Columbus, OH · Member since 2017 · 101 posts · 56 votes
I am a newbie investor that is getting my first taste of property management as well. I purchased a duplex in February with inherited tenants and so far they have worked out well. However, I've recently gotten the opportunity to purchase a 20 unit apartment complex on a land contract from a family member.
My question is, what is the best way to screen tenant applications? I was told to look into Fabco, and after reviewing the site I'm going to call them to make sure I even meet the requirements to obtain credit reports and qualify for a membership. I would like to be able to view tenants credit, rental, and criminal history if possible. Although, the property is in a C area, so I'm not sure if I'll be able to focus on credit scores all that much.
Anyhow, I would love to hear any experience you all have with tenant screening and the application process. Has anyone on here had good or bad results using Fabco? Is there another method that would be more efficient? Any advice or feedback would be greatly appreciated. Thank you!
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
9y
I don't have experience with Fabco, but have plenty of experience with C class rentals.
We have found that lower income applicants cannot make a web based screening option work. We use old fashioned paper applications and scant hose on to our screening companies. Some require their application, which I supplement with additional pages, or some allow any format. The applicants either don't have e-mail or don't have the technical abilities to navigate the site and instructions.
We have also found that a credit score is not at all important for the majority of our applicants. Many of our applicants and tenants do not even have bank accounts. Their credit is poor or non-existent. I want the credit report to see what addresses they have lived at (looking of undeclared addresses) and what outstanding debt they have (collections and/or unpaid utilities). For that we can use a credit fitness score rather then the actual credit score, which reduces the hoops we have to jump through.
See if your state or local rental association offers screening services, or check this site out: https://aaascreening.com/
We have a point system to rate all incoming applications. Based on initial scoring they are denied, continue tot he next round, or get put in a holding pattern (slow/no progress, wait and see). This helps us focus on the highest potential and not invest time and money to screen everyone.
Columbus, OH · Member since 2017 · 101 posts · 56 votes
9y
Michele Fischer I'm definitely going to look into my local rental association, and I'm going to call aaa screening tomorrow to learn more about their service. Thank you for your help! I love the idea of a point system. Is that a system that you created yourself?
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
9y
I did. I'm happy to share it with anyone who provides me an e-mail address. I built it and refined it over the first few years by looking back on applications for good and bad tenants to look for clues that I could have seen earlier.
Real Estate Consultant · Joppa, MD · Member since 2015 · 218 posts · 178 votes
9y
Great advice here. There are also quite a few free tenant screening services that you can use if you don't have a large number of units. I am not sure if I can post the sites so just Google "free tenant screening".
I would add that you should ALWAYS verify previous landlord references and don't forget that they could actually just be friends or family members so you should always run the address through your state's real property data search just to make sure the owner of the property matches the name they gave as their landlord.
@Jeff G. "Jerk is not a protected class"!!! I love it! Thanks for the afternoon laugh!
Real Estate Agent · Pasadena, CA · Member since 2015 · 476 posts · 263 votes
9y
Hello :)
checking credit is important:
1. Credit check:
FREE : credit karma.com
2. Credit check:
not free: have the prospective tenant pay for it: my smart move.com (you have to create an account: and then they usually pay 45$ for their credit report).
. Check for high credit card debt
. high DTI (debt to income) ratios: say they get paid $5k a month but their credit card debt, bills, and car are close to $3500 or $4k (then it will be difficult to make rent.... )
3. references:
ask for 3 references and then ask for 1 to 2 more references from everyone of the 3 you call. (this way the tenant won't know and have control over the 2nd and 3rd level references.
4. Employer references:
call their current employer : and their previous one or two employers: you could even go there or call someone random there: and ask if they know the tenant (again so that they don't have control over who you call).
5. Landlords:
Call their previous landlords: (really call them) don't just get their info and not call them...
6. bank accounts: check for low balances or high balances for that matter (which would be a good thing).
7. What do they do: teacher? nurse ? bar tender? police officer ? doctor? (some are cyclical and some are more stable than others and more in demand in case they lose their job): some landlords only like jobs in the medical field etc.
8. Make sure to do your home work! (you worked very hard to get here and now you are not going to protect your asset???? don't be that person...
9. Consult with an eviction professional now: not once you needed... and prepare yourself for the worst : hopefully you won't need it.
10. Learn the laws that protect you as a landlord and the ones that protect the tenant: also know how to properly give notices: to view the place: and then incase they are moving out.
being prepared + knowledge + action = cash flow :)
Real Estate Agent · Pasadena, CA · Member since 2015 · 476 posts · 263 votes
9y
** also something I saw someone doing that seemed to be very smart was:
once you accept someone: either
1: collect deposit (2 months) first and last month of rent (in case you have to evict them: you have enough for the 60 day notice etc) check with local officials to see if feasible in your area.
