Finding quality tenants is one of the most important tasks that a landlord must do. The quality of tenants can have a significant impact on the success of a rental property.
Here are some tips for finding quality tenants:
The Importance of a Quality Listing
Before you even get to the screening part of the process of finding a quality tenant, you need to make sure to attract the right tenants in the first place.
To do that, you need to make sure you do the following:
- Create a high-quality listing (we just published a podcast on this very topic)
- List your rental where your potential tenants are searching (apartments.com, Rentler, etc.)
- Highlight benefits of the property location (e.g. downtown, near parks, quality schools, etc.)
- Pets? Deposits? Utilities? Smoking Policy?
- Detail the touring and application process.
The Importance of a Customized Application
When potential tenants are going to apply to your rental, you must have an application that every applicant fills out. To avoid any Fair Housing issues, the application should be the same for every tenant that applies for your rental property.
In most cases, the application that tenants fill out should have some standard information that each applicant needs to provide:
- Contact Information
- Date of Birth
- Drivers License #
- Expected Move-in Date
Aside from the basic information, you may need more information to help financially pre-qualify the tenant. Information such as:
- Monthly/Annual Income
- Employment History
- Proof of Current Employment/Income
Then you’ll want to make sure that the tenant has a positive rental history. In order to do that, you’ll probably want to get the following information:
- 5 Years of Prior Addresses
- Property Manager Contact Info (past two years)
- Monthly Rates of Previous Rental(s)
Now that you have all of the core information needed to pre-screen the applicants, you can proceed with the screening process.
The Importance of Pre-Qualifying Applicants with Rental Criteria
Prior to accepting applications, it’s essential that you have Rental Criteria that are well defined as part of either the listing itself or on the application. Wherever you publish it, it needs to be early on – before the prospect gets too far into the process of expressing interest in your rental property.
Ideally, it should be on the rental listing so that you don’t even waste the time of unqualified prospective tenants by touring a property that they won’t be able to qualify for.
The exception may be if you manage other rental properties that you may have available for those tenants who do not meet the requirements of the rental they originally expressed interest in.
Wherever it is published, the criteria need to be explicit about what will (or will not) be accepted.
Some things you will likely want to cover on your applicant criteria may include:
- Monthly Income Requirements
- Felony / Misdemeanor Requirements
- Eviction / Rental History Requirements
- Credit Score Requirements
Making sure that your application criteria are obvious will help to weed out any potentially unqualified tenants. It will save you and the applicant time, hassle, and money because they won’t fill out a pointless application for a rental they won’t get approved for.
The Importance of a Consistent Screening Process
After you have prequalified your prospective tenants, now you need to screen them. And, similar to the application, every screening should be done the same way, every single time.
There should also be defined criteria for what determines if someone is approved or not. That criteria should be strictly adhered to since any contradictory denials or approvals could land you in hot Fair Housing water.
For example: You decline one applicant because they had a misdemeanor in the past 2 years, but then you approve another applicant who also had a misdemeanor in the past 2 years.
Here are some of the things you should take into consideration when screening a potential tenant:
- Check employment history.
A landlord should always check employment history before renting to a potential tenant. This will help ensure that the tenant has stable employment and can afford the rent payments each month.
- Check criminal records.
A landlord should always check criminal records before renting to a potential tenant. This will help to ensure that the tenant has no criminal record and will not pose a threat to other tenants or the property itself.
- Check rental history.
A landlord should always check rental history before renting to a potential tenant. This will help to ensure that the tenant has not had any problems paying rent in the past and will be able to pay rent on time in the future as well.
- Check credit scores.
A landlord should always check credit scores before renting to a potential tenant. This will help to ensure that the tenant has good credit and can afford the rent payments each month without having problems with late payments or other issues related to paying rent on time each month.
Once you have attracted the right prospective tenants, pre-qualified them early on, and then screened them to ensure they meet all of the criteria for your rental property, you’ll want to move the process along quickly to get a lease signed and finalized.
List > Pre-Qualify > Tour > Screen > Approve > E-Sign.
The quicker the process, the better. Even a high-quality tenant who’s been approved may want to back out of a rental at the last minute for any number of reasons.
It is not uncommon for that to happen.
And it’s especially painful when you have gone through a lengthy touring, screening, and approval process, ultimately taking the rental off the market and informing all other interested parties that the rental is no longer available.
And if there is no signed lease... you are out of luck.