If you have a property that you’re preparing to list for rent, then your friends and family have probably started to tell you horror stories of how things can go wrong with tenants.
I’m not sure why people will have such a strong desire to tell you the downsides of owning rental property, when the upsides of it are absolutely enormous.
These upsides include consistent cash flow in the form of monthly rent, paydown of your mortgage by tenants, price appreciation of your property over time, and powerful tax deductions along the way.
However, to make owning rental property a positive experience, you are going to need to find responsible and qualified tenants. This way you can avoid inconsistent rent checks, messy cleanups, and damage to your home.
So how do you properly vet and screen tenants for your rental property?
The Tenant Screening Process
When you create a rigorous screening process to ensure that tenants are well matched for your property, you can improve their satisfaction while minimizing your own risk.
Continue reading to learn exactly how to vet and screen tenants.
1. Check their Credit Score
When a prospective tenant applies to rent your property, one of the first things you will want to do is check their credit score.
To collect this information, you will need their permission. Usually, the easiest way to access it is to use a tenant screening service, such as MyRental.com or MySmartMove.com, for example. For a small fee, these services will let your tenant release their credit score, criminal history, and eviction history for your review.
Another easy way to access these metrics is to list your property for rent on Zillow.com. Zillow is a popular rental listing platform used by many landlords.
When a prospective tenant submits an application for your property through Zillow, you will be sent a comprehensive application that includes their credit score, criminal history, income history, and rental history.
This will give you a good idea of their financial responsibility and whether or not they have been reliable in the past.
2. Pull their Criminal History
If you use of the websites suggested above, then you’ll already have received your applicant’s criminal history.
Because you are responsible for actions conducted within your property, it is important for you to know about your applicant’s past. In many cases, it is fine for an applicant to have a criminal history, particularly if the offenses were nonviolent, happened a long time ago, or were the result of a difficult separation.
However, if there are serious items that come up on the criminal history report, you will want to talk to your applicant to better understand what caused them.
3. Check their Eviction Record
Next, you will want to check your applicant’s eviction record. As mentioned, when you use a tenant screening service, you will automatically receive information on whether your prospective tenant has ever had an eviction.
You will also get info about your applicant’s eviction record when you run a credit check. This is because an eviction is a legal proceeding, which means that it will appear in the public records section of your applicant’s credit report.
Finally, you can screen for past evictions by searching online court records by state. In the state of Virginia, this is the website to use to search for past evictions. If you live in a different state, simply search for the term “court records for evictions” and your state name.
Again, it is acceptable to rent to tenants that have past evictions, but understandably, you will want to clarify how your applicant’s financial and personal situation has changed since that time.
4. Verify their Employment
When a tenant applies, it is critical to verify their employment status. The first way to do this is to collect at least two months of paystubs to verify their income.
You can also call your applicant’s employer. When you speak to their employer, you will want to confirm their employment status, length of employment, and salary.
While it is less common, some tenants will prefer to submit their bank statements as proof of income. If your prospective tenant wishes to do this, remember to ask them to redact sensitive information, such as their account number.
Finally, if your prospective tenant is preparing to start a new job, you will need to acquire proof that the job has been secured, such as an offer letter or contract of employment, for example.
5. Talk to Past Landlords
Next, you will want to speak with your applicant’s past landlords.
When you reach them, ask whether your applicant regularly paid rent on time, how they treated the property, and if they had any conflicts with other tenants or neighbors.
You can also ask if they honored the terms of the lease and what condition the property was left in when they moved out.
Inquire into whether they would rent to your applicant again. If past landlords have positive things to say, that’s a good sign that the tenant will likely be a fit for your property.
However, if the references say negative things or raise red flags, you may want to be cautious.
6. Call Their References
Most rental applications will collect contact information for an applicant’s current employer, two recent landlords, and one or two personal references. As mentioned, the best way to check these references is to call them.
After you talk to their previous landlords to understand what it was like to have them as tenants, you will want to call their personal references.
Remember that your prospective tenant got to choose these references, so they should say extremely positive things.
If doing any of this makes you nervous, you don’t have to do it yourself. Instead, you can hire property management company to do it for you. These professionals can handle the entire tenant screening process on your behalf.
7. Talk to Your Prospective Tenant
The final step in the tenant screening process is to talk to your applicant.
Questions you might want to ask include:
- How long have you been with your current employer?
- Is the rent similar to what you have paid in the past?
- Do you have any other debts or financial obligations?
- Do you have any pets that will be living with you?
- Why are you leaving your current home or rental situation?
By asking these questions, you will be able to evaluate whether or not a potential tenant is a good fit for the property under consideration.
Screen Tenants the Easy Way
Congratulations! You have successfully learned how to properly vet and screen tenants for your rental property. Keep in mind the importance of using various tools to verify a tenant’s identity, income, and rental history.
Did you find this article helpful? Check out the real estate section of this blog for more content like this.