How do you screen prospective tenants?
Real Estate Agent · Minneapolis, MN · Member since 2008 · 193 posts · 7 votes
I thought I would throw out a topic for discussion....Tell me about the process that you go through to screen tenants.
I do everything MikeOH does except for #3 and #6
I don't do 3 because I'm not sure of the process in my local yet. I will be researching this soon though.
I don't do 6 because anyone they put down on their app is going to paint a rosey picture for them.
Things I do in addition.
I scope out their car to see how well it's maintained and how clean it is inside. (does it look like a mcdonalds dumpster and have bald tires?)
I check their current landlord and also their previous one. The previous one is more important. When I call I always say:
"Hi, I'm calling in regards to Jane Doe. She is interested in renting an apartment from me and put your name down on the application. How do you know Jane?"
You can tell immediately if the person is a fake because they will be stumbling to figure out what role they are supposed to be playing (are they the friend, former landlord, employer)
Forgetting a form for them to fill out is sometimes good to, it gives you an excuse to go to their current apartment to knock on the door and peer inside to see how their housekeeping skills are. Better to see it in someone else's apt than in your own.
-Michael
Does any LL's have Commercial property? I have 2 units in a mixed use building and 1 recently became available not really big surprise to me with this economic crisis mess. But I have found a potential Tenant and want to screen them properly. I have secured a deposit as of yesterday with them and we are scheduled to sign a lease tomorrow I am trying to lock this up fast because I do not want to loose them. My commercial rental application is pretty lame I found it on the Internet and will be revising it. I know I need the typical stuff - personal & business reference, copy of drivers license, present living address, credit report etc. but am I missing anything?
"Does any LL's have Commercial property? I have 2 units in a mixed use building and 1 recently became available not really big surprise to me with this economic crisis mess. But I have found a potential Tenant and want to screen them properly. I have secured a deposit as of yesterday with them and we are scheduled to sign a lease tomorrow I am trying to lock this up fast because I do not want to loose them. My commercial rental application is pretty lame I found it on the Internet and will be revising it. I know I need the typical stuff - personal & business reference, copy of drivers license, present living address, credit report etc. but am I missing anything?"
Get a Dun & Bradstreet report on them. It's kind of a credit report for businesses.
Also try to get a personal guarantee(s) along with the corporate guarantee. Get business credit references and past landlord references.
I haven't yet experienced renting a place my whole life, but can I share my views regarding this topic? Because sometime most of the problems that a landlord face in renting was the tenant monthly payment, most of the time the tenant did not pay their rent on time, so i suggest that you may want to check their credit background, their source of income, and their history on renting.
I am a property manager in Syracuse. Though I believe Syracuse is a great market to invest in, most of my tenants are lower- to middle-income folks. Although credit checks are useful, their usefulness is limited if you are dealing with low income tenants who 1) are on welfare, 2) have no credits or bank accounts.
What I do always check is 1) eviction history, which you can do as part of a credit check (or separately), and 2) take a detailed rental application that includes landlord references.
One thing that turns me off right away is if I see I tenant who moves around too much. I'm less considered with their credit.
Tony D'Anzica, Esq.
Coming from back to back eviction processes, I'm a lot stricter than I was in the past. Most of my rentals are $1300 and above. I can't afford to mis-calculate and end up in tenant divorce court.
Definately check criminal history. My last tenant looked good credit wise but her and her husband were 1st class con-artists with a history of fraud that didn't show up on a credit report. At the time I was only running an infile. I now run a three bureau and I've found a couple of places to run criminal background checks. I've made a commitment not to let it happen again.
I've learned that it's hard to predict the future but one should learn from the past. If a prospective tenant's overall profile is yelling, "DON'T RENT TO ME!!" from now on I'm gonna listen......lol
Check credit....., with today's market requiring a 680 for 95% Ltv on purchase money, there's plenty of individuals with decent credit needing to rent. Decent in my opinion is 580 and above with little or no recent derogs.
As for credit, how many trades and how established are the trade-lines? Look for recent lates and charge-offs. Recent derogatory information depending on the type, may mean that they are about to crash and burn.
If derogs are old, what are they? Are they luxury purchases or, are they medical, utilities and phone bills? Find out why. Get explainations.
Look for broken leases and public records tax liens, child support ect.... Don't rent to broken lease candidates or you'll be next. Calculate debt.
Check employment references for stability and income. One month most current in pay stubs. Two years employment minimum. Look at bank statements 3 months minimum. Ask for tax records 2 years.
