​ Property Management: The What And How Of Tenant Screening

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Property Management: The What And How Of Tenant Screening

When owning property that you plan to rent, it is essential that you obtain quality tenants that will be responsible with your property, and the only way to do that is to do tenant screening. Other than renting to people you know (which I don’t recommend), how else will you know if the tenants will be responsible, pay rent on time, take care of your property and won’t be a nuisance to the neighbors?

The best way to ensure that you obtain high quality tenants is to perform tenant screening. The first step is to have a prospective tenant fill out an application which will provide you with their social security numbers, birthdates, past rental history, credit history, job information and references. Once the application is filled out, you can submit that information to a tenant screening service (there are many available out there, Experian® is a good one) and they will run all of the data through their systems. You would still have to check references.

I usually run a back ground check, a credit report, an eviction report, a criminal report, sex offender check and a terrorist check (just to make sure we are all safe). This much information will unveil much of what I need to know to make a decision on whether someone will be a good tenant or not. There are a couple of other things that you need to check as well: one, you want to check with current and previous landlords to see if rent was paid on time, if the property was clean, if there were neighbor complaints or has the police been called. Did the prospective tenant follow the rules? And two, I always call the immediate supervisor to see how happy they are with the performance of our applicant and confirm employment dates.

Most investors that I speak with always focus on the score of the credit report, and yes, it is a good indicator of the prospective tenant overall performance, I delve into the details. What details you might ask? Well, I look at utility bills, such as car insurance, gas company, electric company, telephone and see how consistent they are with those payments. To me, reviewing utility payments tells me how my rent will be paid. If people are always on time with their utility payments, then my rent will be paid on time, if there are issues with regular utility payments, then I know, I’ll have issues with rent payments as well. Delving into the depth of a credit report will unveil much more information on your prospective tenant. Take the time to review the report line by line. From my experience, the actual credit score won’t give you as much information about people’s payment habits as the details of a credit report. Medical debt and college loans will reduce the credit score substantially of an otherwise good prospective tenant. Don’t just judge on the credit score number, look inside and analyze the report. You’ll be surprised what you find.

I briefly touched on previous landlords earlier, and want to discuss this in more detail as it is also important to screen a tenant for their behavior in their last residence. As you are looking for a tenant that is responsible and pays on time, but you are also looking for a tenant that does not annoy neighbors, cause problems in the neighborhood, keeps your property clean and maintains the property. This takes a screening of their character and habits, which is best gained by checking with previous landlords and asking lots of questions. I use a standardized worksheet with questions that I ask of all previous landlords and my last question always is: Would you rent to this tenant again? If the answer is anything but an enthusiastic “Yes”, then keep on looking.

And last, but not least, is to have all your screening standards clearly stated prior to opening the rental property for applications. You can be as strict as you like, without infringing on illegal selection criteria. These criterions can be found on the fair housing website for you state by performing a simple internet search. In Georgia, fair housing law can be found athttp://www.dca.state.ga.us/housing/homeownership/programs/downloads/FairHousingBrochure.pdf. The main issues are to not discriminate based on sex, religion, race, marital status, or income source.

As long as your criterion for selection are consistent and applied to all prospective renters, you should have no trouble selecting the tenant that had the best qualifications and made you feel the most comfortable. Remember that you have the final say in who resides in your property, but the selection process should be fair and nondiscriminatory. By following these screening techniques, you should feel assured that you have a reliable tenant that will pay their rent on time, take care of your rental property and won’t be a nuisance to the neighbors.

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Marina Shlomov, a managing partner at ALH|Podland Rental Homes Property Management is the author of many articles on Landlording, Property Management, Rental Tips and Rental Home Decorating. As an investor herself, Marina structured the rental property management services to be “For Investors” and “By Investors”. In her spare time, Marina likes to spend time with her family, friends, garden, read and travel. Check her out at www.alhpodland.com in the About Us/Meet the Team section.