What do landlords and property managers look for in prospective tenants?

What do landlords and property managers look for in prospective tenants?

Solid Rental History

Your credit report can provide insight into how you manage your debt. There’s information it doesn’t show, however, such as evictions, bounced checks, broken leases and property damage. Money owed to previous landlords could appear on your credit report if it was sent to a debt collector.

To learn more about your history as a renter, a landlord or tenant screening service can also run a separate eviction report that will show any evictions you’ve been party to during the last seven years. They may also look at your rental history from an informal angle, taking into account how long you’ve been a renter or how long you’ve stayed at each address, for example. Reference letters from previous landlords could help provide reassurance if you feel it’s necessary.

Rent payments won’t automatically be added to your credit report, but they can be. Going forward, if your landlord agrees to report your payments to Experian RentBureau, your positive rent payment history will appear as an account on your credit report and contribute to your credit score. You can also take your own steps to have your rent payments reported to RentBureau, which could help with future applications.

3. Pre-Screening Showing

When someone answers your advertisement with interest in renting your property, the next step is to continue the pre-screening process by beginning a conversation with them, either via email or with a phone call. This gives you the opportunity to ask questions to the prospective tenant while also answering any questions they may have before scheduling a showing.

Being prepared for the pre-screening with great questions will help prevent you from wasting your or your potential tenant’s time. 

From there, you can meet with them in person and show the property. You can use this opportunity to learn more about them and whether they would be a good fit for your rental. Laws are different in each state so it’s important to stay updated on current housing and rental laws. 

Remember that it is illegal to discriminate because of the Fair Housing Act, but you can pose questions that help you determine if the applicant is a possible good fit. In some places, a landlord may be able to deny a tenant based on gut-feeling. However, in others, this is not acceptable, such as in the case of Seattle’s First In Time rental law, requiring landlords to allow rental to the first applicant who meets their criteria.

Also Read: Best Pre-Screening Questions To Ask Potential Tenants

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6. Checking References

Even if they have a perfect credit score and work history, you don’t want to rent to someone who will mistreat your property and other residents. Make sure your application requires them to provide at least three references from prior landlords. You can also request personal references to help you get a better idea of who the person is.

It can be tempting to skip this part – and many landlords often do – but reference checks help you to confirm whether the prospective tenant will be a responsible one or not.

Also Read: Choosing the best questions to ask rental references

Make Your Property Attractive to the Best Tenants

The most desirable tenants tend to have discerning taste, so it is important to maintain your property to make it look its best. Your property manager should pay attention to the overall appearance of the property, including the interior of the unit or home, the structure’s facade, and any common areas or gardens.

This also includes handling any maintenance requests in a timely manner to prevent further damage. After each tenant moves out, your property manager should conduct a thorough inspection to identify any areas for improvement. Your property manager will address them before you begin showing the property to prospective tenants.

Screening Applicants to Find the Best Tenants

This is the most important task your property manager will do in the process of finding new tenants for your rental properties. A prospective tenant’s past rental history, bankruptcies, criminal history and other information will play a large role in their suitability as a tenant for your property. The National Tenancy Database (NTD) can provide a wealth of information on these topics. A smart property manager already uses such helpful tools.

Finding the right tenants for your rental properties can be a long, stressful process. But an experienced property manager can make it as easy as possible for you. But be sure to work with your property manager to identify the traits you want in your tenants. This way, your property manager will have a better understanding of what to look for when they start receiving rental applications.

What’s the best way for landlords to screen tenants?

Savvy landlords should ask all prospective tenants to fill out a written rental application that includes the following information:

  • employment, income, and credit history
  • Social Security number (or Individual Tax Payer Identification Number) and driver’s license numbers
  • past evictions or bankruptcies, and
  • references.

Before choosing tenants, you should check with previous landlords and other references; verify income, employment, and bank account information; and obtain a credit report. The credit report is especially important because it will indicate whether a particular person has a history of paying rent or bills late, has gone through bankruptcy, or has ever been evicted.

To avoid trouble with fair housing laws, be sure to be consistent and fair in your screening. For instance, make it your policy to require credit reports from all applicants. For more information, see Choosing Tenants: Avoid Fair Housing Complaints and Lawsuits.

How to Filter in the Best Tenants

Right now, what comes to mind when you visualize your ideal tenant? How do they appear to you? What’s their occupation and financial status? Why do they want your rental property?

There might be complaints about tenant screening of any kind. Others look only at the applicant’s credit rating. However, the bottom line is that your rental property enterprise is a business.  That means being thoughtful about tenant’s ability to pay and whether they’re going to work out okay.

Write down the top 5 attributes of an excellent prospect so you can track back in a month from now about how your views have changed.  Knowing subtle differences and qualities makes a difference.

3. Perform a Criminal Background Check

Criminal information is public record, and can be viewed at various court houses. This check will turn up both serious and minor offenses. You will need the tenant’s name and date of birth to run one. Keep in mind that those with a criminal record may try to falsify this information, so make sure to check a valid ID to verify that they are who they say they are.

