Once your rental property is ready for Tenants and listed for rent, your next task is knowing how to Screen & Select Qualified Applicants. This is one of the most important things that Landlords do! Good Tenants take care of your property, consistently pay rent on time, and don’t cause headaches for you or the neighbors.
Because of the importance of selecting good Tenants, it’s vital to make sure that you have thorough Tenant Screening procedures. Here are step-by-step instructions to ensure that your Tenant Selection Process is effective, fair, and legal.
How to Screen and Select Qualified Applicants
Step 1: Establish Selection Criteria
Before you can select a qualified Tenant, you need to set criteria to determine which Applicants are qualified. When doing this, it’s important to make sure that your criteria are objective and comply with all local, state, and federal fair housing acts.
To ensure that you comply with all fair housing laws, it’s important to do research before setting your selection criteria. You can review federal laws on HUD’s website and contact local attorneys if you need help researching local or state requirements.
The Federal Fair Housing Act prohibits Landlords from selecting or denying Applicants based on sex, familial status, national origin, color, race, religion, or disability. Some states and municipalities also consider age, marital status, sexual orientation, gender identity, political ideology, veteran status, and citizenship as protected classes that cannot be the basis of Tenant selection.
Once you’re familiar with fair housing laws, you’re ready to make a list of selection criteria. Some factors to consider including are:
- A minimum credit or ResidentScore
- A minimum income level or steady income
- A history of paying rent on time
- Having the security deposit and first month’s rent available
- No eviction history
- No dangerous criminal history
Each Landlord will need to come up with a set of qualifications for their rental unit. Just keep in mind that they need to be objective and applied equally to all Applicants.
Step 2: Pre-Screen Applicants
Once you have criteria for determining if an Applicant is qualified, you’re ready to start moving forward with the screening process. To make the process as efficient as possible for you and Applicants, starting with some informal pre-screening is helpful.
You do this by sharing some basic Tenant qualifications to ensure that Applicants are a good fit for the property and vice versa. Here are a few ideas of things that you can share before starting a formal screening:
- Pet Policy
- Smoking Policy
- Occupancy limits
- Security deposit amount
- Minimum Lease term
- Requirements for paying the security deposit and first month’s rent at Lease signing
Communicating this information with potential Applicants serves as an informal pre-screening to ensure that you only move forward with serious Applicants that can meet some of your basic tenancy requirements.
Step 3: Send a Rental Application
For individuals that are still interested after the pre-screening phase, it’s time to have them complete a Rental Application. The Rental Application collects key information from an Applicant, including:
- Full name & date of birth
- Current Address & prior addresses for the past 5 years
- Current & prior Landlords’ names and contact information
- Employment status
- Proposed occupants & proposed pets
- Authorizations to run necessary background & screening reports
- Credit card & debt information
Step 4: Run Screening Reports
A big part of Tenant Screening is collecting the necessary information and reports to make an informed decision about Applicants. Once your Applicant has completed a Rental Application, you should have the necessary authorizations to run key reports, including:
- Credit Report;
- Credit Score or Resident Score;
- Criminal History Background Report; and
- Eviction History Report.
The best way to gather this information is to use a Tenant Screening Service that will give you all of this information in one step. To make things even easier for Landlords, we offer a Tenant Screening Package where Landlords can send a Rental Application and initiate screening reports in one step.
When you take advantage of this feature, as soon as your Applicant completes the Rental Application, the screening reports will automatically be run and you’ll receive them electronically.
View this post on Instagram
Step 5: Check References – Employee and Prior Landlords
The next thing you need to do is contact the Applicant’s references. You’ll want to contact their employer to verify employment, length of employment, and income. Plus, you can ask some basic questions to get a sense of the type of employee the Applicant is. For example:
- Is the individual frequently late to work?
- Does the individual miss work regularly?
- Does the individual regularly have conflicts with other employees, managers, or customers?
In addition, it’s important to contact the Applicant’s two prior Landlords. While contacting the current Landlord is a common practice, we highly recommend that you contact the Applicant’s prior Landlord as well.
Sometimes, if Landlords are anxious to get rid of a bad Tenant, they might not be as forthcoming about issues or concerns. Talking with a previous Landlord ensures that you get a complete picture of the Applicant.
When you talk with prior Landlords, you want to ask specific questions, including:
- Did the Tenant pay rent in full & on time?
- Does the Tenant have any outstanding rent payments? If so, what is the amount?
- Is the Tenant a good neighbor? Has he/she been the source of complaints from neighbors?
- Did the Tenant take good care of your property?
- Would you rent to this person again?
Step 6: Review Applicants and Select a Qualified Tenant
Once you’ve gathered all the necessary information, you’re ready to review the data and select a Tenant. Because you have established clear criteria, it should be easy to determine which Applicants meet your criteria and are qualified to Lease your property.
To ensure your process is fair, legal, and transparent, we suggest that you select the first qualified Applicant. This leaves no question about how you picked the Applicant, ensures you’re not influenced by unconscious bias, and protects you against any claims of discrimination from Applicants that weren’t selected.
Up Next: Creating & Signing the Lease Agreement
Once you’ve selected a great Tenant, the next step is executing a comprehensive Lease Agreement. This is a key step because the Lease is what sets you up for success as a Landlord and protects you if things go poorly.
Kevin is passionate about helping others to become a better Landlord by providing tools and education to help them thrive.