If a tenant wants to renew a lease, it is within your right to screen (background/credit check, etc.).If an existing tenant is month to month and you decide to keep them, keeping the lease month to month is beneficial as it is easier to evict should the need arise.

I can tell you that I live in a relatively cheap area, come from a blue collar background, already own everything I really need in life, and I would find it impossible to retire on 2 SFHs. 

Background story: A group of my friends (including me) are first-time home buyers looking to break into REI by means of House hacking.

@Adem Karaduz my reaction: beautiful building and amenities.

does anyone else experience potential tenants that don't want to fill out an application?

Do I use the same criteria as above and invite the first ones who applied & fit the bill to do the background and application check?

I would recommend learning a bit from here and making your PRIMARY authority on this your real estate or business attorney (preferably with a Tax background). 

I have recently cleared my post graduation in Project Management + International Business and have a background in Computer Science from back home.My family back in India is into long term buy and hold real estate investing in farmlands, empty plots and commercial spaces.

This is when the "real" credit and background check comes in, and where any compromise to your screening can hurt.

Background - owned properties in CA, one is primary home with mortgage and my parents live in another one (no mortgage and title is under my name).