A Thorough Criminal Check Will Include:

3 Points of Caution:

  1. Certain states, such as California, prohibit landlords from discriminating against renters with certain criminal convictions. As a landlord, you may have an easier time justifying your rejection of a prospective tenant with a drug or violent crime conviction than you would rejecting a tenant with 50 speeding tickets. This is because drugs or violent crimes can jeopardize the safety of other tenants.
  2. There is no nationwide database of criminal records, so it may be hard to do a thorough background check.
  3. Doing a criminal check yourself can be very time-consuming. It may be best to hire a reputable tenant screening company to perform this check for you. It can often be combined with the credit check, for an additional fee of course.

Are landlords required to use written rental applications?

Landlords are not required by law to use written rental applications. However, asking prospective tenants to fill out written applications can protect you from lawsuits filed by irate applicants whom you rejected as tenants.

For example, suppose you talk to six applicants before renting one of your units. You pick Applicant #3 because you feel he is most likely to reliably pay the rent. Two weeks later, you get a call from a lawyer representing Applicant #5, who claims she was discriminated against because she is African-American and a single mother. If you aren’t willing to pay $10,000 to settle the matter, you’ll promptly be sued in federal court for $50,000.

Because you have no written documentation explaining how you picked Applicant #3, your insurance carrier proposes to pay the rejected applicant $10,000. After all, the insurance company points out, it looks bad that you picked a white male with no children, especially since it turns out that the African-American single mother has a high-paying job.

Had you been able to produce all the candidates’ comprehensive written applications, their credit reports, and references from previous landlords, the result would likely have been different. You would have had good written documentation supporting why you picked Applicant #3—his salary and job stability were far better than that of Applicant #5, who had only recently started her job and had a bankruptcy in her past.

For more information, see Choosing Tenants: Avoid Fair Housing Complaints and Lawsuits.

Do Property Managers Really Take the Extra Step to Screen their Tenants?

Above is the result of the survey poll I created on numerous property management groups on social media. I asked them what they would usually do when choosing a tenant. As you can see, credit score checks, contacting employers, and background checks are the top common steps that many property managers would do during a tenant screening process.

Although not many confirmed that they would review the applicant’s social media profiles, I personally believe there could be lots of insightful details there.

A property manager once told me that he saw on Facebook/Instagram that an applicant regularly hosted house parties and turned the previous rental unit into a mess. So this could be a sign of a red flag.

I’m not saying you should connect with the prospective tenant through your social media account. But just by reviewing their public profiles, you may be able to get a sense of the applicant’s lifestyle.

On the other hand, you may be able to find out more about their employment history, comments from their colleagues and boss by reviewing their LinkedIn profile.

Do Property Management Companies Find Tenants?

When working with a property management company, you can decide whether or not you want to choose a package or company that helps you to find tenants. Most property management companies have different packages and offerings; landlords like you can pick and choose what they’d like to use.

Positive Criminal Background Check

Landlords often run criminal background checks as a routine tenant screening measure. A criminal background check may surface:

  • Past felony or misdemeanor convictions
  • Active warrants
  • Pending criminal cases
  • Sex offender registry listings

Depending on what information is revealed, a criminal background check can affect whether a landlord views you as a risk—either to property or to the safety and well-being of the other tenants. If they decide to take adverse action, such as declining your application or requiring a larger security deposit as the result of a criminal background check, they must notify you of their decision and their reasons why. You have the right to see the report, including the name of the consumer reporting agency that provided it, and to dispute erroneous information with that agency. If you think this is an area of concern, learn more about Fair Housing Act guidelines and your rights under the Fair Credit Reporting Act.

References

  1. Personal and business references, especially from previous landlords, are important additions to your tenant application. Be sure the previous landlords state the regularity of your rental payments, how much you paid and how good a tenant you were. Previous evictions may deem you unqualified.

How a Property Manager Helps With Finding Keeping Good Tenants?

Beyond using a strict screening process to eliminate applications from unfit tenants, routing the entire renting process through a property manager attracts tenants who are serious and want a long-term and professional relationship.  A reputable property management company will also draw in good tenants and keep them by:

  • Giving an initial in-depth showcase of the rental property where tenants can ask questions.
  • Talking with the tenant about the terms of the lease and negotiating as needed.
  • Responding to and making maintenance repairs in a timely manner.
  • Ensuring that tenants have easy access to making payments. 
  • Work with tenants during emergencies. 
  • Coordinate certain services as needed for the tenant such as appliance repair. 

A property management company provides a certain feeling of safety for tenants as they are dealing with another business for all of their rental needs rather than directly with a person they do not know. 

To Hire Or Not To Hire

Do property management companies find tenants for you, and are they effective at choosing the right kind of tenants?

These companies do help to find tenants for your properties, but there isn’t a single answer to whether or not the companies are going to choose the same tenants that you would choose. As long as you talk to them about the selection criteria, however, you should be able to come to an agreement about tenant selection that keeps both parties happy.

In the long run, it is up to you to decide whether or not you want to use a property management service to simplify your responsibilities or continue to manage things yourself. Some landlords love to be hands-on; others prefer to manage from afar. Consider what position you would like to take as you move forward with your process!

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