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Finding The Right Tenant: The Importance Of Tenant Screening

Screening potential tenants is your opportunity to separate the renters that will pay their rent on time and take care of your home from the ones that could leave you with costly damages and unpaid rents. While nothing is guaranteed, a thorough screening process is an effective way to ensure that you find the best tenant for your home.

1. Setting up screening criteria

The most important step in the screening process is to establish your rental criteria. Local, state and federal laws will dictate what you can and cannot ask for and it’s important to know these laws inside and out and to apply the same criteria consistently to every applicant. This will keep you out of legal hot water that can cost you a lot of money should you be found in violation. Properly established rental criteria will protect you when you need to prove why someone was denied and will serve as a checklist to vet tenants against.

2. The Application

The application is your opportunity to collect the data you will need to vet the potential tenants. Sample applications can be found online and range in the information that is required. At the minimum, you should collect an application from every adult living in the home. The application should include:

  • Full Legal Name, Date of Birth and Social Security number- for background and credit checks
  • Current and Previous Employers- to verify they will have income to pay the monthly rent
  • Past Residences- if they are coming from another rental you will want to get a reference from the current landlord
  • Pet Information- the number, size and ages of all pets will help you determine the potential for pet damages
  • An Emergency Contact- someone you can call if the tenant goes MIA

Your application should be signed by the tenant acknowledging that the information is true and authorizing you to perform credit and background checks.

3. Credit and Background Checks

Tenant screening services available will often run the credit and background checks simultaneously as part of their services. Pulling an applicant’s credit will usually give you a pretty quick idea as to their qualifications and should be your first step. If you find a payment history full of delinquencies or maxed out lines of credit, the tenant may struggle to pay the rent each month. A background check will turn up any past criminal records, evictions, bankruptcies, and other public records. These reports will give you a pretty clear picture of the viability of the tenant for your home.

4. Verifying Income Details

You want to make sure your new tenant has a steady stream of income to be able to afford their obligations. Also, does their employment history show them bouncing from job to job in a short period of time? Some tenant screening resources will instruct you to require a monthly income of 3 times the rental rate. At Eaton Realty, we require a debt to income ratio of 50% or less, including the rent. We want to make sure our tenants will still be able to pay their rent when life gets unexpected.

5. Residence History

The background check you completed at the beginning of the process should have flagged any evictions on the applicant’s record. However, you want to make sure you find the perfect tenant which means going one step further. Completing a rental verification of the tenant’s previous landlords can give you insights into the tenant’s rental behavior. Did they consistently pay the rent late? Did they sneak a dog in that barked all night long and destroyed the carpet? Maybe their home required excessive cleaning and painting that used all of their security deposit. None of these would show up on the background check unless court papers were filed. This is your chance to delve deeper into your applicant’s history to ensure you don’t miss anything.

6. Approval and Onboarding

Once you’ve thoroughly screened the applicant and feel confident in your decision to approve them, it’s time to get the security deposit. It’s important that you do not stop marketing your home until the prospective tenant has been locked in. This means the deposit has been paid and a lease agreement has been signed. You do not want them changing their minds after you’ve turned down other applications or taken your home off the market. Make sure you’ve set the appropriate expectations for the tenant regarding their responsibilities for utilities and payments prior to move in day.

Congratulations! If you’ve thoroughly completed the tenant screening process, you should be able to look forward to a successful landlord/tenant relationship.

The tenant screening process can not only be overwhelming but can cost you a significant amount of time, money and headache if not done correctly. At Eaton Realty, our property management team has years of education and experience vetting tenants. We’re here to take that responsibility off your shoulders. Contact us today to get started.

 

 

 

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