouri law, for example, includes ancestry as a protected class and many states prohibit discrimination based on sexual orientation or gender identity.

If you are managing for yourself, it’s a good idea to consult an attorney to make sure your screening criteria are in compliance with Fair Housing and your state laws before you begin.

Furthermore, I would recommend having a third-party company do both the background check and the income/rental history verification. You can do the second part yourself, but there is a tendency for you to want to see the best in the applicant as you want to get the unit rented.

Confirmation bias can hurt you here. A third-party screening company doesn’t care and will give you “just the facts.” I use Red Star, but there are many such screening companies out there to choose from.

Finally, make sure your rental criteria are in writing and you stick to them as best as you possibly can. Don’t just shoot from the hip when it comes to screening. If you get sued, you definitely will want this written criteria to reference.

Now, let’s turn to the items to look at.

Eviction History

This one is pretty simple. If someone has been evicted, it is much more likely it will happen again. I do not accept evictions for the previous seven years and recommend demanding a significant amount of time has passed since a previous eviction. Or simply, don’t allow evictions at all.

You will also want to consider what to do about satisfied evictions (where the tenant was evicted but paid off the back rent and costs of the eviction). Perhaps view these more leniently.

Criminal Background

This one can be a bit tricker than evictions because there are many different types of crimes of varying severity. You may decline all violent felonies, all felonies for at least five years (perhaps with the exception of a DUI) or more than two misdemeanors in the past five years. (Or something like that.)

Unfortunately, it will have to be a bit arbitrary but make such selections as best as you can and stick to them. This is probably the most important area to have written policies about.

Rental History

Screening-tenants

You want to at least confirm the previous year of rental history. You should, at the minimum, get the rental history from their previous landlord. While it's preferable to get it from their last two landlords, this can be difficult to attain sometimes. The big things you are looking for are:

  1. Prospect left the previous unit in good shape.
  2. Prospect paid for damages (if any).
  3. Prospect had few late pays (I want one or less in the previous 12 months).
  4. Prospect had few or no complaints against them or lease violations
  5. Prospect fulfilled their lease in full and did not break it. (Or if they did break it, they paid whatever lease-breaking fee the landlord had in place.)

Income Verification

The prospect should make at least three times the rent in monthly income, and this should be verifiable income (i.e., not “under the table” money). There are, however, a few caveats to this.

In more expensive markets, such as Manhattan and San Francisco, the 3x rent threshold is often unreasonable (and sometimes restricted by law). In such areas, 2.5x rent or occasionally 2x rent may be acceptable.

Furthermore, if you are accepting Section 8 or tenants benefiting from another rental assistance program, you will need to adjust your income requirements accordingly.

Related: 7 Things I Wish I Would’ve Known Before Becoming a Landlord

Employment History

It is generally not wise to accept someone who just started at their new job the day before applying. Preferably, you will want them to be on the job for at least a year. This is something you can give a little ground with though. Maybe ask for a double deposit if your state law permits.

Furthermore, young people who just left their parents’ house or graduated college likely won’t have any employment history. In these cases, you may consider getting a cosigner, which you can read more about here. (You could also require a cosigner if the applicant has mediocre or no credit, or falls just below the income requirement—say between 2.5 and 2.9x rent.)

Credit Check

The scores are nice, but the report is more helpful. I aim for a score of at least a 600, but need something above 500. Regarding the report, the big thing I look for is charge-offs from property management companies. Those are a big red flag.

Putting It All Together

eental agreement form with signing hand and keys and pen

Unfortunately, sometimes someone will be just above the minimum criteria in multiple areas. For example, someone could have a recent misdemeanor and a 10-year-old, nonviolent felony, barely hit your income requirements, had a late payment, and only a 520 credit score.

In this case, I’d probably say no. That’s because I have red flags (recent evictions, violent felonies, etc.), which are automatic noes and yellow flags (misdemeanors, late pays, etc.). Too many yellow flags also means denial.

And, yes, you should have this criteria written down as explicitly as possible. While you can’t have it written down for every possible scenario, you should be as detailed as possible.

