How to Screen Tenants (7 Easy Steps for Rental Properties)

Tenant screening is one of the smartest steps to make your property management experience as headache-free as possible—and protect your investments.

Here are some things to keep in mind:

Certain qualities you should seek usually indicate top-notch renters, as well as indicators that an applicant might cause trouble down the road.
When choosing the best tenants, all rental property owners should be aware of protected classes that are illegal to discriminate against.
For a well-run real estate business, all landlords should create solid processes for prescreening, screening, approving, and rejecting rental applicants.

Have you heard the story about the tenant who deliberately threw maggots down the stairs to the tenant below? Or how about the tenant who moved 15 children into an 800-square-foot house? These stories are not fiction; they are true stories taken from actual BiggerPockets members and just a tiny sample of what a real estate investor often must go through as a landlord.

However, by learning how to screen tenants effectively, you can reduce the chance of this happening and relieve the stress, headache, and backaches that often accompany the landlord’s job. This guide will help you learn to discern a good tenant from a bad one, a responsible tenant from an irresponsible one, and a nonpaying tenant from a paying one.

This authoritative, step-by-step guide teaches how to rent your property to great tenants with minimal headaches, stress, or costs.

Why Is Screening Tenants Important?

Learning how to screen tenants is important because it can save you a lot of headaches down the road as a landlord. While no tenant screening method is a 100% guarantee against problem tenants, it will help you weed through applicants and select the best ones in most cases.

Having a strong tenant screening system in place can help prevent lengthy legal disputes and even property damage. In some situations, especially if you deal with multiple-occupancy home leases (e.g., apartment blocks or house shares), it can also help you make sure that everyone you rent to gets along and is happy. This in turn leads to lower tenant turnover, which means less work finding new tenants for you.

Understand Fair Housing Laws and Protected Classes

It’s OK to screen people for some criteria, but not others.

Generally, you can deny rental applications of those with poor rent payment histories or someone with a violent criminal history. However, discrimination against someone in a protected class is not only morally wrong, it’s also illegal. This section will let you know what those protected classes are.

Federal fair housing laws

The following was taken directed from the U.S. Department of Housing and Urban Development’s Fair Housing Website, which states:

In the Sale and Rental of Housing: No one may take any of the following actions based on race, color, national origin, religion, sex, familial status, or handicap:

Refuse to rent or sell housing
Refuse to negotiate for housing
Make housing unavailable
Deny a dwelling
Set different terms, conditions, or privileges for the sale or rental of a dwelling
Provide different housing services or facilities
Falsely deny that housing is available for inspection, sale, or rental
For-profit, persuade owners to sell or rent (blockbusting), or
Deny anyone access to or membership in a facility or service (such as a multiple listing service) related to the sale or rental of housing.

In case you missed it, here are those classes again:

Race
Color
National origin
Religion
Sex
Familial status
Handicap

While it is vitally important that you don’t discriminate against those classes, it is also important that you don’t even ask questions about those topics. This means don’t ask what their race is, how many children they have (you can ask how many people will be living there), or if they have a husband or wife. Save yourself legal trouble and simply do not ask.

This also applies for advertising: DO NOT advertise for “no kids,” “great Hispanic neighborhood,” or “home great for families.” This is against federal law. Check out our guide on Fair Housing Laws for more.

State and local fair housing laws

In addition to Federal Fair Housing Laws, your state may also have landlord-tenant laws that must be followed regarding fair housing, which might include:

Marital status
Sexual orientation
Gender identity
Age
Participation in the Section 8 program or other subsidy programs

Be sure to check with your state and local laws to ensure compliance with fair housing standards. A simple Google search for “your state” and “fair housing” should give you the answers you need. The last thing you want is to accidentally end up violating fair housing laws.

A note on age and children discrimination

As mentioned, federal fair housing laws prevent discrimination against family status, and prohibiting children is illegal. However, there is an exception to the law, which states that certain properties are designated as a “55+ community.” According to HUD, in order to qualify for the exemption, the housing community/facility must satisfy each of the following requirements:

At least 80% of the occupied units must be occupied by at least
one person 55 years of age or older per unit.
The owner or manager of the housing facility/community must
publish and adhere to policies and procedures that demonstrate an
intent to provide housing for persons 55 years or older.
The facility/community must comply with rules issued by the
Secretary for verification of occupancy through reliable surveys and
affidavits.

In other words, if 80% of the units in a community owned by you have someone older than 55 living in them and your visible intent is to provide housing for an older age bracket and you abide by the laws that govern this exemption, you can exclude a familial status to include only those who are 55+ in age, thus discriminating legally against those with young children.

