tenant screening question

13 Replies

Seems like best practice is to go with the first qualified tenant who is ready and able to put the money down and sign the lease.

I would not necessarily change the lease terms, though.

I just prefer multi-year tenants for the obvious reasons.  I've always had tenants in this property that have been willing to sign multi-year leases for small rent concessions, but I'm turning the property over currently and have a feeling there will be high interest from qualified applicants and not all will want a lease for more than one year.

Hello @Steven Anderson . I would avoid choosing your tenants this way. You may be exposing yourself to an unnecessary risk of litigation depending on landlord/tenant law in your state.

I understand the logic in getting as many applicants, then screening them all and choosing the best from among the bunch. However, this practice is not fair to the prospects that you end up turning down. It's best to only screen one applicant at a time, and accept the first one that meets your screening criteria.

Consider how your prospects will feel when they are charged an application fee, then denied tenancy even though they meet your criteria. Also if you're getting a credit report, the inquiry will adversely affect their credit score, since a tenant screening report is a hard hit to credit. You'll end up with a lot of disgruntled applicants by continuing to screen this way. 

Since it sounds like the damage is done at this point, I suggest accepting the first person that applied and met your criteria. Next time, address your leasing terms before screening, so your applicants can decide whether or not they want to apply. Feel free to contact me directly for more support with this matter.

@Alex Hamilton you make absolutely fair points. To be clear I have yet to do what I was suggesting above but my current tenant just gave notice and I think the interest in the property will be high BUT perhaps less interested in multiyear leases as has been the case in the past.  The only three tenants I've had were just as you and @Sarnen Steinbarth suggested. They were the first to apply, qualify and pay the deposit. However, I offered a rent concession to sign a multiyear lease. NOW, I think the appetite for a multiyear lease may less so I was thinking of approaching things differently. The points you make clearly suggest the suggested approach inappropriate. Seems I can either make the multiyear lease an initial requirement for qualification or I can continue to offer a rent confession for signing a longer term lease. 

i appreciate the candid feedback. 

Originally posted by @Steven Anderson :

Quick question. If you screen multiple applicants and they all qualify do you tell the applicants you will give a lease to whomever is willing to sign a multi year lease?

Hello Steven,

This is a great question! I have been in this situation before. You get a couple of tenants and they all fit what you are looking for, but you only have one unit! 

Unfortunately, I do not recommend trying to "sweeten" the deal by convincing them to stay longer. Probably the best way to do it, would be to really look at everyone's background/credit and see who is the BEST fit. 

You'll probably want the applicant who has the best ability to pay the rent on time. However, if they are all exactly the same, you might want to see who can move in the soonest. It would be great to get them in ASAP so whomever can move in the fastest and pay their security deposit might be the best fit.

To be honest, if they are all way to similar to tell the difference try to reevaluate their employment/credit. You'll have to be particular and see who will ultimately be the BEST to pay their bills and are hopefully a good tenant.

Please let me know if you have any questions, I do see this all of the time.

What's the real advantage to you in a multiyear lease?  The tenant get's a lock down on rent increases.  You lose some flexibility in case you decide to sell.   You may have someone who irritates or hassles you over little things that you may wish to leave. I've never had a tenant stay only one year, but I also do not allow multiyear leases to new tenant's.  After they've been there a year and I know how they are, I may present a multiyear lease in lieu of a rent increase or reduced increase in rent.

@Steven Anderson I'm glad you asked this question here on BP and hope others can benefit from it too. A lot of landlords don't consider application/screening procedures until after they've made a compliance violation.

There's certainly nothing wrong with offering rent concessions for a longer term lease. Perhaps you can make the concession VERY attractive in comparison to your monthly/yearly lease option. I suggest disclosing your terms before the application process.

Also, don't hesitate to accept multiple applications at once. You don't want to limit your options. Just be careful with your procedures once you order the tenant screening report. You can always refund the screening fee if another applicant qualifies first, but you can't "un-order" their credit report.

Good luck with this rental!

Originally posted by @Alex Hamilton :

@Steven Anderson I'm glad you asked this question here on BP and hope others can benefit from it too. A lot of landlords don't consider application/screening procedures until after they've made a compliance violation.

There's certainly nothing wrong with offering rent concessions for a longer term lease. Perhaps you can make the concession VERY attractive in comparison to your monthly/yearly lease option. I suggest disclosing your terms before the application process.

Also, don't hesitate to accept multiple applications at once. You don't want to limit your options. Just be careful with your procedures once you order the tenant screening report. You can always refund the screening fee if another applicant qualifies first, but you can't "un-order" their credit report.

Good luck with this rental!

Alex makes a great point! You should always accept multiple applications. I've had people call me the DAY OF the lease signing to say they changed their mind. Sometimes you never know what other people have going on in their lives. 

I hope this helped!

Keep in mind not all screening reports (credit reports) are a hard-hit that affects a tenant's credit.

Ours, for example, does not affect the tenant's credit score in anyway.  Soft-hit or "pushing" credit vs. "pulling" credit is becoming more popular, in part for this exact reason.

@Steven Anderson

@Alex Hamilton

@Mike S. you make valid points. The property in question is the the burbs of Houston and rent increases are slow. The market doesn't move that much from my POV. I, personally, don't care for the process of turning over my properties and I like to minimize vacancy. This property is also not very convenient for me to get to. That being said, as you suggest, you can always renew or enter into a multi year lease after the initial lease once the tenants have been validated as strong tenants. You at least have the option to not renew once the initial lease is up. 

If I go that route, I would probably approach the tenants at the 6 month mark and discuss amending/extending the lease at that point. 

Again, appreciate the feedback and perspectives from everyone. 

If you are looking for a tenant who will sign a multi-year lease I suggest you state that in your ad.  If that is not stated, then you get several qualified applicants and you suddenly introduce new criteria and choose base on that, you might be subject to litigation. 

Yes @Sarnen Steinbarth , there are some consumer initiated options for "soft pull" credit reports available through the credit bureaus. They require the applicant to setup an account and order their own report, then inviting the end user to view their report online.

In my opinion, you're better off getting information directly from the source or having a Consumer Reporting Agency obtain it for you. Get credit reports from the credit bureaus, criminal and public records from the courts and verify application information with employers/landlords.

Besides, an applicant is either qualified for your rental unit or they're not. They shouldn't have to compete with other renters for a place to live. They would have to wait for ALL their "better qualified counterparts" to obtain residency if that were the case. You'll also end up getting a lot of people changing their mind for a different rental the DAY OF lease signing as @Tom Ott pointed out. The entire purpose of a "hard pull" credit report is to discourage consumers from applying at multiple places at a time. Tenant screening is done this way for good reason.

Speaking of litigation @Fred Dray , I'm sure choosing tenants by pitting them against each other in a bidding war for your rental sounds like a sure fire way to land yourself in court!

Lastly, I agree with @Mike S. regarding the original question in this thread. Since the rental market and economy are so unpredictable at this time, you may end up regretting what seems like a great idea - the long term lease.