Tenant Screen Advice

[James Morrissey]

Hey fellow BPers, what is your approach to screening tenants? What are the most important aspects to a tenant's application to you? Attached I have a tenant screening document I wrote out based on episode 6 of Real Estate Rookie.

[Kenny Dahill]

@James Morrissey, screening tenants is definitely doable for your first time.  Some landlords don't feel comfortable.  End of the day, it's subjective to your own comfort.

Here are my go-to's:

• Background / Credit Checks:  These reports are important but they are not the end-all be-all.  Simply another tool in your screening toolbox.
  • Low Credit:  If tenant has low credit, review and look for any recently missed payments.  Granted their credit score is a marker of today and not a trend, assess if their scores are going up or down.  Look for any missed payments within the last year.  Ask them to explain about missed payments.
  • Criminal Record:  Personally, I allow non-physical/aggressive criminal records. i.e. DUI.  Some people have a zero tolerance.
• Rent: Income Ratio:  I look for 3x, total combined income.  However, I match this with their credit score to see how much debt they pay each money as well.
• Pets:  We don't allow cats.  Too many people are allergic and will increase our vacancy risk.  However, we have no restrictions on dog breeds.  I know plenty of pit bulls that are the sweetest.  We require meeting all dogs first to see any aggressive or destructive behavior
• Proof of Income / Funds:  Applicants must provide pay stubs and bank statements.  I like to view their spending habits as that is an indication of monthly debt they pay.  Or, if they can afford a car maintenance bill.
• Personal Reference:  Ignore these.  It's a joke.  Will a personal reference ever say anything bad?!
• New Relationships:  Regardless of the ship (friend or relation), I give the talk regarding both are on one lease.  If they break up, they are both responsible until it is resolved with a new tenant I approve.
• Negotiators:  Applicants who immediately ask me to reduce rent, I drop them from consideration.  That is a sign they will always ask and expect favors.  BTW, we offer a discount for 2-year leases but that is different.  Some applicants will try to negotiate other items into the lease.
• Last Minute Movers:  My personal screening quote I always follow is "drama in, drama out".  Sad to say but almost always their old drama will follow to your rental property.  Avoid it.

These are some of my personal tips that I have used.  During my years of placing tenants, I have had multiple homeruns and only one dud.  Granted they were recent college grads and I knew I was taking a higher risk.  Truth be told, they were grant tenants until they moved out and got upset about security withdraws due to leaving the place trashed (not damaged).