Steps for Screening Tenants

Once you’re ready to tackle tenant screening, you’ll take the following steps to do so efficiently and properly.

1. Set your minimum requirements

One of the most important steps in tenant screening and finding the best qualified ones is by coming up with your list of minimum requirements for the property. This list of standards should be told to the tenant on the telephone, placed on the rental application, placed on your Craigslist ad, and told in person to eliminate those who simply will not qualify. Having a clear list of requirements saves you and your applicants time.

The following four standards are commonly used by landlords on BiggerPockets:

Income must be three times the monthly rent

By giving an exact minimum income requirement, you can filter out those who might believe they can afford to pay the rent but really can’t. Requiring income to be three times the monthly rent has been used by landlords for many years—as well as banks and other financial institutions that supply loans. Note that the salary that’s considered using this method is gross, not net.

There are situations when a good prospective tenant may not meet the 3x rule but still be worth considering. This especially applies to people who run their own businesses and have irregular incomes. In these instances, they may be able to compensate for a lower monthly income with savings or other assets. They may also be able to offer a guarantor, a person who vouches to step in for them if they are unable to make rent for whatever reason.

Tenants must have good references

The references you receive from past landlords are the best indication of the way the tenant will behave for you. A bad review from a past landlord is a huge red flag for most landlords. When requesting references from past landlords, you will get more out of them if you ask specific questions; for example, ask them to be honest about the tenant’s cleanliness, whether they got into any trouble with neighbors, and whether they were courteous and reasonable when resolving any issues with the property.

No evictions

A tenant who has a serious eviction history is unlikely to ever rent from me. I realize that many people change, but I’m not willing to take that risk.

Clean background

I want tenants, not problems. If a tenant has a background filled with criminal activity, I am very hesitant to rent to them. Again, people do change, but it is not a risk I’m willing to take.

Should you allow a cosigner?

This brings us to the question of allowing a cosigner: Should you do it? The answer is: It’s not a bad idea under some circumstances.

A cosigner is a person who agrees to be financially responsible if the tenant is unable to pay their rent on time. They sign the rental lease agreement along with the tenant; hence the name. A cosigner can reassure you, the landlord, that you won’t have to go through the stressful, costly process of evicting a tenant.

Contrary to popular belief, needing a cosigner doesn’t mean that the tenant is undesirable or financially irresponsible. Some people may recently have experienced a career change or a change in family circumstances, which has affected their income. Others may be recovering from the financial ill effects of the pandemic. If you like a tenant but are not 100% sure of their long-term financial prospects, having a cosigner can benefit both you and the tenant.

If you live in a low-income area with a sluggish housing market, taking on a tenant with a cosigner can also simply make the difference between having rent come in and having a property stand empty.

Note, however, that when accepting a cosigner, you should screen them exactly like you would the tenant, running and background and credit check. Ideally, a cosigner should be a resident in the county where you are renting.

2. Prescreen prospective tenants

You’ve begun advertising for your property and have begun receiving calls. Contrary to popular opinion, tenant screening doesn’t begin with a background check or a rental application—it begins with the initial contact. This is known as “prescreening.”

As you can probably tell by the length of this guide, tenant screening is not a flippant activity that you can do in a few seconds. Tenant screening can take a considerable amount of time—and you don’t want to waste that time on every person who shows interest in your property. This is why prescreening is so important.

Think of the tenant screening process as a funnel—like the kind you would use to pour oil into your vehicle. At each step of the process, you are able to narrow down the pool of applicants until only a small few—or just one—match. Prescreening is the widest part of that funnel and will help to keep away those who obviously won’t qualify.

Request an application

Having prospective tenants fill in an online tenancy request application form is a very effective early stage in the tenant screening process. First, people who are genuinely interested in the property and serious about renting will have no problem answering a few questions online and providing accurate information about themselves. You will automatically weed out those who aren’t all that interested, as they won’t bother with this step.

Prescreening through your advertising

Your prescreening efforts begin with your advertisement. Whether you are using the newspaper, Craigslist, Zillow, or another service to market your property, the information in your advertisement can further help to weed out time wasters. For example, by placing the location in your ad, you can screen out individuals who are looking for another location. (Don’t worry—if you don’t feel comfortable putting in your exact address for any of your rental properties, just put a general location or a nearby landmark.)

Also, putting the price in the advertisement helps to keep those who can’t afford that price range from calling. I often see ads with no monthly rent listed—and have to wonder how many wasted calls they are receiving or how many potentially great tenants they are missing out on.

