How do Property Management Companies Screen Tenants?

[Heath Sizick]

Here is another post to help those considering professional property management. 

No landlord wants a bad tenant, but not all screening processes are equal. Applicants often hide things that would disqualify them, so it’s crucial to understand how thoroughly a company screens tenants. The process can vary, and one eviction shows just how important it is. Get a sense of the protection their screening process offers by asking these questions:

Will they "hold" a property for a tenant, and take it off the market before a lease is signed? If so, do they charge a fee?

There should absolutely be a fee so that you are protected in the event that things fall through.

What systems do they have in place to protect against rental scams? Have they ever been duped by one?

Scams are becoming more widespread and more advanced. It’s not just foreign scammers, but local scammers who will copy your ad, break into your home, and show the unit so they can collect a "security deposit" and run. 

What methods do they use to screen tenants?

The more thorough the screening, the better. Former landlords should be contacted, income and employment verified, credit reports run, application details checked, personal references reached out to, and public records (like bankruptcy or eviction) searched. Each manager will have their own methods, so if they use a third-party service, ask who they use and why.

Which tenant qualifications are most important to them? Will they consider a tenant who meets their qualification is some areas but not in others?

Ideally, you want them bringing in people who are serious about their job or schooling. Remember that the less someone has to lose in life (money, family, career, reputation, personal pride), the less you can expect from them as a tenant. The eviction rate and tenant turnover rate on the properties they manage is a good indicator of how well they screen tenants.

Do they provide you with tenant information so you can approve or deny each tenant?

While it may seem like a good idea, it’s not. Tenant screening is a key responsibility of property management companies, and they should be experts in it. If you don’t trust them to handle this critical task, don’t hire them. Owner involvement increases the risk of discrimination, intentional or not, leading to potential fair housing violations and costly lawsuits. This creates significant liability for both you and the management company.

Other Potential and Miscellaneous questions to ask:

• What do they charge tenants for the application fee?
• Do they require each adult that will be renting to complete their own application?

Hope this helps. And as usual, other PM's - let me know what I missed.