Check rental history last two years minimum. How many lates? What type of reference do past landlords give? Another trick in the industry is called the hook-up. This is where they get someone to handle the rental verification for them with a false reference. To combat the hook-up, only accept rental verifications from a property management company with a business line that can be verified. If rental verification is from an individual....they must provide canceled checks or money order receipts.
Then like some of the other great posts have mentioned...it's that inner gut feeling stuff. Never make a decision to rent based on a good gut feeling alone, but always make the decision not to rent based on a bad gut feeling. (That quote is hot off the press from me, You heard it first.....lol)
1. Are they wanting to split rent and or deposit payments up before they even move in? Are they asking for special considerations? Are they changing the dates when they'll have "ALL", the money at the onset? Pass on these people!
2. Are they difficult to reach on the phone? Are you finding yourself always have to leave a message? And then waiting for them to call back. This is another warning sign to pass.
3. Do they seem to have a lot of drama in their life? Is it always someone else's fault? If it's a married couple, how's the balance of power? Is one over-bearing, is one oppressed?
***I've experienced an example where the wife was oppressed and committed suicide. Luckily it was in the home that they were moving from and not mine but, the lease had already been executed. The husband assured me that he would still be ok with the move and since he was the main source of income I proceeded with the rental. This ended up being an eviction*****
4. Do they re-schedule initial appointments?
5. Do they seem to make a lot of money and nothing to show for it. (drugs, alcohol, gambling, church). See how they respond to those topics.
***why did I include church? Because I've seen some churches literally drain people.
6. Why are they moving? Does their reason check out? Does it make sense. Do they need to move quick?
7. What are their long range housing plans? Can I sell them a house in the future?
To P NW:
Can I persuade you to post a copy of your criteria?
Could you maybe give some verbatim examples of your correspondence when citing the reasons to a tenant who was not qualified?
I have two MHs that I own and lease. Unfortunately, my last few tenants have been less than reputable, to say the least, even with rental application fees, background checks and higher rents. (Yes, they're older MHs, but they're freshly painted, repaired, and have newer appliances, and they're on private lots in a very quiet neighborhood. I also live right in the middle of both units. How stupid do you have to be to mess up with your landlord as your next-door neighbor?)
Anyhow, my question is this - who do you use for your background checks?
SB, so sorry, but my rental criteria is 5 pages long. That's a bit much to post on the forum.
For rejections, there is a standard letter issued by my credit report service. I mail that if the applicant is rejected for credit.
If they are rejected for any other reason, I simply tell them sorry, but I can't rent to them. I don't give them a reason. In my state, I am not legally obligated to give them a reason. However, I have a legal reason for everyone I reject and that is written on the application and the applications are all saved. That's in case they sue me or file a complaint with fair housing.
i love the check the car to see how clean the car is. That is a great quick check without going to there apartment to check how they live.
Here's how we do it.
1. Speak to them on the phone
2. Visit his present address and collect information from neighbours.
3. Speak to present owner about payment of rent and maintanance of property.
4. Employment Check (really working inthe given organisation) and salary details.
5. Reference Check
Kishore
[LINK REMOVED]
WOW, lots of good points, especially from Dick and Charles. I admit, I did not start reading this thread from page one! Just wanteed to mention;
I took a loan application 1003 and basically use the same underwriting and processing (verifications) as if it were a loan. An in file credit report is obtained not a mortgage report. It's done appropriately for a lease and they are not held to loan standards, but those issues are viewed.
I hate it when there is a no show and I drove to the units. I'd make an appointment and then tell them to call me 15 minutes before hand to confirm, that if they did not call, I would not be there, they can wait on me! And the comment about what they drive is very true, if the car is full of trash, the house will be too! Bill
For those who use a screening service like NTN, what criteria do you set on the credit part? I asked NTN for advice on this and didn't hear back from them.
I get the whole credit report and draw my own conclusions. My company makes comments, but I use the raw material to make my own decision.
Credit scores make no sense at all and I don't think they have any use in deciding whether to accept or reject. I want to see whom they pay and when. I want to see how much they borrow and how much they owe. I want to see how they act after a bankruptcy and what caused it in the first place.
Whatever an applicant tells you about their credit is 99% of the time a lie. Tenants don't even know what is on their own credit report and they certainly can't understand that their bad credit is because they don't pay their bills.
Let me tell you what nonsense the credit score is.
I have an excellent tenant who comes back as "No credit score, unable to score".
