Tenant Screening For Landlords
Many landlords who complain about bad tenants in their rental properties are their own worst enemy. Sometimes they are so focused on getting the property rented as soon as possible to keep the money flowing in that they do a poor job of tenant screening.
When done properly, this process can eliminate a large percentage of problems, headaches, money lose and almost all other problems that landlords encounter when renting out their properties.
Through trial and error, educating myself and tapping into the knowledge of others, I've found a way that puts the best tenants in my properties and keeps me the landlord in control of my rental properties.
1. Meeting the prospective renters.
Once we get the call that someone is interested in renting one of our properties, we set-up a time to meet them at the property to start the Screening Process.
We are a husband and wife team, you may be also, or you may be partnered with someone. Either way, here is our steadfast rule of first contact. ONLY ONE OF US meets the prospective tenants.
Why, one of us evaluates the person(s) and the other just the information procured from the prospective tenant(s).
In the first part of tenant screening, our (Pre-Lease) form states that potential tenants MUST HAVE the following items:
1. A legible copy of a "Current" driver's license from (whatever state you're in). 2. A copy of a Current employment history. (Copies of Last 3 pay stubs) (Include phone # of supervisor (s) or Human Resources contact for verification) (If self employed, a copy of your Profit and Loss, or 1099 tax statement will do.) 3. Current credit history report. (even if no or little history, this report is mandatory). 4. Rental Application filled out in full. (All items/areas must be printed and legible)
I give them a copy of our (Addendum "A") form. I go over every item on this form, ask if they have any questions and tell them that this document will be made a part of the lease. It has some 47 items or (Rules) that both tenant and landlord are bound to in the lease contract.
This addendum "A" is our own, and plays a huge part in our tenant screening process. It has been tested for 5 years now to work very well in keeping my tenants and me the landlord on the same page. We all know what is required from each party.
After we have gone over all of this, I show the house to them. If they like the house and want to rent from us, then I give them a (Rental Application) to be filled out.
I also, give them a copy of the (HOA Rules & Regulations) should that apply. I don't want there to be any surprises, and don't like my time wasted either. So this is why we give them all of the information they need to make an informed decision on renting our property or not.
Although we are conducting tenant screening, they get to do some landlord screening as well. In the end it makes for a good match for all parties. They may see something in all the information that they just can't live with, and so they will pass.
This way neither of us has wasted each other's time by going all the way through the rest of the process just to find out they just can't live with one of the items on our addendum "A" or the HOA's R&R's.
Lastly, and maybe most importantly I inform them of the monthly cost of renting that property as well as the security deposit amount. They are told that this money must be paid in the form of cashier's check, or cash.
We do not accept personal checks for the first payments. If their personal checks were to bounce, and they have already been given the keys and assumed occupancy of the property, then I/you are out that money and now must go through the eviction process.
That means you are out at least another 2 months of rent, a minimum of one month to get them out of the property, and another to find a new tenant.
In Tenant Screening "Time is of the Essence"
Our policy is this:
We have others that have looked at the property and are interested. We do not have a 1st come 1st serve policy.
The 1st one to get us all of the information that is required, gets our attention 1st.
This basically starts the second phase of tenant screening. Meaning we will start the process of verification of employment, evaluating the credit report(s) and so on.
We allow ourselves 72 hrs to complete this process.
As soon as someone qualifies and commits to renting our property, we will immediately notify all other applicants that the property has been rented. Tenant Screening Information Evaluation
2. This is now where my wife comes in. Or in a partnership situation, your partner. Remember, only one of you went to meet the potential tenants. My wife at this point can only evaluate the potential tenants based on the paperwork and information they have provided to us from the "Pre Lease" form and the credit report(s) and the "Rental Application".
Here is how we evaluate the paperwork information:
1. Drivers License: they must have a current driver's license from the state that my property is in. If they are from another state, and don't want to do this, then they don't rent from us.
2. Employment History: We get employment history from every adult that is to be on the lease. (this includes every adult that will reside in the property for any part of the lease term). Visitors cannot stay more than 2 weeks, without being added to the lease.
We are looking for enough money coming in to pay the rent consistently. When we evaluate this we want to see that rent is no more than 1/3 of their monthly income.
3. Current Credit History: Every adult that is going to be on the lease MUST provide us with a current (no more than 30 days old) credit report. We make the prospective tenants get this report.
You could get this with their permission. Create a form that they sign that gives you permission to do this. Charge a small fee for your time approximately $35.00 to $45.00. This fee should be non-refundable.
In our tenant screening we evaluate this by looking for consistent payments on all of their bills. If one or more parties had a bankruptcy or some sort of hick-up in their credit history, we are not too concerned about that as long as the last 6 months of payments are consistent.
Additionally, with this tenant screening process, collecting a credit history on all parties on the lease you are able to see if one has a car loan while the other does not, or any other anomalies that may show that they are overextended with their money and may not be able to pay rent consistently.
4. Rental Application: We always take a close look at how they filled out the rental application. If they are leaving out information, I want to know why? In most cases, when potential tenants are leaving questions unanswered, it is usually because they are trying to hide something.
We will go back and re-ask for the omitted information. But in most cases, we get the run around about why it is not there. If that's the case, we don't rent to them.
After my wife/partner gives them the OK, then we talk about my evaluation of their character, how they answered my questions etc.
What questions or objections to our policies they may have had, and how do I think they will treat our property etc.
Let me just say one thing about discrimination here. DON'T DO IT!
Tenant Screening: Your Right To Choose
You Have The Right To Choose Who Is Best Suited To Rent Your Property.
The process I've described above does as much as possible to keep us away from discrimination issues.
Remember in your tenant screening process to treat this like a business. Make sound business decisions.
If you get the wrong tenants in your property, it will cost you much more money, time, aggravation, and heart ache than rejecting someone and having to wait another month to get your property rented.
Randy is a seasoned landlord with years of experience, If you would like more information on tenant screening or on exactly how to run your rental business, with step by step instructions, addendums to add to your lease, and all the forms you may need, then I invite you to go to this website and see if it's a fit for you. www.MyLandlordsFriend.com .
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