Tenant screening trends in current market

[Ryan Bird]

I heard in a local real estate investing webinar that tenants screening rules needs to be revisited in this market. In short, they were saying that tenants are able to afford buying homes now (with the interest rates being very low) so the recommendation was to bring down the screening standards. Is this the trend you’re also seeing?

Just an example: If the screening criteria before was income greater than 3x, the ask was lower it to 2.5x since 3x income applicants can now afford monthly payments for mortgage. Similarly they also asked not to focus much on credit scores but look more at the tenant history in terms of evictions, background etc.

I personally thought buying a home in this market is super competitive so I didn’t had to necessarily lower the standards for tenant screening. Wanted to check if there is still a strong demand for renters. It’s a class A neighborhood for context.

[Julie Hartman]

From our experience, the exact opposite has been true. With the eviction moratorium ending/ended, tenants that are now being legally evicted need someplace to go and screening needs to be solid. The last round of properties we had advertised recently brought out less than stellar applicants. We had a few that faked background information and we were glad we screened as thoroughly as we always have. If you lower your standards, you may find yourself in trouble later. There will always be people that want or need to rent instead of buy, so don't change your process for the ones that don't.