The man doesn't owe a penny to anyone and he has never made a late payment in his life. Rent is early and the house is decorator magazine spotless.
Another applicant with all sorts of problems and a recent bankruptcy also comes back "no credit score, unable to score". They look like they've never paid a bill in their life.
I've seen an applicant with 3 pages of collections come back with a 690. (huh?). I've seen applicants with no lates ever come back with a 620.
Granted, your applicant who comes back with an 800 is always going to have a good payment history. I've got 4 tenants right now with 800 scores and a couple more very close to it, so there are actually tenants out there with 800 scores.
An 800 score probably means they will pay the rent, but it doesn't mean they will take care of the house or be easy to get along with. It doesn't stop them from moving in relatives or getting a pit-bull.
Credit scores aren't much use as a screening tool.
Do you pros put use criteria like "must have at least 2 years verifiable rental history"?
I'm trying to avoid another situation like the one in my other thread (applicant's entire rental history consisted of living with parents). At the same time, I'm wondering if I could be ruling recent college grads out who could be good prospects, by having this rule. Thanks.
I've found this to be so true in the last few weeks. The ones who carry on about the security deposit and try to cut deals are the worst.
Lots of good stuff on here. I personally can spot a bad tenant on the phone easier than in person. The longer you get them to talk, the more accurate your guess will be. Almost all drug addicts have the same kind of giddy laugh.
Also, on my application requirement sheet, it includes not owing any money to either of the two rental companies in town. People that rent TV's and washing machines can't seem to pay their rent on time.
When I'm asked to take payments towards the security deposit, I tell them that's what family and friends are for. If they won't trust them to pay it back, then why should I?
I charge a fee if I have to pull a credit report but I allow them to pull their own for free. That alone stops most deadbeats. They can't seem to figure out how to do that on the internet.
When it;s time to evict, don't hesitate.
There is no such thing as a tenant moving out and giving you extra money. You are the only one that will lose money in this game, so cut your losses, smile and move on to the next
wonderful and glorious tenant.
College students or first time renters with no landlord references. First verify that. Then get a qualified co-signer with enough money to pay.
College students ae required to keep an acceptable grade point average. I won't take first year students, so GPA is verifiable.
I have it in my written criteria that parents are not accepted as landlord references, nor are by the week motels. If they claim to have only lved with parents, then they can be rejected for no landlord references.
I agree with Morency the biggest red flag for us is the rental of appliances. If they have to rent stuff like that you know they are not good with money.
What we do to avoid getting bad tenants is have a high finders fee for current tenants to help fill the spot. Tenants always want their friends near by and if the referral comes from a great tenant it is a good sign the referral is a good tenant too. Something like good people hang with good people.
For some of our properties we also try to get tenants that have some bad things on their application. Sometimes people have twisted pasts but have gotten over them and are looking to start over. So if we give them a chance while every other landlord in town said no we often get tons of respect from the tenant and they work hard not to screw it up. Now this is a tough game to play but we have had really great results when have taken the risk. It all depends on what the red flags are that you would be over looking.
Definately a comprehensive list here.
Use a good application
Personally verify employers, previous LL
Run credit & background check (they pay)
Use your *BETTER JUDGEMENT*
Don't be blind to the telltale signs of trouble tenants. Difficult to get ahold of, late or no-show, suspicious behavior, trashy looks, trashy car (interior), eager to move in today, throwing money in your face, absurd requests (i want to put my camper in the front yard).
You get the drift. I put in serious effort for my first rentals. My very first tenant was prompt & to the point, she asked all the right questions and was courteous & non-intrusive. The only reason I know she is still living there is by the rent check in my mailbox every month. She lives 2 floors up from me.
This is the area you do not want to skimp on.
I always try to meet them in person and ask them some good questions to understand them as best I can as a person. In other words, do they seem honest and trustworthy, do you feel they would take care of the place, do they seem the type to keep a steady job? This will give me a 'gut' feeling about someone.
And on top of that, you'll of course want to phone references if you feel its needed and you'll definitely want to do a background & credit check. For as little as a $20 fee which might take less than 20 minutes, its definitely worth the piece of mind to know and may help reveal any inconsistencies with what you spoke about when you met with them.
The link below has a couple resources for services that offer this:
http://www.charlotterealestateloop.com/landlords.php?catid=24#TBCC
You'll also want to verify employment or at least their deposit history through their checking acct. Always better to spend more time up front with your decision on whom to rent to than to end up with a year long problem (or more).