Tenant screening process for first property

[Austin Haynes]

I just secured my first house hack! I am currently in the process of deciding what property management software to use. As of right now i am deciding whether or not to use RentRedi but I noticed that RentPrep has a more thorough tenant screening process. I am wondering if anyone would be able to guide me on the best software to use and or if there are any others out there.

Ideally I want the best property management application to streamline the process of being a landlord but also want a in depth tenant screening. For my for rental property/house hack i want to make sure that I do everything right. Thank you!

[John Warren]

@Austin Haynes full disclosure I have not used RentRedi. I have used Cozy/Apartments.com, Transunion smartmove  and Zillow for credit checks, and I now am using AppFolio to manage 114 units here in Chicago. I find that tenant screening requires much more than just a software with a nice interface. We are digging deep into employment history, land lord references, social media, and local court records to find out if a tenant is likely to be a good tenant or not. 

[Michael Noto]

@Austin Haynes Just make sure that whatever option you choose provides a national criminal and eviction check, not state specific ones, and gives a detailed history of credit (not just a score). 

[Caryn Seifert]

@Austin Haynes

In addition to the good advice above:

3 Mo of pay stubs. Mo. income of 3X the rental amount. 

Call to verify employment and whether it is temporary or permanent.

Google them. Enter name in quotation marks so it shows you only results for that person as opposed to showing results for anything containing their first or last name. Also, try combining applicants' names with their city or county to narrow the search.

Drive-by Unexpectedly. Consider driving by or even paying them a visit at their home to get a good look at how much care they show to their yard maintenance, housekeeping, and general cleanliness.

Landlord references are good but be aware they may not always be truthful if they are trying to get rid of a problem tenant. 

[Kristi Mergenhagen]

Bigger Pockets offers tenant screening through a trusted partner. They have two options depending on what you are looking for; a tenant involvement and a no tenant involvement package. There are also very useful add-ons available like income verification. You can find further information by going to Tenant Screening under the Tools tab.
Best of luck to you!

[Jerel Ehlert]

Don't Expect Perfect.  Don't get judgy about their life choices.

What do you want?/What is your goal?  - any tenant who can pay rent on time, in full, and not destroy the property.  That's it.  No more. No less.

Someone who has perfect credit, 4x+ rent, and cash reserves can go buy any place they want.  These are not anywhere near your pool of applicants.  You won't get them, but if they do apply, it is likely false information or they can demand a reduced rent rate (perfect tenants don't pay top of the market rates).  The alternative explanation for why this unicorn applies is for some clandestine purpose.

Relying too heavily on credit reports and criminal background checks run afoul of the Fair Housing Act.  Credit reports have already been proven to be a poor indicator because the formulas don't correlate with future performance.  Both credit reports and criminal background checks have heavy racial bias against minorities.  Relying on tools with a strong racial bias makes your tenant selection process racially biased.

Do not go to the applicant's current residence or job.  First off, stalker much?  Second, likely a violation of your states consumer protection laws.  If that's what you need to feel good about leasing property, you are in the wrong business.  And what, exactly, are you googling them for?  What criteria are you using to evaluate the results in light of a decision to approve a rental application?  If I were to get you under oath at a deposition or on the stand, these are the kindest questions I would start with and get worse from there.  Likely nothing about this process will make you look good (assuming you can correctly identify which results really are your applicant).

Assume, for one moment, that somehow/someway your application process comes under the scrutiny of a highly motivated and adverse attorney (private suit or government agency).  You must rationally defend your entire application and review process to reach a legal and unbiased result: approved or not approved.

And....GO!

[Christie O'Malley]

After trying a few different property management softwares, I settled on Hemlane. We knew that we wanted to grow exponentially and needed something that was user friendly for not only us but our renters. It has been one of the best decisions. Very streamlined. You can use them to list directly on websites like Zillow and Trulia. The leads will come directly into your account and you can invite the prospective tenants to apply and complete a full background/credit check. Leases are uploaded to the system and it allows you to keep all communication with each tenant in one simple space. Rent can be collected through ACH or credit card. (I do not use the credit card option) Once you reach a certain milestone, you can add team members to help you manage your rentals too! It is a pretty neat system and exactly what I was looking for. Hope this helps. 

[Amy M Lane]

I use TenantCloud. It's desktop and mobile friendly. Prospective tenant pay for background and credit history and fills out online application via a link you would send them. Has all the basic management features you would need to start out ... and best of all its free for basic service up to quite a few units.

[Drew Sygit]

@Austin Haynes - why are you expecting a program to screen rental applicant (they are NOT tenants yet!)? Too much reliance on artificial intelligence to approve loans is what caused the Great Recession - and getting an applicant to cooperate with a loan application process is WAY EASIER than getting an applicant to cooperate with a rental application process. 

Give me any AI rental approval system and I gurantee I can beat it!

@Caryn Seifert why would a landlord want 3 months of paystubs? As long as it's a YTD paystub, we only need the most recent to calculate average income to date.

@Jerel Ehlert makes some great legal points, but once you understand the risks - you can make your own decisions.
Esquire Ehlert can you help us all understand more about your points please?
1) Can you please share any case law examples where the use of a credit report was ruled a Fair Housing violation?
2) Same goes for criminal background checks... we're aware that several states and cities have passes statutes that you cannot ask about them on an application olr use them as an approval filter, but not aware there's been a Fair Housing ruling on them yet or that a landlord can't use the information as part of their approval process...
3) How is a visit to an applicant's home a Fair Housing or Consumer Protection laws? Where has that been established in case law please?
4) Googling: not aware of when public information became a Fair Housing violation to use? Why would a court fault a landlord for denying an applicant due to online information showing they were not paying their rent, had unauthorized pets, were drug users, were threatening their current landlord with violence, etc.?

Appreciate you answering any of the points above:)