2: if they cannot afford the above:
then get 1st and last: 1 month deposit: and say the rent is 1200$ a month: then let them know that the rent will be $1300 for the first year: where they accumulate $100 a month in a side fund: and their rent will go down at month 13 to $1200 and if they choose to leave and give proper notice: they will get back their $1200 (accumulated thus far).
Columbus, OH · Member since 2017 · 101 posts · 56 votes
9y
@Laticia Braxton Jeff G. Sebastian Marroquin thank you all for the great advice! This thread has been extremely helpful so far!
Jeff G. I actually read your tip about looking at the condition of a tenant's car in the Bigger Pockets Book on Managing Rental Properties as well. It's a great idea that I would have never thought of. Thank you.
@Laticia I'll definitely Google some free options and check them out. I've heard lots of stories about tenants using family members as landlord references. I'll certainly be cautious of that.
@Sebastian Thank you for the detailed list of helpful tips. I'll definitely be implementing some of them in the near future once I start screening tenants.
Jacksonville, FL · Member since 2015 · 17 posts · 9 votes
9y
I have been using for several years and highly recommend RentPrep for tenant screening. They run criminal/eviction checks and call landlord and employer references. From a property management standpoint, I also recommend you require tenants to get renter's insurance and name you as "insured/interested party" to the policy. I also require tenants to pay via cozy.co (it's free for you to set up and free for them to pay) so I don't have to deal with collecting rent from tenants in person or dealing with rent being lost in the mail. Finally, use an attorney for evictions. They can get the process started and finalized much quicker than if you tried to do it on your own. Good luck.
Columbus, OH · Member since 2017 · 101 posts · 56 votes
9y
Perez Leanne I've actually just created an account with RentPrep and I plan on using them for tenant screening. I had never heard of cozy.co but I'm definitely going to look into it. I have an attorney lined up for evictions. I work full time, so handling evictions myself isn't an option, I understand that an attorney will be much more efficient anyhow. Thank you for the recommendations!
Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
9y
@Joshua Biondi, you have received some great tips here. Some of the tips will not work in every area. I would love to get 3 months of rent and security deposit, but I doubt very many of my tenants could ever do that. I have never gone deeper than calling all the past landlords, I ask questions that only landlords tend to know the answers to. How many units they manage, vacancy rate, cost of turnover etc. I verify the time that they lived there. I also call and verify employment. I have actually had one or two try to fake that. I require income of 3 X the rent as well. Another thing is don't get desperate. After a unit has been vacant awhile you tend to start lowering your standards. That can be bad, it is usually better to leave a unit empty than get a bad tenant so beware of that. Try to find a niche if you can, like a local business like a hospital, or teachers etc. Concentrate on word of mouth there. For awhile I was getting a lot of school teachers. Anyway good luck.
I don't have experience with Fabco, but have plenty of experience with C class rentals.
We have found that lower income applicants cannot make a web based screening option work. We use old fashioned paper applications and scant hose on to our screening companies. Some require their application, which I supplement with additional pages, or some allow any format. The applicants either don't have e-mail or don't have the technical abilities to navigate the site and instructions.
We have also found that a credit score is not at all important for the majority of our applicants. Many of our applicants and tenants do not even have bank accounts. Their credit is poor or non-existent. I want the credit report to see what addresses they have lived at (looking of undeclared addresses) and what outstanding debt they have (collections and/or unpaid utilities). For that we can use a credit fitness score rather then the actual credit score, which reduces the hoops we have to jump through.
See if your state or local rental association offers screening services, or check this site out: https://aaascreening.com/
We have a point system to rate all incoming applications. Based on initial scoring they are denied, continue tot he next round, or get put in a holding pattern (slow/no progress, wait and see). This helps us focus on the highest potential and not invest time and money to screen everyone.
Could you explain your scoring system, I'd be interested in hearing more about that.
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
9y
I just sent you the details, but basically we ask for more info on the application and use that info to do a first evaluation by granting or removing points on positive and negative attributes. Only the highest scoring applications get the most energy to vet the data, and we have a one page objective documentation of why we chose who we did.
Rental Property Investor · Seattle, WA · Member since 2013 · 2k+ posts · 1k+ votes
9y
@Account Closed I would never rent to an applicant who listed a PO Box as a previous address. If this practice took off it could make it more difficult to find prior landlords and use the addresses on the credit report as a tool. Interesting issue, thanks for bringing it up. I've had applicants refuse to provide a SSN due to identity theft issues; I told him I could not move forward without it. Identity theft is a real issue, but it also is a red flag that an applicant may be a fussy tenant.
Real Estate Agent · Central Fl / Tampa Lakeland / Orlando · Member since 2016 · 12 posts · 3 votes
8y
I just checked out RentPrep. Is it really all that? The video on there home page was entertaining... but didn't really give me a confident feeling. Maybe I'm just old school. Looking for something that is more professional. ... I had been using Tenacheck... but they don't provide a Credit Check any more. Instead, they re-direct you to a company called ApplyConnect. Anyone know anything about these guys?
