Steps of the tenant screening process:
Tenant screening is the process conducted by landlords to vet potential renters for their long-term viability as paying, stress-free tenants. Follow each step of the process carefully to make sure you get the best possible tenants living at your rental property.
Step 1: Ask Pre-Screening Questions
Before spending the time and money on the full screening process, ask applicants a short list of questions that can help weed out those that are obviously not a fit for your rental property. These questions both help both parties expectations are aligned (i.e. move-in dates, pet policies, etc.), as well as uncovering any immediate red flags (i.e. a recent previous eviction).
Here are the 10 questions we recommend most to ask during the pre-screening process:
- What Date Would You Like to Move In?
- How Many People Will Be Living in the Household?
- Do You Have Pets?
- How Long Have You Lived at Your Current Address?
- What Is Your Estimated Monthly Income?
- Would Your Current Landlord Give You a Good Recommendation?
- Have You Ever Broken a Rental Agreement?
- Have You Ever Been Evicted?
- Will There Be Any Issues on Your Background Check?
- Do You Have Any Recent Bankruptcies?
Step 2: Collect Tenant Information
At the very least, have all of your tenants fill out a rental application. The application should get the basic information you need to make a decision about this tenant, including information that you can use to perform a background check online and basic contact information like email and phone number. You should collect information about:
Where have they lived?
Find out their last address and landlord. Get contact information for the previous landlord so you can call for references. Ask the potential tenant why they are moving. Is the potential tenant looking for a bigger unit or a cheaper unit? Are they relocating for a job? Were they evicted?
Who will they live with?
Even if there is just one tenant on the lease, you should get the names and past addresses of everyone over the age of 18 who will be living in your unit. It’s important for every person living in your unit to fill out an application. While the primary tenant may have a perfect background, their family may have a seedier past. It’s in your best interest to know who will be living on your property because a court may ask you to defend their actions. In the end, you are the owner of the property, if someone commits a crime in the unit, you will have to answer questions about it.
Where do they work?
Getting paid rent is the primary motivation for landlords. Finding a tenant makes enough money to pay for rent is an important part of that. It’s good to know where your tenants work and how much they make. Ask for their boss’ contact information so that you can confirm the information they give you. Ask your potential tenant about previous employers. If they change jobs often, they may not be able to reliably pay rent.
What’s their history?
The background check will likely include this information. However, you should still ask in the application.
Have you ever:
- Filed for bankruptcy?
- Refused to pay rent?
- Been convicted of a crime? What type of offense? What country and state?
- Been evicted from a tenancy or left owing money? Who was your landlord? What city and state were you renting in?
You should also get the tenant’s written consent to credit and background checks in the application. You have to get consent because it is the law. However, asking potential tenants for consent will discourage tenants with rough credit or backgrounds from applying. That means you’ll less money screening them because they’ve screened themselves out.
Step 3: Conduct a Background Check
Next, using an outside service, conduct a background check. Specifically, you’ll be looking to assess three things: their credit history, eviction history and their criminal history.
Credit History
A credit report lets you know if they make late payments, owe a lot of money to credit card companies, or have been sent to collections. Some states allow you to charge applicants a fee to check their credit scores. However, some credit check services charge your tenants for the report directly. The tenant then gives you access on the website to view the credit report. These services are legal in all states, but legal consent is required by federal law (the Fair Credit Reporting Act).
Eviction History
Checking for past eviction history helps a landlord to understand whether the tenant has had previous issues paying their rent or legal issues in previous rentals. An eviction generally stays on a tenant’s record for 7 years, and evidence of such is a red flag to stay away from with any prospective tenant.
While tenant screening services will do national scans for eviction records on an applicant, you can look for a previous eviction record within a state’s civil court records.
Criminal History
Lastly, a background check will also help uncover any evidence of criminal history, whether related to a housing issue or not. While a landlord cannot discriminate against a potential tenant for an arrest (as arrests do not imply guilt), a relevant felony conviction is a red flag that is likely to be taken into account, as it could imply that not just the rental property is at risk, but also the safety of the neighborhood.
Tenant Screening & Background Check Services
We’ve reviewed a handful of the most popular tenant screening services to show you exactly what they provide, how much they cost and how they stack up to the competition.
- e-Renter – 4/10
- LeaseRunner – 8/10
- MyRental – 8/10
- TransUnion SmartMove – 7/10
- ScreeningWorks – 4/10
- Naborly – 7/10
- RentPrep – 7/10
- TenantAlert – 9/10
Step 4: Conduct Reference Checks
A tenant screening & background check service can provide a lot of useful information, but they won’t give you the whole picture. Spend the extra few minutes to get on the phone with a few key people that can help fill in those gaps.
Talk to a Past Landlord
While there’s a chance this may be someone pretending to be a landlord, you should still do it. If you do get a real landlord on the line, you might come across some interesting information. Ask the landlord if the tenant was noisy, disruptive or destructive. Why did the tenant move out? Credit and background checks can only give you so much information.
A tenant may have left without a hassle, but been behind on rent. Some landlords would rather avoid going through a tiresome eviction, if possible. Maybe the tenant siphoned water or electricity from other tenants. Or the tenant may have wrecked the unit before leaving.
You would only find out about the issue with a personal conversation.
You wouldn’t learn anything from a fake landlord, but don’t give up the chance to potentially talk to a real one.
Talk to Their Boss
A potential tenant’s boss won’t likely tell you more than whether they work for the company. However, some bosses may accidentally give you more information. For example, they might grunt and groan about the employee, telling you that they are not the best worker. Or a boss might rave about a great employee.
An employee with a great work ethic will likely have a great payment ethic too. An employee with a bad work ethic doesn’t necessarily make for a bad tenant, but it’s something to consider.
Talk to The Potential Tenant
Talking to a potential tenant in person gives them to explain anything you find in their screening. Some landlords are willing to overlook certain negative things that come up in the screening because of the way the tenant explains the circumstance.
Additionally, meeting with a tenant in person helps you understand their attitude. What will it be like to deal with them on a daily basis? It’s better to figure out that the person who passed your screening is a pain to deal with before they move into your unit. And it’s great to learn someone you might have written off would actually be a great fit for your unit.
Step 5: Review & Analyze Information
Once you’ve collected all the information possible on a tenant, it’s time to analyze your findings. Here are some examples of specific criteria to follow:
- Rent to Income Ratio – the rent should ideally be 30% or less of their income.
- Rental History – applicants should have verifiable rent or mortgage history (from a non-relative) of a year or more. If less, it’s recommended to require a co-signer on the lease.
- Credit Score – a credit score of 600 or higher.
The criteria you set as a landlord completely depends on the situation, the quality of the rental property and your overall standards. To see some examples of the criteria that professional property managers set, see this example and this example.
Step 6: Respond to Applicants
Once you’ve analyzed the information and made a decision on whether or not to accept the application, inform the tenant. If you decide not to accept them, it’s important to share why they weren’t accepted. To reduce the chance of any complaints for illegal discrimination, we recommend sharing your screening criteria with all applicants.
Checkout this example rejection letter as a standard form to use for this final step.