Tenant screening is about managing risk.
From an investment standpoint, finding the right tenant is essential to maintaining the value of your property investment and ensuring a steady income. High-quality residents will pay rent on time and help take care of your property. Unqualified tenants will only cost you money and put your property and your profitability in danger.
So, tenant screening isn’t just about filling a vacancy, it’s about setting up the right conditions for a successful investment experience. A thorough tenant screening process can help property owners minimize risks, establish good landlord-tenant relationships, and maximize long-term returns.
Screening isn't as easy as it seems. Effective screening takes into account an applicant's credit history, rental history, and landlord references and ensures compliance with Fair Housing Laws and fair credit reporting standards.
We're providing some guidance for landlords and property owners who are unsure where to start with essential screening efforts. Here are some effective tenant screening strategies every landlord and real estate investor should know.
Define Your Rental Criteria Clearly
Before screening begins, it’s essential to outline the qualities that make up your ideal tenant. These rental criteria will ensure that the screening process is fair, objective, and consistent. Typically, rental criteria might include:
Steady Income. The income you’ll need depends on how much rent you’re charging. Industry best practices say to look for tenants whose monthly income is at least 2.5-3 times the rent.
Good Credit Rating. A credit report can shed light on financial responsibility and past payment habits. Look past the credit score. You want to be sure there aren’t any late payments on housing-related accounts like utility bills.
Positive Rental History. A reliable tenant will have a history of punctual rent payments and maintaining previous properties. Ask for landlord references on the application. Check for eviction histories. Look for any money that’s owed to former landlords or apartment communities.
Communicate these criteria clearly in your listing to attract qualified applicants and weed out those who don’t meet your expectations.
Pre-Screen Applicants
Before investing too much time in applications, use a bit of pre-screening intelligence gathering to decide whether this is a tenant likely to be approved for your property. During the showing process or even before that, you can filter out unqualified renters by asking questions such as:
What is your monthly income?
How many people will live in the property?
Do you have pets?
Have you been previously evicted or convicted of a crime?
This initial step helps identify applicants who align with your criteria and speeds up the screening process. It also saves potential applicants time and money. You don’t want them paying an application fee and working through the paperwork if they’ve been evicted twice in the last year or have no documented income.
Conduct a Comprehensive Background Check
Once you've shortlisted potential tenants and collected applications from those who believe they’re qualified, it's time to investigate their histories.
Credit Check
A credit report provides insights into an individual’s financial reliability, helping you gauge whether they can consistently pay rent. Look for on-time payment histories, a record of outstanding debts and whether they were paid, and pay attention to low credit utilization
Criminal Background Check
For safety and liability reasons, check applicants' criminal records. Follow all federal and state fair housing laws and only consider criminal records that directly affect their ability to be tenants.
Rental History
Contact previous landlords to verify the applicant’s rental history. Ask key questions such as:
Were rent payments made on time?
Was the property left in good condition?
Would you rent to them again?
Verify Income and Employment
Request proof of employment and income to confirm that they can comfortably afford the rent. This can include pay stubs, tax returns, or an offer letter from a new employer. Tax filings or bank statements can serve as verification if they're self-employed.
A Word about Applications
Get the applicant's written permission before running any background or credit checks. This ensures you comply with legal regulations, including the Fair Credit Reporting Act (FCRA). Transparency builds trust and sets the foundation for a healthy tenant-landlord relationship.
We always recommend that property owners charge an application fee. This not only covers the cost of background checks but also discourages uncommitted applicants. It’s a good practice to make the fee refundable in case the tenant does not meet the required criteria.
Tenant screening must comply with all applicable housing regulations to avoid discrimination claims. Under the Fair Housing Act, it’s illegal to deny housing based on race, color, religion, sex, national origin, familial status, or disability. Focus solely on financial readiness and tenant reliability.
Use a Comprehensive Lease Agreement
Once you’ve worked through the screening process, identified a qualified tenant, and approved the application, it’s time to have the lease agreement signed.
Don’t underestimate the role of an explicit, detailed lease agreement. Ensure that the lease outlines all expectations, terms, and conditions to eliminate future misunderstandings. This document should also spell out the consequences for non-compliance.
Leveraging Professional Property Management Services
It’s easy to feel overwhelmed by the screening process, even if you’ve been through it before.
Professional property management services can be a tremendous resource when it comes to screening tenants. We specialize in matching property owners with quality tenants, and you can count on us to handle everything from listing your property and screening tenants to executing a comprehensive lease agreement.
You don’t have to be an experienced rental property owner to know that effective tenant screening is non-negotiable. Following these strategies will attract reliable tenants who contribute positively to your investment. More importantly, you’ll protect your investment.
Let’s leave the tenant screening hassles behind. We’ll take care of it for you. Contact our team at EPOC Property Management.