Prescreening through your first phone call

The initial phone call is the next logical step in screening tenants. The first thing you hear is often an indication (though not proof) of the kind of tenant they might be. For example, if the first words you hear after saying hello is a voice yelling into the phone, “How much do I have to have to move in?” you can assume the tenant might not be a great fit. After all, they are more concerned with getting in anywhere than even asking to look at the property.

When a tenant calls about a property I have for rent, I like to ask them, “What can I tell you about the property?”

This open-ended question allows the tenant to begin talking and asking questions. The typical questions are generally:

“How much is it?” (even though I always include it in the advertising)
“What’s the address?”
‘’Are any bills included?’’
“Do you accept pets?”
‘’Is there any flexibility on the moving date?’’
“How much is the deposit?”
“Will you work with me on security deposits?” (no)
“Can I book a viewing?”

The kind of questions asked by the tenant is a great indication of the kind of tenant they are going to be. I’m not suggesting that you judge a tenant solely on their ability to ask good questions, but it does help point me in the right direction as to the type of person they are. Are they orderly? Do they care about where they are going to live? Do they sound broken?

In the conversation, I also always include a few of my minimum requirements, as we discussed earlier. Usually, this is easily worked into the conversation, such as, “Now, the rental property has a minimum income requirement of $____ per month, and we do a full background and criminal check to ensure we only rent to upstanding people.”

Many times I simply get a click after stating this information. If not, they will usually volunteer how much money they actually make and reassure me that they have never done anything bad in their entire life.

This simple two-minute phone call does two great things:

Gets rid of 80% of the “bad apples” and prevents them from wasting my time.
Lets the good tenants know I am not a slumlord and only rent to good people.

In both cases, this is a win for me. This is what makes pretenant screening so important. It allows you to save time, avoid nuisances, and project a good image.

I’d also recommend leaving your minimum requirements on your voicemail as well—so when you can’t get to the phone, your tenants still get the message, and your prescreening still works.

3. Use an application

The rental application during tenant screening offers a window into your tenant’s life. You must ask the right questions, and don’t ask the wrong ones (see the Fair Housing section).

The following is a list of must-have sections to include and ask on your rental application:

Name, address, phone number, and driver’s license number
Social Security number and date of birth
Current and past landlords, with contact info
Employer and job details, with contact info
Have they ever had an eviction filed against them or broken a lease agreement?
Release of information signature

When tenant screening, these questions are the most important for knowing the past history of your potential tenant. A good strategy to use is not to ask “have you” but instead “how many” or “when.” This makes it tougher for a tenant to lie. For example, by writing “Have you been evicted?” a tenant will more easily write “no” than if it said, “How many evictions have been filed against you?”

4. Screen potential tenants in person

The next step of the tenant screening process is to meet with tenants and show them the property. This is also a great opportunity to screen the tenant before any paperwork is done. I always restate my minimum requirements to the tenant in person; it’s good practice that minimizes misunderstandings further down the line.

At this point, many tenants will admit that they don’t quite meet the requirements but ask if I’ll work with them anyway. If I need time to think about it, I always tell them I will have to check with the owner (or partner, or any other higher authority) and let them know.

If I know they immediately won’t qualify, I let them know why, but still offer the opportunity to apply. Why? I never want to be accused of being discriminatory against any of the protected classes. Let’s talk about those now.

5. Run a background and credit check

Let’s get down to the nuts and bolts of running a background screening and credit checks—but first, allow me to explain the difference.

A background check looks at the tenant’s criminal records and eviction history and for fraud or deception. A credit check looks at the tenant’s ability to pay their bills and make loan repayments responsibly.

Several years ago, a law known as the Fair Credit Reporting Act was passed in the United States that made checking a tenant’s full credit report much more difficult and cumbersome. Whereas before, any landlord could simply enter the applicant’s information and get back their full credit report, there are now several hoops a landlord needs to jump through, including an on-site inspection. If this is an approach you want to take, there are several reputable companies you can use to secure a credit report.

However, at BiggerPockets, we recommend using one of the best tenant screening services to avoid that hassle. A popular company is called SmartMove by TransUnion. They provide the following:

No site inspection needed
Includes both criminal and credit background
The tenant applies and pays online.
The vital information from the tenant’s report is sent to you, the landlord.
No application process, no site inspection, no waiting period
To run a background and credit check through SmartMove, you’ll need to set up an account with the service, which should take less than two minutes. Next, you’ll enter the rental property information and the prospective tenant’s email address.

