A Landlord’s Guide: How to Screen Tenants to Avoid Problem Renters
Landlords rely on collecting the rent every month to keep their businesses in the black. Tenants who don’t pay the rent hurt monthly cash flows, and continued missed payments can force the landlord to start a lengthy and expensive foreclosure process. Unscrupulous tenants may also damage or even steal from the property.
How can landlords safeguard themselves, their properties, and their bottom line from this risk? The solution is simple: They need to carefully screen tenants to ensure they only rent to responsible, high-quality renter prospects.
This guide takes you through the critical steps of how to screen tenants and gives you tips on how to avoid common pitfalls along the way — all with the goal of helping you become a better landlord.
Why Landlords Need to Screen Tenants
Landlords provide tenants with extremely valuable assets in exchange for the promise of monthly payments. Your tenant gives you a month’s rent and a deposit before moving in, but in exchange, you hand them the keys to a home or apartment that is likely to be worth hundreds of thousands of dollars, if not more. You need to ensure you’re protected in this transaction.
A rental arrangement should ideally be a win-win for everyone — your tenants pay you rent, and in exchange, they get the use of your property.
Unfortunately, the process is not always this streamlined, and unqualified tenants can cause a host of problems, such as:
Financial Losses
Tenants who don’t pay the rent reduce your cash flow. That may leave you unable to cover the mortgage payment or may face personal financial issues.
Property Damage
Renting to irresponsible people who throw wild parties, punch holes in the walls, ruin carpets, or potentially even cause structural damage can lead to significant financial losses.
Upset Neighbors
Loud, dirty, disrespectful tenants also upset neighbors. That can force you to deal with a barrage of complaint calls or hurt your reputation as a property owner.
Quality tenants should not burden you with any of these issues. To protect your properties and your budget, you need to understand how to screen tenants effectively.
How To Screen Tenants
You need to find the best tenants possible when trying to fill a vacancy, but that’s easier said than done. You want someone who is going to pay the rent, take care of the property, and respect the neighbors. Following these steps will help you find these kinds of high-quality prospects:
1. Set minimum requirements for your tenants
Take some time to think about your ideal tenants. You want renters who can afford the property and have a proven track record of paying their bills on time.
You may want to define a minimum credit score, require a certain income level, ban smokers or pet owners, or create other requirements.
2. Establish an application process
Decide on an application process that is based on those minimum requirements. What do you want to know about your tenants? Draft an application form requesting the key details you need.
3. Do a background check
Not everyone is going to be completely honest on their application, unfortunately, and to get a clearer picture of potential tenants, you need to do a background check to look for criminal activity or other red flags.
4. Run a credit check
A credit check will show you how responsible prospective tenants are about paying their bills, and this information can be critical to your decision.
5. Contact previous landlords
A lot of information doesn’t appear on reports from the major credit bureaus, but talking to previous landlords can help to fill in the gaps. Try to make sure you’re talking to legitimate landlords — unscrupulous applicants often give out phone numbers of friends who will lie for them.
6. Contact employers
Contact your applicants’ employers to check on income levels. They can verify employment status and help reassure you that the tenant can afford the rent.
7. Invest in a tenant screening platform
Taking care of all these steps on your own can be expensive and time-consuming. Consider streamlining the process with tenant screening software to save time and money. High-quality screening software allows you to send electronic applications to tenants and run background and credit checks from a single application.
Requiring applicants to submit to a stringent screening process will help you identify the best tenants and reduce the risk of financial losses, property damage, and lawsuits. The result will be a property that is more peaceful, more profitable, and less stressful for the landlord.
Common Mistakes With Tenant Screening
An unscreened tenant may move out without notice, turn off the heat, and let your pipes burst. They may allow their pets to damage your property. They may refuse to pay the rent and force you into a months-long foreclosure process.
A screening process can help you avoid these risks, but you need to ensure you don’t make any of these common mistakes when deciding how to undertake it:
- Forgetting to ask for a photo ID
- Not requiring an application
- Failing to verify the information on the application
- Not verifying the identity of previous landlords
- Allowing people with low credit scores or violent records to slip through the screening process
- Not investing in tools to help
The right tools can help you avoid these common pitfalls in the screening process, and they can make it easier to identify the best tenants for your rentals. Think of selecting tenants as if you’re hiring an employee or bringing a new person into the family.
You need to make your choice carefully so you don’t get damaged by poor work habits or toxic behavior down the road.
Contact an Expert to Optimize Your Tenant Screening Process
If you are ready to eliminate the risk of low-quality tenants and want to protect your properties and your bottom line, then Rent Safe may be the solution for you. Our platform enables you to easily create a tenant application and screening process.
Your applicants can add co-signers, share references, upload documents, and more, and the customized dashboard provides convenient access to all the information you need. To learn more, contact us today.
Frequently Asked Questions About How to Screen Tenants
Why is tenant screening important for landlords?
Tenant screening is crucial to avoid financial losses, property damage, and conflicts with neighbors by selecting responsible tenants who pay rent on time and maintain the property.
What are the essential steps in the tenant screening process?
Essential steps include setting minimum requirements, establishing an application process, conducting background and credit checks, contacting previous landlords and employers, and using tenant screening software.
What common mistakes should landlords avoid during tenant screening?
Common mistakes include not asking for a photo ID, not verifying applications, and overlooking low credit scores or criminal records.
How can tenant screening software benefit landlords?
Tenant screening software streamlines the process by allowing electronic applications and centralized background and credit checks, making the screening more efficient.
Why is it important to verify the information provided by applicants?
Verifying information ensures the accuracy and reliability of the tenant’s application, preventing issues related to false or misleading details.
