Over the past few weeks I have been discussing tenant screening. I have noted that tenant screening is perhaps the most important thing a landlord can do, and discussed some of the do’s and don’ts of tenant screening. In this article, I would like to put it all together and describe the tenant application and selection process.
Download Your FREE guide to evicting a tenant!
We hope you never have to evict a tenant, but know it’s always wise to prepare for the worst. Navigating the legal and financial considerations of an eviction can be tricky, even for the most experienced landlords. Lucky for you, the experts at BiggerPockets have put together a FREE Guide to Evicting Tenants so you can protect your property and investments.
Selecting Your Tenants
It all begins with the first point of contact. The first contact is the time you need to start the pre-screening process. First, make note of how your potential tenant sounds and acts. Are they rude or are they courteous? Are they abrupt or engaging? If they are rude you can guess where they go on the selection pile.
Second, begin reading your script about the properties you have available and your screening questions. Ask them:
- Is this property what you were looking for?
- Is this property in your price range?
- When are you looking to move?
- How many adults will be living with you?
- Do you have any pets? What kind?
- Are you available after work for a showing?
With just those six questions I will have found out if they can afford the property, if they are moving when the property is available, the number of adults and pets and if they have a job. Depending on their answers, you can disqualify some right away. Others may be ready for the next step where you can set up a showing.
At the showing, the screening process continues. Do they show up on time? Is their car full of junk? Do they have food dripping down the front of their shirt? You want people who are neat, clean and can keep an appointment to visit your properties, otherwise your rent will likely be late and your apartment will end up trashed.
The Tenant Application
If the showing goes well, the time comes for the formal application process. What should you ask for on your application? Here is what our application process requires:
- Name, DOB, SS#, Current Address, Phone # and e-mail.
- Addresses for the previous 3 years, w/contact info.
- Current employer(s) contact info.
- Info on any other income source.
- Info on previous bankruptcy filings.
- Info on previous eviction filings.
- Info on previous criminal charges (except minor traffic violations).
- What animals they own.
- What vehicles they own along with their tag number.
- We ask if they have ever broken a lease and if so why?
- We ask if they have checking and savings accounts.
- We ask for credit references.
- We ask for emergency contact information.
Once we have the completed application and application fee ($25 per adult) in hand, we process the application. We begin by pulling their credit report and criminal history. We first compare the information on these reports with the information presented on the application. If we find major discrepancies, such as an unreported bankruptcy or burglary conviction, they are done. If we find minor discrepancies we realize people make mistakes and/or forget things so we may try to verify in other ways.
Ranking the Tenant Applicants
If everything checks out, we begin to rank the applicants according to our written standards. Some of our written standards include:
- Does the applicant make 3 times the amount of the monthly rent payment?
- Do they have 3 or more good years of rental references?
- Have they had an eviction?
- Have they filed bankruptcy or been foreclosed on in the last 5 years?
- What is their credit score? How many accounts are in collection or how many accounts are 30, 60 and 90 days past due?
- Is there a criminal record?
- Are their pets on our approved pet list?
- Were they neat, clean, prompt and courteous?
Each applicant then gets ranked according to each standard. For example, if the applicant makes three times the rental amount that might be a +3 in their favor, if they have decent credit score with 2 accounts over 30 days past due that may only be a +1 in their favor, if they have a recent bankruptcy that would be -3. If they have a recent eviction, that would equal instant disqualification.
What we are trying to get to is the highest ranking applicant for our property based upon our rental criteria. We are trying to find people who can pay the rent, will pay the rent, will pay on time and will not cause trouble or destroy the place. Sometimes someone may be right on the cusp of qualifying but may not make it due to lack of rental history, for example. In that case we may take a co-signer, but we apply the same standards to the co-signer as well.
So there you have it. A tenant screening and selection process designed to rank applicants on the basis of their ability to meet our standards while avoiding items which may be considered illegal discrimination.
Does it work all the time? No, it does not. Unforeseen things happen like job loss or illness that no one can predict. Id does work most of the time and it has really cut down on the headaches and made the life of this landlord much easier.
Screen Your Tenants Fast & Easy with BiggerPockets SmartMove – No Approval Process. No Applications. No Minimums. For independent landlords. Begin screening in minutes. Credit, criminal, fraud checks.
Photo: K D