There are also groups of individuals who apply together. In such a case, each applicant needs to hit the minimum standards. Even if four are perfect and one doesn’t hit, that group gets denied. (Or, at least, the group is only approved if the one who was denied drops out.)

Screening often requires resisting temptation. Remember, a bad tenant is worse than a vacant property. Every buy and hold investor who’s been in this game for more than a few months will tell you that.

You can’t accept everyone and expect to have good residents, and you can’t simply wait for the perfect prospect to come around and expect to ever have an occupied property. Tenant screening is a balancing act—and it’s a balancing act for which you need to determine the rules ahead of time.

Again, screening is an area you should be very careful with as there are a lot of laws on the books about this. So look over the laws carefully (both state and federal) and consult your attorney before you start.

promotion for how to become a landlord guide

What is your method for screening tenants, and which on this list do you find to be the most important?

Share with a comment below!

Andrew Syrios has been investing in real estate for over a decade and is a partner with Stewardship Investments, LLC along with his brother Phillip ...
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    Barry H. Investor from Scottsdale, AZ
    Replied about 1 month ago
    ANDREW - Good stuff. I clicked on your link to "ancestry" discrimination as related to MO law and I was not able to find the definition? I have MO properties so I was curious if you could clarify what that means? I learned something about criminal history with your article - thank you !!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied about 1 month ago
    Ancestry discrimination seems a bit redundant to me, but here's the definition: https://labor.mo.gov/mohumanrights/Discrimination/origin. In short, "National origin/ancestry discrimination means treating someone less favorably because he/she comes from a particular place, because of his/her ethnicity or accent, or because it is believed that he/she has a particular ethnic background."
    Daryl Luc
    Replied about 1 month ago
    A couple of additional considerations....I actually pay more attention to landlord input that comes from those prior to the current one the tenant is leaving. Landlords have been known to puff up a tenant review to get rid of them. As far as background checks, see if your service will expand checks automatically into states that have prior addresses for the applicants. Ordering a national is usually quite expensive, but getting states beyond the one your property is in can be quite helpful. I had an applicant that listed zero issues on the application, since he had none in this state, but the service automatically found 5 felonies in the state next door due to addresses tied to his name and known aliases going back to juvenile offenses.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 29 days ago
    Very good point, although it's sometimes hard to get ahold of more than the previous landlord. Red Star does a national background check. If you just check the local websites, like here Missouri Case Net where I live, you will definitely only find the crimes committed in this state and not elsewhere.
    Amanda Klawitter Rental Property Investor from Bakersfield, Ca
    Replied about 1 month ago
    Good info! Thanks.
    Brian Lucier Property Manager from Groton, MA
    Replied about 1 month ago
    @Andrew Syrios Thank you for the article on Resident Screening. Always a topic of interest for me and our property management team. I'd like to add some of the comments and tips from a recent BiggerPockets BLOG on the topic. The more tools in your toolbox, the easier to get the job done right. We typically only pull a credit check when the applicant passes all of our criteria first, then we spend the extra money when we are ready to offer the rental. Last chance to find those skeletons. https://www.biggerpockets.com/member-blogs/12732/88453-top-10-tips-guerrilla-tenant-screening-tips-for-landlords
    Arturo Matamoros Property Manager from Orlando, FL
    Replied about 1 month ago
    Andrew, this is a fantastic post. As a property manager in Central Florida, this is super useful information that I can pass along to current and future owners. Thanks for sharing!!
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 29 days ago
    Thank you Arturo, I'm glad you found it helpful!
    Justas Gintautas New to Real Estate from Bangor, ME
    Replied about 1 month ago
    Another genius tip I got from an experienced property manager was to look at the person's car. If it's full of their belongings, trash, and other junk - odds are that's what your apartment is going to look like very soon. Messy tenants aren't necessarily a dealbreaker, but certainly, something to consider before renting.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 28 days ago
    That's a good idea to look for, but you're not allowed to make a decision on whether to lease or not from their car's condition so be careful.
