Doing a Tenant Screening? Follow These Tips

The quality of your tenants can have an immense impact on the profitability of your rental properties. And once tenants have moved in, you can’t simply have them move out. Conducting a thorough tenant screening process and being selective with who you let rent your properties is essential if you want a successful investment. Many property owners have faced negative consequences for overlooking warning signs or giving questionable applicants the benefit of the doubt. You may end up with property damage, consistent late rent payments, or have to take legal action.

Effective tenant screening software is helpful, but even the most advanced systems may not detect every potential issue. Background checks cannot foresee future criminal behavior or uncover undiscovered crimes. To ensure that you’re only renting to the best potential tenants, follow these screening tips:

1. Establish and Document Written Eligibility Requirements

Occasionally, landlords must reject applicants. Sometimes, these applicants belong to a protected class under federal or state housing regulations. To defend against discrimination accusations, create and document impartial criteria related to race, gender, disability, and familial status. Be prepared to demonstrate how the complainant failed to meet these lawful tenant screening standards should this situation arise. This also helps to you prevent any personal bias from influencing your decisions when choosing a tenant.

2. Confirm Income Sources

In the past, producing a fake pay stub was challenging. Nowadays, with widespread access to computers, scanners, and photo editing software, forgery is easier. Websites like www.stubsamples.com and www.speedystub.com enable individuals, such as small business owners or contractors, to create pay stubs, but they can also be misused for deception. To mitigate fraud risk, request three months of bank statements.

If you request a phone number from their employer, it’s never a bad idea to give them a call. This also gives you an opportunity to ask some questions about the tenant and their boss’ experiences with them in the workplace.

3. Review Social Media Profiles

Examine applicants’ Facebook, Instagram, or LinkedIn accounts to verify employment and residence histories. Look for mentions of criminal activity, incarceration, or affiliations with hate groups or gangs. Be aware of potential red flags.

4. Contact Two Former Landlords

Current landlords might provide glowing references to encourage problematic tenants to leave. To obtain a more objective evaluation, reach out to previous landlords. This step is extremely important, as it gives you an idea of how the tenant has treated previous rental properties. Ask how consistent their rent payments were, if there were any issues during the tenancy, and the condition of the property once they moved out.

5. Conduct Background Checks for All Adult Applicants

Perform separate background checks for spouses or roommates, and watch for attempts to use a relative’s information instead of the actual applicant’s. Identification fraud is one of the most common forms of fraud in the rental industry.

6. Require Completed and Signed Rental Applications

Incomplete applications may indicate hidden issues. Fully completed applications are crucial for eviction proceedings, providing proof of tenant dishonesty and reducing risk to other tenants.

7. Limit Written Comments on Applications

Only note information relevant to rental criteria, such as credit score or income. Avoid comments about personal details, as they could be used against you in a housing discrimination lawsuit.

8. Retain Applications for Several Years

Store applications securely, depending on your state’s statute of limitations. Safeguard applicants’ sensitive information and restrict access only to those who need it.

9. Beware of False Positives

For tenants with common names, it’s possible for an innocent person to be flagged. Verify mugshots and basic biographical details to confirm the individual’s identity.

10. Employ a Property Manager

While you can follow all these tips and carry out tenant screening on your own, there’s nothing more effective or efficient than hiring a property manager. A professional property manager saves landlords time by filtering out unqualified applicants and staying current on housing discrimination laws and regulations. They can prevent common mistakes that result in costly fines and legal expenses. Additionally, their errors and omissions insurance can protect landlords from liability due to their mistakes.

At Utopia Management, we utilize the latest screening software and employ a strict application process to ensure that your property is safe and to increase your retention rates.