If you’re managing property, knowing how to weed out bad tenants and find the good ones is one of the most crucial things you can do. Rigorous tenant screening will give you the necessary information you need in order to choose a tenant who meets your standards.
Rental property management software can really help lighten the load by doing some of the legwork for you. With that said, it’s still important to know some of the dos and don’ts of conducting successful tenant screening.
DO: Adhere to a Tenant Scoring System
While it may at first seem difficult to decide which applicants you should accept and which you should reject, this process is made easier, more objective, and more legally sound if you use a tenant scoring system.
A tenant scoring system allows you to compare applicants fairly by listing various criteria that meet your standards and evaluating which criteria an applicant meets. These criteria may relate to the applicant’s income, credit history, criminal record, eviction history, etc. In order to help you make the most objective decision on whether to accept an applicant — or which applicant to accept, if there are multiple — it’s important to adhere to your tenant scoring system and keep records of it so that you avoid potential legal trouble.
DON’T: Violate Fair Housing Laws
The Fair Housing Act was enacted to prevent discrimination against the following protected classes: Race, Color, Religion, National Origin, Sex, Familial Status, and Disability. You may not intend to discriminate against one of these classes when you draft your application or select which applicants you will accept and which ones you will deny. Nevertheless, it is important to document your process, adhere to your tenant scoring system, and be conscientious about your wording. Otherwise, you may wind up with an unintended Fair Housing lawsuit on your hands.
DO: Use a Rental Application
With rental applications, you can directly ask applicants for information about themselves. This information may include former residencies, employment history, monthly income, and identification number (driver’s license or SSN). This is initial information can extremely helpful since it allows you to weed out unqualified applicants before you start spending time on credit reports and background checks. Furthermore, in an application, you can also indicate any restrictions which might rule out a tenant, including your stance on pet ownership or smoking.
DON’T: Over-rely on Social Media
Most Americans use social media platforms, and looking at an applicant’s social media can certainly be a way to evaluate some of their behavioral patterns. It is important to exercise caution when doing this, though. In order to avoid falling prey to a Fair Housing lawsuit, you want to make sure that you screen all applicant’s social media accounts in exactly the same way, and with a clear objective in mind beforehand. And if an applicant’s social media profile is private, know that it is against the law to ask them to make it public.
DO: Use Passive Screening
When we talk about tenant screening, we are often talking about active screening, which is the process of accepting a tenant who meets your standards and rejecting those who don’t.
Passive screening, on the other hand, is a way to attract the applicants you want by targeting specific demographics when advertising your property. For instance, by making the price of your unit clear in your ads, you will be attracting applicants who can afford the rent, whereas those who know they can’t afford this price will be less likely to apply in the first place.
DON’T: Deny an Applicant without Cause
When it comes to making your final decision, you can deny an applicant as long as there’s proof that every applicant is screened the same way and held to the same standards.
The Landlord Protection Agency recommends sending a generic rejection letter to an applicant with a checklist of reasons as to why they were denied. These may include:
Insufficient or unconfirmed income
A prior eviction
No rental history
Owning a pet
Smoking
A history of damaging property
Giving false information
Conclusion
Tenant screening might seem like a lot of work on the front end, but conducting it properly and thoroughly will yield high-quality tenants, which will bring you more money and less headache in the long run.
