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May 27, 2024

What is Tenant Screening?

Daniel Berlind
CEO

Welcome to the thrilling world of tenant screening! Okay, maybe it’s not exactly thrilling, but trust us, it’s a vital step in the journey of being a savvy property manager. A good screening process can not only make your systems run smoother but can get you more great tenants in less time. Who wouldn’t want that?

In this blog, we’ll dive into the realm of tenant screening and why it’s absolutely crucial for the success and sanity of your rental business. Get ready to learn the basics of what tenant screening is and how to go about doing it, as well as some services that are available to make your life easier. Let’s jump in!

What is Tenant Screening?

Looking for the perfect tenant? You’ll need a robust tenant screening process! Tenant screening allows landlords and property managers to gather crucial information about potential renters before signing on the dotted line. It involves gathering information and conducting various checks to determine an applicant’s suitability as a tenant.

A good screening process should include a range of reports, including background checks, credit checks, employment verification, rental history verification, and reference checks. The goal is to gather a complete picture of the applicant’s background, financial stability, rental track record, and overall reliability.

By screening your tenants thoroughly, you can reduce the risk of bad tenants and select those who are responsible, trustworthy, and a good fit for your rental property. With this critical tool, both landlords and tenants can enjoy a positive rental experience.

Why is Tenant Screening Important?

Tenant screening is an essential component of being a responsible property manager. Without proper tenant screening, you run the risk of encountering numerous issues that can wreak havoc on your property and financial stability.

Non-payment of rent, property damage, lease violations, and disruptive behavior are just a few of the potential nightmares you could face. Tenant screening acts as your trusty shield, protecting you from potential disasters and helping you find tenants who are the cream of the crop. Tenant screening is not just a box to check; it is a critical process that safeguards your investment and contributes to the long-term success of your rental business.

Elements of a Good Tenant Screening Process

So, what does a good tenant screening process look like? While the specifics may vary depending on the property and the landlord’s preferences, there are a few key elements that should always be included. And remember, your screening process should be the same for each and every tenant to avoid fair housing violations.

Application Form

A comprehensive application form should be provided to all prospective tenants. This will help you gather basic information like employment history, income, references, and other relevant details all in one place. Think of it like a mini-resume, but instead of applying to a job, they’re applying to your property!

Credit Check

A credit report is one of the best ways to gauge the financial stability of the applicant. It reveals their credit score, outstanding debts, payment patterns, and any previous delinquencies or bankruptcies. A positive credit history demonstrates a track record of successfully managing financial commitments and decisions.

Credit checks also help gauge an applicant’s likelihood of consistently paying rent on time, something that is of the utmost importance to property managers. A history of late or missed payments could be a red flag, indicating potential challenges on the horizon.

Background Checks

The primary reason for conducting a background check is to ensure the safety and security of your property and other tenants. A background check helps identify any criminal records, including convictions or history of violent behavior, theft, or drug-related offenses.

When reviewing the background check, it’s important to remember that the goal is to keep your property and tenants safe from legitimate harm. Review your local and state laws prior to implementing this step, as some states do not allow criminal history to be used in a screening process.

Income Verification

You don’t want to end up renting to someone who can’t afford to pay the rent, leaving you high and dry. Income verification helps landlords ensure that their tenants have a steady, reliable income and are able to afford the monthly rent.

Property managers should request proof of income in the form of pay stubs, bank statements, or other financial documentation to ensure that the applicant has a steady flow of cash coming in.

Rental History

Reviewing an applicant’s rental history helps assure you that the tenant you’re selecting is a good one. How long have they been a renter? Do they have an eviction history? What do their previous landlords have to say about them? Give them a call and ask a few questions about their tenancy. This can help you get an idea of whether or not they pay rent consistently, are a nuisance to neighbors, or have had problems with previous landlords.

Fraud Detection

While you may have heard of credit checks and income verification, not every property manager has been enlightened about the dangers of rental application fraud. We are living in the digital age and as a result, tenants have figured out how to alter their application documents in order to secure the property they want. A simple text edit can increase their salary from $50,000/year to $150,000. We most commonly see these document alterations on bank statements and pay stubs.

But why does this matter? Well, if undetected, it could mean you have a high-risk tenant in your property. This tenant may have issues paying their rent consistently, which increases your chances of having to evict them. Evictions are a nightmare for property managers that should be prevented at all costs.

Preventing this is as easy as implementing fraud detection software like Snappt. Our data-driven software is designed to catch these fake documents before they make it through your screening process, saving you time, money, and future headaches. To learn more, schedule a free demo or check out our website!

Adhering to Fair Housing Laws

If you’re a property manager, you likely know about fair housing laws. These federal laws are in place to protect tenants from discrimination in the housing industry. This can include discrimination on the basis of:

  • Race
  • Color
  • National Origin
  • Religion
  • Sex
  • Familial status (including children under the age of 18 living with parents or legal custodians, pregnant women, and people securing custody of children under 18)
  • Disability

This is extremely important when it comes to your tenant screening process. Fair housing prevents managers from refusing to rent to families, students, people requiring wheelchairs, etc. In addition to these national laws, make sure you review state and local laws, too. Some areas may have additional protections, such as gender identity and sexuality.

Tenant Screening Do’s and Don’ts

When it comes to tenant screening, there are a few important do’s and don’ts to keep in mind. Here are a few key ones:

Do:

  • Follow all fair housing regulations and avoid any discriminatory practices.
  • Use a consistent screening process for all applicants to ensure fairness.
  • Verify all information provided by the applicant to ensure accuracy.
  • Consult with an attorney if you’re unsure about any aspects of the process.

Don’t:

  • Use social media or other informal sources to gather information about an applicant.
  • Ask inappropriate or illegal questions during the screening process.
  • Base your decision solely on one factor like credit score or employment status.
  • Rush the screening process or skip important steps in an effort to fill a vacancy quickly.

To Sum Up…

By following these guidelines, developing a thorough screening process, and adhering to fair housing laws, property managers can protect their investment and ensure that they’re selecting responsible tenants who will take care of their property and pay their rent on time.

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