Conducting Tenant Screening

The screening of prospective tenants is a clear necessary skill to have as a property manager. While some aspects of tenant screening may seem obvious, I think it is important to take a close look at your process and spell it all out. When property owners are looking to hire a property manager, those who are doing their due diligence will assure that your tenant screening process is immaculate – so lets take a look at what can and should be considered as a part of your process.

Right off the bat, the standard tenant screening elements are pretty clear. Initially, you should of course be contacting former landlords. You want to find out everything from how they were at paying their bills, to treating their apartment and neighbors, to why they left their previous living situation. It is recommended that previous two landlords be contacted to avoid potential managers trying to offload bad tenants (by giving them a glowing recommendation). It is also prudent to check their personal references – this I would say is more useful for determining the type of person they tend to associate with than for actually learning about the individual in question.

You also of course need to verify their reported income and employment. This is twofold – make sure they can afford to rent with you and assure that they are not putting down false information. Any sort of false information should be a red flag. You may also be inclined to prefer certain types of individuals over others (will cover later).

A credit report should also be run – though this shouldn’t necessarily be taken at face value. Credit scores are dependent entirely upon people utilizing their lines of credit.Though they are designed to indicate individuals who responsibly pay their bills, they do nothing for people who don’t need/use credit (who pay for everything in cash for example). Get the full story before passing judgment.

Finally, in the list of basic screening elements, you should check to see if there have been any public notices regarding your prospective tenant. These would be things like bankruptcy or eviction type notices.(looking for bankruptcy or eviction type things).

If you use a third party to take care of your screening, you as the property manager should verify that the third party you are paying for actually carries out all of these actions – and be prepared to pass along the details of what the third party’s processes to prospective property owners.

Aside from these tenant screening basics, there are a few other things you may want to consider as a part of the process. Are you the type of manager who will hold a property for an interested tenant before a lease is signed? If you do, you should charge a non-refundable fee (which of course can be applied to the security deposit when they sign and move in).

Know which qualifications in tenants are important to you. It is good to prefer tenants who have a serious job or are entrenched in school – the point is you find someone who is motivated to keep a good rental record. If you consider tenants who don’t meet these sorts of qualifications, what do you use to justify their renting? Perhaps they have demonstrated that they have more than enough assets to afford living at your property.

Last but not least, keep the owner out of the screening process. If the owner gets involved, this can lead to fair housing violations due to discrimination (even just the suggestion by someone else that the owner has made a discriminatory preferential decision can be destructive – leading to lawsuits).

Source: propertymanagementexecutive