Your possible tenant will receive an immediate email prompting them to head to SmartMove and set up an account of their own, which should take them less than two minutes. They will be required to enter their name, current address, Social Security number, and other information. After doing so, they will submit their credit card number for processing (though as a landlord, you can choose to pay for this service rather than the tenant).

Almost immediately, you’ll receive an email letting you know their information is ready to view. At this point, simply log into your account and search for the tenant via the rental property address.

6. Get references

The next step in the tenant screening process is requesting references from your prospective tenant’s previous landlords and employer. You may also request personal references from a tenant’s contacts at this stage.

Call previous landlords

The reference from a previous landlord is the most important one, as it will give you, the prospective landlord, the most useful information about your tenant. Be very specific when speaking to current and previous landlords.

Questions you should be asking them include:

Did the tenant always pay rent on time?
Were there any disputes or problems during their tenancy? If so, how were they resolved?
Did anyone make any complaints about the tenants? Did they get on well with the neighbors?
Did you have to do much to the rental property after they moved out in terms of repairs and cleaning?

Some landlords may be unable to answer all the questions on the phone, so emailing them may be a good idea.

You may find that some landlords, especially larger rental property management firms, will require you to fax them over the tenant’s release of information (which you should have on your application) along with your questions. For more information, here’s a great list of 12 questions to ask tenant references.

Call employers and verify employment

The next tenant screening step is to get in touch with their employer to check that the tenant works here; they say they do. You don’t need to request too much detail here, but ask the employer how long the tenant has been working at the company, whether their role is permanent, and for tenant income verification.

Again, it is much easier to request this information in writing. Your tenant should provide you with an appropriate email address, whether it’s for a manager or an HR department. It is important that the details they provide are of someone authorized to give detailed information on their employment history and salary, not another employee at the company.

When talking with their previous landlords or property managers, you will likely need to fax over the “release of information” signature from the application before they agree to discuss the tenant.

If your prospective tenant is self-employed, you can ask for their most recent employer’s details. If they run their own company and have an accountant, you can ask to reach to them for a reference on the tenant’s ability to manage their finances. You should also ask to see their tax returns, ideally from the past two years.

Get personal references

Not all landlords choose to get personal references, as it’s generally understood that friends and family will rarely give a bad reference. However, if you like a tenant but don’t have the reassurance of an employment reference (for example), getting a personal reference can be a good idea. It also gives you extra contact in case you need someone to step in for a tenant. They can become the tenant’s cosigner if it gives you peace of mind as a landlord.

7. Screening on social networks

In today’s world, people often put more information publicly on their Facebook, Twitter, or other social network accounts than they would even tell their own mothers. I always do a search for my potential tenants and see if I can find any information that would help me make an informed decision.

For example, a young couple once applied for one of my apartment units that do not allow pets. However, upon checking her Facebook profile page, we discovered she had a brand-new puppy that she did not disclose and was attempting to hide.

What Are the Red Flags in the Tenant Screening Process?

So, as a landlord, what should you consider to be red flags during the tenant screening process? We recommend taking note of the following, which are never good signs.

They ask for rent reductions or mention that the rent is quite high

Now, only you know your own rental property. If you are advertising a home that still needs a few things fixed and the tenant is asking for a temporary rent reduction to reflect that, this may not be unreasonable. However, if you are advertising a newly renovated home in a highly desirable area and the tenant starts the conversation by asking if you can rent to them for less, it’s a no-go.

Remember, if you don’t feel comfortable creating your own tenant screening reports, you can always hire a tenant screening service to help you create a thorough tenant screening report.

They ask for a deposit reduction or payment plan

This is another sure sign the tenant isn’t in good financial health and won’t be able to afford the rent. Avoid.

They don’t appear to like their current job

While life happens to all of us and many people successfully change careers at various points in their lives, watch out for prospective tenants who seem visibly unhappy or bored in their current job. This may indicate that they haven’t come up with a plan and may just quit their job suddenly, which will jeopardize their ability to make rent payments.

They wanted to move in yesterday

If a tenant is in a great rush to move, this may indicate that they have been evicted. Proceed with caution until you get all the details. In some cases, the need for a sudden move can be completely unrelated to their tenant quality and simply result from a relationship breakdown or another sudden life change. However, avoid any tenant who is trying to pressure you too hard on the move-in date.

Seven Qualities of a Great Tenant

There are no guarantees when it comes to the future quality of a tenant. However, there are several key metrics that will help you decide what kind of tenant they will be. To make your life as stress-free as possible, it is imperative that you only rent to the best tenant possible.

