Properly screening your rental applicants to find qualified, reliable tenants is one of the most critical steps you will take as a landlord or rental property manager—and choosing reputable tenant screening services ensures you won’t make rookie mistakes. In fact, prioritizing strong screening practices is one of the best ways to maximize real estate profitability.
Good tenants mean on-schedule rent payments, less chance of property damage, and fewer lease agreement violations. Bad tenants can reduce your profits and be extremely difficult to remove once they’ve signed a lease and moved in.
Find the right tenants and avoid potential discrimination issues by educating yourself on federal, local, and state fair housing laws. In addition, create an official set of screening criteria that you apply equally to all applicants. Developing this will streamline your application process by weeding out potential tenants who do not meet your minimum criteria. It also minimizes the chances of a discrimination claim, as this process removes your subjective opinion.
Types of Tenant Screening Reports
Tenant screening reports should be used to discover potential tenants’ financial responsibility and rental history. These reports are usually accessed online and processed with information from the tenant’s rental application.
- Credit reporting: Reviewing tenants’ credit history, FICO scores, and debt obligations will give you a good idea of their financial responsibility and ability to pay rent on time, every time. Poor credit can be a red flag, especially if their debt payment history is spotty. (However, there may be unusual circumstances indicated in the credit report.)
- Criminal reporting: Criminal background checks can be tricky, because there’s always a chance someone with the same name as your applicant has been convicted of something. Landlords can legally deny an applicant based on a criminal record if the past crime relates to a lack of respect for property or safety of other individuals. But be cautious—the Fair Housing Act prevents landlords from setting a blanket policy to deny all applicants with a criminal record.
- Eviction reporting: Many tenant screening services or credit reports include an eviction report. However, be sure to verify rental history and references. Evictions are complicated and time-consuming—and they put you at risk of losing rental income.
What to Look for in a Tenant Screening Service
Before you can confidently screen tenants, you’ll need to select a tenant screening service provider that fits your needs. The most essential considerations when researching services are customer service, speed, and quality of data.
- Customer support: Choose a reliable service that cares about your needs and offers open, two-way communication. A provider with well-trained staff to support and educate you is essential.
- Speed: High-quality, in-depth screening reports ensure you know prospective tenants well. However, a long screening process means you might miss out on qualified applicants who applied elsewhere.
- Quality of data: Most importantly, the data from your provider need to be accurate. Look for tenant screening providers who get their credit reports from a reputable credit bureau and use high-quality background check and eviction history sources.
- Tenant-friendliness: Some tenant screening services require you to type in your prospective tenant’s personal information, such as their social security number and any previous addresses. You may not mind this extra step—but if you do, look for a service that allows potential renters to enter all their information themselves.
Make sure you choose a service with a screening package that suits your needs.
Related: How to Run a Tenant Background Check
Best Tenant Screening Services
The BiggerPockets forums provide a wealth of information about everything from local markets to screening how-tos—and if you’re trying to decide between screening services, there’s no better source. Here are our readers’ top picks.
A favorite of digital-native landlords, Cozy offers a full suite of rental management services. Accept rent, market your properties, and track expenses in-app. Our readers are fond of their speedy screening services: “I use Cozy, and am very happy with it,” says Dawn P., a landlord from Sumter, SC. “I had a lady apply Saturday afternoon, I got notification from Cozy a couple hours later—clean credit and background check. She signed the lease and moved in this week.”
MySmartMove specializes in tenant screening. (Parent company TransUnion knows a thing or two about credit scores.) No need for you to enter all the tenant’s information. The app pings them and ask them to complete the process themselves. “I like that the applicant pays them directly so I don’t handle any money,” says Ankeny, IA, investor Anthony Wick.
National Tenant Network
The National Tenant Network (NTN) provides a full suite of tenant screening services, including public records searches, eviction records, credit reports, and criminal history checks. It even lets landlords be a little sneaky—which can be essential when rental turnarounds are tight. “What I like about NTN is that once you accept a tenant, you report it to NTN and they monitor that person for you,” says Tomasz Banas from Brick, NJ. “So, if a tenant is looking for a new place and you don’t even know about it, you would receive a notification that he or she is getting a credit check for the purpose of renting a new place, as long as the new place is also using NTN.”
Like Cozy, Tellus provides a full suite of property management tools—it even lets you submit work orders for your properties. Its free tenant screening provides a broad overview of each applicant’s financial status and background. Investor Thomas Hayworth is particularly fond of their efficient customer service, which is “on the ball,” he says. “I get responses to my questions super fast. A friend of mine (fellow landlord) uses a different [property management] software and has to wait a few days sometimes before his questions are answered. He might be making the switch soon.”
RentPrep offers credit check, background check, and screening services for a low price. Jacksonville, FL, investor Perez Leanne says she “highly recommend[s] RentPrep for tenant screening. They run criminal/eviction checks and call landlord and employer references.”
While this fully-featured service may be overkill for newbie investors, seasoned landlords love Buildium because it handles almost every aspect of large-scale property management. Just be willing to put in the time to learn, even with their basic package. “They constantly come up with ways to better the program,” says Dawn Brenenger, a real estate broker in Raleigh, NC. “It’s not perfect, but I don’t really have any complaints other than my own inability to figure out all the details.”
Like Buildium, this mega-app targets larger landlords—and it can definitely be pricey. But if you’re ready to scale, AppFolio offers an unparalleled suite of tools. “Everything just seemed ‘tight,’ from the website, to the generated ads for places like craigslist, to the backend,” says Kansas City investor Austin Freuchting. “It was the cleanest program top-to-bottom IMO when I was searching. The people that bought my business continue to use it to this day.”
None of these options suit your style? Your real estate agent may recommend a boutique local service that offers more customization.
?Related: How to Run a Tenant Credit Check??
Renter Screening Mistakes
Once you’ve started screening tenants, ensure your process remains consistent and effective. Here are some of the most common tenant screening mistakes:
- Not screening every single tenant: Some property managers choose to only screen applicants they’re skeptical about. You can’t judge a book by its cover, so make sure you screen every promising applicant. A blanket screening policy also protects against discrimination claims.
- Starting the screening process too late: Start the screening process as soon as you have an interested tenant. Otherwise, you risk an unoccupied unit and higher vacancy rates. Unoccupied units are the biggest income killer.
- Ignoring subtle red flags: Sure, a history of multiple evictions or a lengthy criminal record are big red flags, but there are other minor warning signs. Did the tenant complain about the rental application process or complete the process incorrectly? Are their past landlord references verifiable? Have they had more than three addresses in the last three years?
Tenant screening is a necessary part of being a landlord, so find a system that works for you.
Are there any valuable methods of screening applicants I failed to mention above?
Add them in the comment section below.