How do you screen your tenants? If you’re like most landlords and property managers, you have potential tenants fill out an application, review those, and then run background and credit checks on the ones that meet your baseline criteria. It’s a fine system – it’s the standard for a reason – but it may not be the best approach if you want to optimize the process and select the best tenants from the pool. So, what should you do instead?
Start With An Interview
Many landlords start the tenant screening process by having people fill out an application, picking the top contenders, and then interviewing those. But what would happen if you reversed the process? In the last several years, industry experts have noted a shift, in which landlords interview potential tenants first before moving on to the formal application. This can benefit everyone because it allows you to answer important questions and get a general sense of potential tenants before anyone puts money into the process in the form of application fees and screening costs.
Evaluate Your Application Options
There’s no dispensing with the rental application when evaluating tenants, but different landlords and property owners use different styles of application and request different types of information. Still, given the state of the industry today, there’s little reason to create your own application from scratch; there’s almost certainly a variety of online rental applications that will meet your needs.
When choosing an application from the many available to you, consider opting for a platform that supports screening automation. You’ve already done your initial interviews, so now you can use automated tools to save time and keep the process moving along efficiently.
Consider Debt Types
Credit checks are one of the most important elements of the tenant screening process because, along with income verification, this information will tell you whether an applicant can actually pay the rent. However, when looking at an applicant’s financial information, it’s important not to treat all debt equally. Credit card debt, which tends to multiply quickly and continue accumulating, is different from student debt, for example, which is typically fixed and is considered “good debt.” While enormous student loans with a highly monthly minimum may still be a warning sign, they should hold a different weight than other consumer debt.
Additional Background
As with credit checks, you should also run criminal background checks on potential tenants – and as with credit checks, it’s important to read these reports carefully. Someone with a single, old charge and no criminal record since shouldn’t be considered to be an equally risky prospect when compared to an applicant with multiple recent charges. Everyone needs a place to live and if someone has proven that they are rehabilitated, landlords should consider giving them an opportunity.
While landlords have to follow a few basic anti-discrimination laws and other local policies, in general, you have the ability to use what criteria you wish to select tenants for your properties.
By completing the above steps, however, you can gain enough background information on applicants to make an informed decision and select tenants holistically, based on how they will fit within the larger community, not just as isolated individuals. The details are important but don’t lose sight of the big picture.
