10 Steps to Successfully Screening Tenants

No matter how eager you are as a landlord to fill a vacancy (finding a tenant), one must take the necessary time to screen tenants properly.

There is no point in hurrying to find a tenant only to have to evict them, wasting time and spending thousands shortly after.

Making a dollar today only to spend ten dollars later is pointless.

Our 10 Steps To Successfully Screening tenants:

1) Have the applicant fill-out and sign a formal application.

Never run a tenant’s credit or background check without their written and signed permission.

2) Have the applicant pay you upfront for the application fee (Fees may vary depending on the service used to run credit and background checks but is usually $35-$50 per applicant).

3) Collect a check for the First Month’s Rent with the application.

The purpose of this is to deter the applicant from trying to walk away from the property while processing the application. We have heard of situations where the homeowner processed an application and decided to accept but was told by the tenant that they found another property and would not be renting the homeowners.

Holding the first month’s check deters the applicant from moving on while you are processing the application.Be sure to let the applicant know that you will be depositing the check if the application is approved.

4) Make sure everyone over the age of 18, staying in the property fills out the application and has his/ her credit and background checked.

Without Exceptions!

We have heard of several accounts where the son, daughter or family member had blemishes such a criminal records and evictions that were not caught because the homeowner failed to process an application on everyone over 18 in the household.

5) Process the credit and background checks using a website service such asMySmartMove.com and review the reports.

Pay close attention to the credit scores, the amount of revolving credit, payment history and the monthly payment that the applicant has to make towards their dept.

6) Ensure that the applicant’s income is true by requesting the applicant’s most recent pay-stubs and or W-2’s.

7) Verify employment status by calling the applicant’s supervisor or Human Resources Department.

8) Call the previous landlords for references and verify that the application addresses match the addresses on the credit and background check.

9) Check Background Report for evictions, criminal history and terrorist list status.

10) Make a decision! Accept or Decline.

Remember to provide a reason for denial within 30 days should you choose to deny.

If you are unsure as to how to screen a tenant or do not have time to do so. It would be in your best interest to hire a property management company to assist you.

Their services will be at a cost but it will be far less than lost rents and having to go to court for evictions if you fail to process applications correctly.

Property Management Fees are tax deductable!

3 More Points to remember:

1) In the state of Virginia, A landlord or management company CANNOT collect more than 2 month’s rent as a security deposit from a tenant!

2) The asking price CANNOT be increased based on the applicant. * Do not discriminate against applicants. Review the Fair Housing Laws and follow them to avoid legal confrontation.

3) Rule of thumb for Income VS Rent payment: Rent should not exceed 45% of the tenant’s income after expenses.

For example: If a tenant earns $1000 per month and has $350 in expenses, their rent payments should not exceed $300 (Monthly Income – Monthly expenses / 0.45).

Good Luck & Feel Free to contact us with questions!