Being able to find a quality tenant is one of the most important things we need to do to be a successful rental property owner.  Finding the right tenant for your property can be really tough and takes work.  We all have stories about the havoc the wrong tenant has caused.  This is why it’s worth investing a bit of effort into finding tenants who will pay rent on time, take care of your asset and be respectful of the neighbors.  Here are some ideas on how to find a trustworthy tenant.

Get the Property Ready

My mantra regarding property is “safe and clean.”  Good tenants have choices, and if the property doesn’t look attractive, why would they want to rent it?  Tenants who will care for your property demand a unit that is clean.  It is important to take the time to get the property ready for move-in before your first showing.

Promote the Property by Having a Quality Ad and Don’t Limit Your Marketing to Just One Website

There are many free sites on the internet other than Craigslist to market your property.  Try postlets.com.  Also, be sure to let your friends know you have a vacancy.  Some of my best tenants were referrals from family and friends.

Let Anyone Apply for Tenancy

However, every applicant must go through the tenant screening process and meet your tenant screening criteria.  NO EXCEPTIONS. Don’t try to save time here. Do a complete background investigation including:

  • credit report,
  • criminal investigation
  • civil background investigation, [evictions]
  • income verification and
  • previous  landlord verification.

Don’t Settle

The only times I’ve made a mistake in leasing is when I rushed or felt sorry for a prospect.  Stick to your screening criteria.  Have high standards; don’t settle out of desperation.

[Editor’s Note:  If you don’t have a written criteria list to hand to tenants with the application – put one together NOW. Members may visit the AOA website, get a “sample” criteria list and develop it to fit your requirements.] 

Require Renter’s Insurance

Tenants who care about their personal property and are willing to get insurance will likely also care about your property.  During the application process before a lease is signed, let your potential tenants know you will request they show proof of renter’s insurance on the move-in date.  Renter’s insurance will help cover the cost of the tenants’ belongings if damage occurs or if the tenant causes damages, for example, from fire.

Require the First Month’s Rent Upfront

Require the first month’s rent up front no matter what date the tenant moves in.  This helps ensure the new tenant will have the money to afford the rent.  Prorate the difference on the first of the next month.  For example, if the tenant moves in on April 15th, at the lease signing the tenant pays the first month’s rent and then on May 1st, they pay the prorated amount of the 15 days.

[Also, be sure to get the entire security deposit up front.]

These tips will help make the leasing of the property as stress-free as possible.  Unfortunately, there are no guarantees when making the determination if someone will be a quality tenant or not.  However, you can limit the risk by taking the time to ensure you have properly vetted the prospective tenant.

Julie Johnson is a property owner and Director of the Multi-Family and Residential Groups at Phillips Real Estate Services.  

Proper Tenant Screening – Step-by-Step

Screening a prospective tenant can be an intimidating process.  Here are some steps you can use as a guide to help you understand the process and what you need to know.

  • Establish Your Screening Criteria

Before you begin accepting applications, make sure you have your [written] screening criteria established.  Present all applicants with your screening criteria up front.  Things to consider include, credit, criminal and eviction records, employment and rental history.

It is important to discuss your screening criteria with your applicants.  Make sure your screening criteria are clear and concise.  Most people will not want to spend the time and money submitting an application if they know up front they won’t qualify.  This will save both of you time and money.  [AOA provides a “sample” criteria list that you can simply alter to fit your requirements.]

 Application for Tenancy

Rental applications should be filled out by ALL applicants 18 years and older – including spouses.  If possible, accept the rental application in person and always ask to see their driver’s license or some other form of government issued ID.  [AOA’s form #100A.]

  • Reviewing the Rental Application

It is very important that you review the application with your prospective tenant to make sure there is a clear understanding of all of the information that you’re requesting.  Make sure the application has been filled out entirely and that all the information is legible. Compare the information on the application to the applicant’s photoId.  Verify that the name, date of birth and address provided are correct.  Lastly, ensure that the prospective tenant has given you permission to run a consumer report by signing the application.

  • Screening the Applicant

Protect yourself from discrimination claims – apply the same screening criteria to every applicant.  Make sure you request the same type of report for each applicant.  It is recommended that you check credit, criminal and eviction records as well as verifying employment status, income and rental history.  [Once you see how much you get and how little you pay, you will always do your tenant screening through AOA!]

  • Receiving Results and Making Your Decision

After you have received results of your consumer report, you will need to look at your criteria and decide whether or not this applicant is a qualified tenant for your rental.

If you decide to reject an applicant OR take other adverse action such as charging an increased deposit or requiring a cosigner, you must provide the applicant with the written notice and the reason for your decision.  [Use AOA’s form # 140 for this purpose.] 

  • Record Retention

It is recommended that you note your decision regarding tenancy on the applicant and shred the consumer report immediately after a decision is made.  You must keep the application as proof that you had authorization the run a consumer report for five years or the length of the applicant’s tenancy, whichever is grater.  The application must be stored in a secure location (locked file cabinet) that does not allow unauthorized access in order to prevent identity theft.

Q:  I have several applicants applying for my rental.  Do I have to screen everyone the same or can I screen only for credit on some and require a criminal background check on others?

All applicants should be screened the same regardless of their gender, age, ethnicity or your “gut feeling.”  In order to comply with Fair Housing laws, if you check one individual’s criminal background, you need to screen every individual that way.  If you require verification of employment on a certain individual, then you need to make sure you verify that information for all the applicants who submit an application.

Now of course, the answer to this question is not completely black and white.  There is always an exception to the rule.

Co-Signer/Guarantor: In this case, one exception might be if you were screening an applicant and a co-signer or guarantor.  The applicant should be screened through the same process that you put all of your applicants through, but you may only need to verify financial information for the co-signer/guarantor; checking their credit and employment/income status since they will be upholding financial obligations and not residing in the rental unit.

Married or Domestic Partnership:  Another exception would be if you have two individuals applying who are married or in a domestic partnership and only one individual is employed or receives income.  In this case, you may opt to check both of their credit and background information, but it would only be necessary to verify employment on the individual who is going to be financially responsible.

It is recommended that before you begin accepting applications you look at your qualifying criteria to help you decide what information is pertinent when screening your applicants.  Obtaining a credit report, criminal and eviction search or rental income verifications can help you make the most informed decision as to whether or not an applicant qualifies.  [AOA’s Applicant Screening Checklist, form #100S, can help you keep organized with every step of the screening process!] 

Members may download all of AOA’s rental forms for FREE at www.aoausa.com. 

This article contains general information and is not intended to apply to any specific situation.  If you need legal advice or have questions about the application of the law in a particular manner, you should consult an attorney. Reprinted with permission of the Rental Housing Association, UPDATE.

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