Screening A Good Tenant In 3 Easy Steps
1 – Face to Face meetingIt is an absolute must that you meet the tenant in person either when they are visiting the property or shortly after. By doing so, you will be able to determine what kind of tenant he/she will be and how they will take care of your investment. During that meeting, you must ask them about the following items:
Current living situation and reason for moving out:
Why are they moving out of their current rental? Does the story make sense? I.E. is the owner selling? Is the house not in good repair?
Length of new lease
How long do they plan to live into your property? I find that good tenants are coming to either:
- Stay 1-2 years until they save enough to buy a house
- Stay 1-2 years until they are done with school and/or fix their credit by paying less rent
- Stay long term if they are under full government assistance such as HOC/Voucher or Section 8 (For more info, please read our blog: 3 Steps To Screening A Section 8 Tenant).
When do they want to move into your property? Does their quick move-in reason matches the reason for their move out? Does the story make sense?
2 -Application FormsThe time it takes the applicant to return the filled out application and all supporting documents is especially crucial in determining the type of tenant they will be.
Filled out applications with all supporting documents should be submitted within 24-48hrs of the application being sent to them. When a prospect provides you with multiple excuses for not being able to provide you with all application information within that time frame, it should warn you that this is not a priority for them and your rent payment will probably also not be a priority for them.
It is an absolute must that a tenant provide the following information:
- Filled out application with EVERYONE over the age of 18 listed even if they sleep there once in a while
- Two months of paystubs especially for hourly workers
- Two months of bank statements to confirm that the pay stubs statements match what gets deposited in their bank account. Most especially, they need to provide the statement account where the rent and deposit amounts will come from. If they have a negative bank account(s), I would not consider that application unless they have a good explanation for it. Two months of negative bank statements is an automatic denial.
3 -Tenant ScreeningFull screening from TransUnion Smart move or similar screening: They will provide the following mandatory information
Credit Score & Social Security match:
A low credit score does not mean you have a bad tenant but the full report will show you how responsible the tenant is. If they have medical and student loans, those are acceptable debts. If they have too many credit cards or collections or phone/utilities unpaid bills, that could be a red flag.
Nationwide criminal background:
Getting the criminal records nationwide will allow you to make sure your tenant will not come with unnecessary drama. All our leases have an addendum not allowing individuals with probation to be on the premises- this allows for less issues with the police being called in down the line.
Nationwide eviction records:
This will allow for any previous negligence on the tenants part to be found out. It will speak to the character of the tenant and confirm the “feeling of honesty” you got from the tenant during the face-to-face meeting.
Not totally accurate but helpful in confirming the credibility and honesty of the tenant.
We Can All Agree That…
We can all agree that screening a tenant is the most crucial step in protecting your investment. This process does not have to be complicated, it just needs to be done the right way. In our Baltimore market, we get a lot of applications, and using those 3 steps has always provided us with quality tenants.
Remember, a good tenant is worth waiting for over one that is too eager to come in and either damages your property or costs you money to evict.