I think we can all agree that:
or is it?
Well, it turns out tenant screening starts with a good rental application. You can decrease evictions and turnovers by downloading the free form and also following the techniques I set forth in this article.
In this article I will show you exactly what red flags you should be looking for in the tenant application and how to avoid "professional tenants."
Many people understand the basics about property management and also understand the basics of tenant screening, but usually don't realize the two should go hand-in-hand.
You see, if you take a great rental and put bad tenants in, it's only a matter of time until you are losing money on the investment property. On the other hand, if you take a terrible area and find the area's greatest tenants for your property, you will soon outperform everyone else and earn a lot of extra profit.
It's because the tenants are key to the success of your business, so you need to find the best ones. You also need to keep those good tenants by being a great landlord.
Screening tenants is not a new concept. Every online resource will tell you the basics of what you should look for (NOLO as an example). Unfortunately, they tell you the basics (employment, income, etc) but don't really get into any detail.
Once you collect the right information, you can use an online tenant screening site. They aren't expensive, this one is $24,95, but you charge this to the tenant anyhow so it costs you nothing.
Keep reading to learn exactly what you should be looking for to find great tenants.
Start by downloading a free tenant application form (and you'll find a ton of other free forms as well). You will be able follow along as I go through each step.
Some of the information is obvious, some of it isn't. A tenant shouldn't be afraid to put their personal information down. If they refuse to, the applicant is probably hiding something.
You may be legally limited to the information you can collect in your state. You may also be obligated to provide the results to the tenants. You should research the tenant screening laws in your area first.
We all collect similar information on a rental application, but how we use it is different. Some people find great tenants and some people rent to bad tenants. I'll let you in on my style and techniques that I use to screen tenants.
Previous landlord information:
Honestly, I'm not even looking for the most recent landlord on the rental application - I prefer having the 2nd or 3rd landlord before. The reason is because any landlord will have absolutely glowing reviews of any tenant they want to go away. Wouldn't you do the same thing?
The landlord 2 or 3 before will have a 100% honest review of that tenant. This is where you'll find out about their 15 relatives living with them, or the roach infestation they caused.
It's also important to ask the previous landlord the right questions. Big questions include:
Job Information and Income Verification:
It is essential that you verify the employment information applicants put on the rental application. Tenants will often completely fabricate employment history in order to get an apartment. Some people will even dress up as if they just got out of work! People like this will provide false phone numbers and names of friends who will play the part to get them the apartment.
So, obviously get the information they provide, but find the number to the business online or in a directory. This way you are calling the actual business number and there is no way you will be calling their best friend.
I never expect a tenant to give the real answer to their eviction history on a rental application, so I always do an eviction record check. Of course, sometimes there are legitimate reasons to go to court.
I have seen tenants evicted because they withheld rent for legitimate reasons, but they didn't follow the legal way to withhold. These tenants are 100% upfront about their eviction and would even provide photo evidence of the whole story.
Other tenants will just check the box "none" and hope you don't know how to check their eviction records. It's all public information so you can find it pretty easily, if you look. Any lying on an application is an immediate reason to reject, regardless of their other qualifications.
Names and SSN:
It's becoming trendy to not take the SSN of prospective tenants. There are legitimate reasons why a person may not have an SSN but need an apartment. In these situations, you should find alternate ways to screen them.
But for everyone else, you collect this information on the rental application for a few reasons. First, you want to know how many adults will be living in the apartment. Violating this can be a valid reason for eviction if you ever need to go that route.
Also, you should verify their identities. You want to make sure they are actually who they are.
Finally, when eviction and collections happen, you need to provide their ssn and as much information as possible to the collection agency if you ever hope to get any money back from the.
Why do I collect references on the rental application if I don't care about them? Simple... I already know every single person will say amazing things about them.
Honestly though, if someone can't find 3 people who will say great things about them so they can rent an apartment, then they are probably somebody that I don't want to rent to.
Credit Score and Report:
I collect the credit score and report in the tenant rental application for two reasons. First, I want to see if the person is willing to give it to me. Like I mentioned above, if they refuse, they are probably hiding something. Second, it may show a massive debt which I would care about. I also check for court records from collectors, so the credit report just forecasts future potential collections, not their history of collections.
The reality is, I really don't care what someone's credit score is.
A lot of people have little to no debt, and have poor scores because they have no history. Other people just don't use the banking system much (you see this on C class and below properties the most).
The vast majority of my tenants have pretty low scores, but I very rarely have to evict any. Score just isn't indicative of their likelihood of paying their rent.
There are a lot of small things that can send up red flags. A lot of it just comes down to inconsistencies. Here are some other things I'm looking for in a rental application.
Anything that makes me think they may not pay the rent is a reason to reject.
Obviously though, you can't violate any fair housing laws or discriminate against any protected classes.
If you somehow missed the links above, here is the link to download your free sample rental application. Or, you can simply sign up below and get it sent straight to your mail box!
Note: All information is for informational purposes only. Everything provided here is not legal advice. It is my own experience and documents that I have personally used and should be used as reference to help you. I do not know if it will work for you or in your jurisdiction.