Renter Screening Criteria

[Raveendra Singh]

Hi, 
What is your criteria for tenant screening. My property is multifamily home and its in an average/good service class neighborhood. High rental demand. I am looking to firm up my documented criteria. 


Credit of 620+ (unpaid rent, open judgements form previous landlords, bankruptcy in past 2 yrs  ,)
3X income - If all other is good, with a cosigner may go up to 2.75 
No Criminal record in past 7 yrs 
No eviction in past 5 yrs 
Rental History - Is 2 yrs min ? or should be more or less . Basic questions asked to previous landlords. 
Collections - rent related (Is utility a deal breaker , what else is a deal breaker) 

Income stability - Do you consider this ? 
Do you consider other items in screening?  Would you go back to the applicant asking to any information if they havent provided initially or make decisions based on provided once. . 

Thank you. 

R

[Drew Sygit]

Quote from @Raveendra Singh:

Hi, 
What is your criteria for tenant screening. My property is multifamily home and its in an average/good service class neighborhood. High rental demand. I am looking to firm up my documented criteria. 


Credit of 620+ (unpaid rent, open judgements form previous landlords, bankruptcy in past 2 yrs  ,)
3X income - If all other is good, with a cosigner may go up to 2.75 
No Criminal record in past 7 yrs 
No eviction in past 5 yrs 
Rental History - Is 2 yrs min ? or should be more or less . Basic questions asked to previous landlords. 
Collections - rent related (Is utility a deal breaker , what else is a deal breaker) 

Income stability - Do you consider this ? 
Do you consider other items in screening?  Would you go back to the applicant asking to any information if they havent provided initially or make decisions based on provided once. . 

Thank you. 

R

What Class if the neighborhood and your property?

Given you have set minimum of 620 score, leads me to guess you have Class B.

If so, no criminal in past 7 years is extreme (our opinion). Maybe go with 5.

What happens if bankruptcy & eviction tied together?

We always ask for minimum of 2-years residency history or minimum of last 2 landlords. Only exception is if same landlord for last 5 years. Reason: in our experience a landlord from more than 5 years ago won't remember the tenant or have records.
- Questions to ask landlords should be designed to catch fraud!
--- DO NOT ask them to just confirm info, "Can you confirm the tenant lived there for 12 months". Too easy for fraudster to just say "yes". 
--- Ask open-ended questions for them to state: how long there, rent amount, how many occupants, pets, any unpaid utility bills or damages.

The lower the credit score, the more important consistent work history is. So, we require 2-year work history and look for negative patterns. Job hopping isn't an issue unless very short work stays or large gaps between jobs.
- We also ask for last year's W-2(s) to confirm work history and income stability.

Regarding credit, credit scores can be misleading!!!!
many tenants are opening Chime accounts - these play games with a "fake" self-loan to generate positive trade line info. We ignore them.
- We look for at least 2 tradelines, active within the last 12 months, that have at least 24 months of reporting. Otherwise, we focus on rental & work history.

We also get a bank statement to minimize fake paystubs. Over 80% of employers now direct deposit into bank account. You can see last 4 digits of bank account on the paystub. 
- You can also see a lot of other info on a bank statement. We recently got a bank statement that showed the tenant betting over $5k monthly online. Are they going to gamble their rent away?