Investor · Atlanta, GA · Member since 2013 · 3k+ posts · 3k+ votes
8y
I use smartMove. If you look at the 'tools' section at the top on Bigger Pocket, you can set up an account from there and then the check is only $ 35 for the potential tenant.
I always look for the pt's facebook account. Have caught more than 1 gangbanger applying, who had pictures with guns and gangsigns on FB.
I also google 'name' , 'Atlanta', 'arrest' and see what comes up
I also just google name and 'Atlanta'. I also look at google images and see if pics of them show up as mugshots.
You'd be amazed what you can find.
May not be such a big deal in A and B areas, but for C and D tenants, you want to see, if they've been arrested for drug dealing or prostitution or whatever.
Real Estate Agent · Central Fl / Tampa Lakeland / Orlando · Member since 2016 · 12 posts · 3 votes
8y
Thank you Michaela ... and Matt! ... I really need to jump on Bigger Pockets more often. It’s great to hear back from others so quickly with the same interests ... and likely much smarty than me!
I will check out smartMove. Thanks! Also appriciate the tip about FB. In the past... I’ve casually checked out tenants on FB... more just out of courisity... but not really before singing them up. I haven’t really had a ‘nightmare’ tenant yet... so I’m probably not as careful as I should be. I have found, however, that credit scores REALLY line up with the quality of a tenant.
Matt... I see you’re from Wallnut Creek. I use to drive by Wallnut Creek every day on my commute from Antioch to Alameda. Brought back some good memories. I know that area of the country is pricey... nothing compared to my town of Lakeland in FL. I’ll make doing just a standard google search part of my selection criteria, too.
Investor · Atlanta, GA · Member since 2014 · 389 posts · 250 votes
8y
I have found, since the "for rent" listings are now syndicated to several other sites (Zillow/Postlets syndicates to Trulia, Hotpads and maybe one other), that I get TONS of knee-jerk contacts where the person just clicks a button and sends the canned "I'm interested, when can I come see it, please call me" message, or a phone call from someone who clearly hasn't read (or doesn't remember) the entire listing with the rent amount, qualifications, or bothered to figure out exactly where the house is. So my first line of screening is a standard email reply with ALL that information all over again, plus a request to drive by the property (with directions) to make sure the commute, the neighborhood, etc agree with them. For phone calls, I use a Google voice number with a similar recorded message. Only after a drive by, or if they convince me that they know the street and neighborhood already, I'll contact them personally to make an appointment. I don't want to waste my time or theirs if they know before seeing the inside it's too far from work, or they are scared of the neighborhood.
In conversation with potential applicants, I use language like "I want renters who will be a positive addition to the neighborhood," and "credit history isn't necessarily a deal-breaker, but a prior eviction definitely is." I self-manage (by choice) and part of my advantage is that I'm a pretty good, fair, firm landlord, so tenants who respect that, want to rent from me.
I also use SmartMove, letting the applicant pay the $35 fee for credit and criminal check. If they're not that interested or get cold feet, they stop right there and I can then move on. Like Michaela, I investigate the heck out of them online -- on they on FB? Who are their friends on FB? What kinds of things do they post? Arrests? Other online presence? In the markets I'm in (relatively close to where I live, in neighborhoods I would have lived in were I just starting out now), I tend to find some connection somewhere -- relatives I know, friends of former students, school connections. I also call prior landlords, non-related references and verify employment/income.
Since I've followed this process, I've had very good luck with my choices. It helps that the areas have become more desirable and the rental market has gotten stronger, so I can't take all the credit, but I do know that I'm much better at screening than I was 15 years ago!
Real Estate Agent · Central Fl / Tampa Lakeland / Orlando · Member since 2016 · 12 posts · 3 votes
8y
Thank you Anna. We use Google voice, too. That has really helped on the calls. I like the idea of always sending a standard email reply... with all the information again ... like NO PETs really does mean we don't allow pets. Ha! Thanks again!
I have been using for several years and highly recommend RentPrep for tenant screening. They run criminal/eviction checks and call landlord and employer references. From a property management standpoint, I also recommend you require tenants to get renter's insurance and name you as "insured/interested party" to the policy. I also require tenants to pay via cozy.co (it's free for you to set up and free for them to pay) so I don't have to deal with collecting rent from tenants in person or dealing with rent being lost in the mail. Finally, use an attorney for evictions. They can get the process started and finalized much quicker than if you tried to do it on your own. Good luck.
When they use cozy.co, since it takes 5 days for the money to arrive, are you notified when it's on it's way? Does it allow late fees to be 50 after the 1st day, 10 additional after each additional day, etc?