    Sylvia B. Rental Property Investor from Douglas County, MO
    Replied 1 minute ago
    What protected class does the condition of a car fall under?
    Patrick Pierre New to Real Estate from Garden Grove, CA
    Replied about 1 month ago
    This was excellent! I'm going to add this article to my folder so I can get back to it when I get my first property. Thank you.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 28 days ago
    Thanks Patrick, I'm glad you found it helpful!
    Deanna Opgenort Rental Property Investor from San Diego, CA
    Replied about 1 month ago
    I look up their name in the court records before I even respond to their e-mail/message if I can. Public records are free, and in the county that I own property they are easily accessible.
    Timias Woods Rental Property Investor from Los Angeles, CA
    Replied about 1 month ago
    Andrew thank you for your insights! It’s important for property managers or landlords to have written criteria for items related to a screening and stuck to those guidelines each time. Your suggestion for having a local attorney help with an initial draft is spot on.
    Terrell Murray from DelMarVa
    Replied 30 days ago
    Amazing article Andrew, it's good to see the screening process explained. To anyone- I would like to rent homes to more elderly people, it seems like this would be a form of discrimination. Are their legal ways to rent to an age group without breaking the law?
    Joanna Benz from Las Vegas, NV
    Replied 17 days ago
    I believe you have the right to designate any property you own as "senior housing."
    Katie Rogers from Santa Barbara, California
    Replied 29 days ago
    "The prospect should make at least three times the rent in monthly income" People keep saying this, but it turns the traditional rational for the guidance on its head. Landlords need to consider the typical income of their tenant pool. When underwriting property, if it won't cash flow at about one-third to one-fourth of the typical tenant income, then the numbers do not work.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 28 days ago
    The very next paragraph basically says that more or less. But underwriting what tenants can afford is somewhat redundant with underwriting the market rent in the area. Because if they can't afford any of the other rents, in the area, basic economics would push market rent down across the board. From my experience at least, the only markets this dynamic changes in any noteworthy way are the really expensive ones where that multiple can fall to 2.5 or occasionally 2, which I note in the article.
    Katie Rogers from Santa Barbara, California
    Replied 29 days ago
    I am so glad most landlords I dealt with when I was a tenant did require I had been at my job for a year. In nearly every case, when I moved , I was moving to a new community for a new job. If they are moving for a new job, requiring a double deposit is not feasible for them If you do hold a double deposit, I would hope you would return it with interest when the tenant leaves.
    Dave Rav from Summerville, SC
    Replied 25 days ago
    Unfortunately, these kind of scenarios exist when applying for things of this nature. Ever apply for a mortgage? There are myriad terms and conditions requiring satisfying. If the prospects fails to satisfy, they are either 1) subject to less-optimal terms or 2) denied the loan. Failing to meet criteria can (NOT to be construed as "it always will") subject the creditor/institution/landlord to increased risk. With this risk, comes some sort of cost or consequence for the applicant
    Katie Rogers from Santa Barbara, California
    Replied 20 days ago
    A mortgage is not a good comparison. It is a much, much larger financial obligation than rent. In fact, a mortgage is functionally closer to a 30-year lease, not a one-year or month-to-month lease.
    Drew Sygit Property Manager from Birmingham, MI
    Replied 27 days ago
    Ask for a bank statement to see if any NSF's and if applicant has a pattern of savings or is living paycheck-to-paycheck:)
    Katie Rogers from Santa Barbara, California
    Replied 27 days ago
    I might submit a bank statement, but I would redact the account number, the Social Security number if it's on the statement, and possibly other personal information. When I was a tenant, I NEVER gave my SSN to a landlord. Also if a tenant submitted a checking account statement, a landlord would have no idea whether they have a separate savings account in another bank. In addition, a bank statement is not going help much if the prospective tenant is an international student or a visiting professor. They might not even have a US-based bank account.
    Dave Rav from Summerville, SC
    Replied 25 days ago
    Andrew, you just prompted me to put in WRITING a screening policy! Thank you. Prior to this, I had a rather scant set of criteria. Now my policy is robust! (I'd been putting this off)
    Chiquita Kramer
    Replied 19 days ago
    is it necessary for a guest to have a back ground check if that person visits 4 -5 hours at a time