The following is a list of the seven traits that make up the right tenant:

1. Great tenants can afford the rent

This may sound obvious, but learning how to screen tenants is, first and foremost, about determining that they can afford the rent. Without proper payment, you’ll be forced to evict and be faced with potentially thousands of dollars’ worth of legal fees, lost rent, and damages. Most landlords require that a tenant earn at least three times the monthly rent from their (documentable) job. Many tenants believe that they can afford more than they really can—so it is the job of the landlord to set the rules. Three times the monthly rent is usually sufficient.

If your renter has a more unusual work arrangement, such as being self-employed, it is better to look at their annual income over the past two/three years. A good rental applicant will be able to show steady earnings without too many fluctuations.

2. Good tenants pay rent on time

While some landlords look at late rent as simply a benefit (and the late fee as a financial bonus to them), a late-paying tenant is more likely to stop paying rent altogether. The stress involved when the rent doesn’t come in is not a pleasant experience and can be avoided by only renting to tenants who have a solid history of paying on time.

3. They have a good long-term outlook on their job stability

While a tenant may be able to pay the rent on time right now, their ability to do so in the future is often determined by their job situation. If they switch jobs often or have long periods of unemployment, you may find long periods of missed rent.

This means that if your prospective tenant has changed jobs several times over the past few years, it’s a good idea to probe them on the reasons why. If the job changes correlate with a career or career progression change and the rental applicant has benefited financially from the change, they’re still likely to be a good candidate.

4. Their housekeeping skills

No tenant stays forever—and when they leave, you want the rental property back in good condition. As such, it is important that the tenant’s day-to-day living be clean and orderly. They must take good care of the rental property you have entrusted them with. It’s always a good idea to request references from the tenant’s past landlords, since the references should give you an idea of a tenant’s general ability to return a rental property in good condition.

5. Great tenants have solid credit scores

Alongside paying attention to credit reports, you want to closely examine an applicant’s credit score. A credit score is a reliable way to delve into a prospective tenant’s financial health. Reviewing a credit score can paint a more accurate picture and be more beneficial than simply requesting bank statements or pay slips. A credit score considers the applicant’s past borrowing history, how much money they owe in different loans, and their ability to repay them consistently.

Needless to say, the higher the credit score, the more reliable your tenant will be. A credit score of over 600 indicates someone who isn’t in too much debt, makes repayments on time, and doesn’t make unwise financial decisions that could impact their ability to pay rent.

6. Their aversion to illegal activities

There’s no need to expound too deeply on this. Tenants who engage in illegal activities will cause nothing but stress and expense.

7. The “stress quotient”—how much stress will they cause you?

The final quality of a great tenant is something I call their “stress quotient,” or the amount of stress a tenant will cause you, the landlord. Some tenants are very high maintenance and constantly demand time and attention. Unless you are having a hard time finding quality tenants, these types will only cause more problems.

This ultimate guide is designed to help you find and sift through the information about the tenant to find one who most closely fits the above seven qualities of a perfect tenant. Obviously, no tenant is going to be 100% perfect, so deciding how close to perfection you will require is a personal choice that largely depends on your desired involvement level and the community in which your rental property is located. If tenants are difficult to find, it may be financially advantageous for you to rent to a less-than-perfect tenant in order to fill vacancies. However, if you have plenty of tenants to choose from, you can be significantly pickier.

Denying an Applicant After Screening

If you decide to deny an applicant, it is vital that you document your reasons why so there can be no question whether there was discrimination involved. By having carefully defined standards (see above), you have the ability to easily deny a tenant that does not meet your standards.

When I deny a tenant, I like to avoid complications by having the tenant “disqualify themselves,” a trick I learned from the book Landlording on Auto-Pilot by Mike Butler. You have two choices if a tenant doesn’t qualify because of a bad landlord reference. Which sounds easier to you?

“I’m sorry, Jerry, but your landlord gave you a terrible review, and I can’t rent to you,” or
“Hi Jerry, I ran into a bit of a snag in getting positive feedback from your previous landlord, so I need you to go and speak to that landlord and get him to call me with a positive review, and we can move on. Can you do that for me, Jerry?”

Jerry will, most likely, mumble, “oh—OK, sure,” and then disappear, never to be heard from again. You never disqualified Jerry—he simply gave up due to the work you needed him to do. When you do disqualify an individual, I always send a letter to them stating exactly why they were dismissed. This can be as simple as a form letter in which you check a box stating why they weren’t approved.

Typically, if a tenant applies for a rental property and fails to qualify, they forfeit their application fee due to the time and cost associated with working their application through. However, if you deny them simply because someone else came first, you must return their application fee.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

How to Screen Tenants for Rental Property