How to Screen Tenants in 7 Steps (+ Free Checklist & Flowchart)
Screening tenants for a rental property is a critical process that can significantly impact a property’s success and profitability. By implementing effective screening methods, landlords can attract reliable and responsible tenants who will not only meet their rental obligations but also help property owners maximize the potential of their investment. In this article, we explore seven key steps in screening tenants to ensure landlords make informed decisions to fill their vacancies while adhering to Fair Housing Laws.
Property owners should plan ahead by utilizing a tenant screening checklist to guarantee they’ve covered the necessary steps in the tenant screening process. Download our complimentary checklist and decision flowchart below, which includes rental application items, ways to verify income and employment, and tenant interview questions.
Thank you for downloading!
Baselane is a new banking platform built specifically for independent landlords. In addition to its high yield 4.25% APY on all deposits, Baselane offers an array of rent collection features like automated payments, fees, and reminders. | ||
 |
| |
1. Understand & Comply With Fair Housing Laws
It is important to have a comprehensive understanding of Fair Housing Laws before embarking on the apartment screening process. Familiarize yourself with federal, state, and local regulations to ensure compliance and to help you avoid any discriminatory practices. Landlords must treat all applicants fairly and equally, without any bias based on race, color, religion, sex, national origin, familial status, or disability.
To avoid breaking fair housing laws, landlords should follow these general guidelines:
- Treat all applicants equally: Treat every applicant fairly and equally regardless of their background or characteristics. Avoid any form of discrimination or bias during the process of screening tenants.
- Use consistent screening criteria: Develop a clear set of qualifications and requirements based on factors like income, rental history, creditworthiness, and references. Apply these criteria uniformly for all applicants and avoid making exceptions for specific individuals or groups.
- Advertise responsibly: When advertising your rental property, avoid any language, images, or statements that could be interpreted as discriminatory. Focus on describing the property features, amenities, and location rather than using language that targets specific groups of people.
- Ask legal and objective screening questions: During interviews or interactions with applicants, ask only legal and objective screening questions directly related to their qualifications as tenants. Avoid inquiries about protected characteristics, family status, and disabilities.
- Maintain accurate records: Keep detailed records of all interactions, communications, applications, and screening results. Documentation can help demonstrate that your tenant selection process is fair and unbiased.
- Use screening services: Utilize reputable tenant screening services or credit reporting agencies to conduct credit checks and background checks during the verification processes. These services are equipped to handle sensitive information and ensure compliance with fair housing laws.
For a more in-depth guide to understanding Fair Housing Laws, check out our article on Fair Housing Definition: A Comprehensive Guide for Real Estate Agents and Landlord Tenant Laws by State: Renter’s Rights & Compliance.
2. Use a Rental Application to Prescreen Tenants
Utilizing a well-designed rental application is a practical step in the tenant screening process to protect your investment properties. A comprehensive application helps gather essential information like personal details, employment history, income verification, references, and consent for background and credit checks. The application acts as a prescreening tool, allowing you to screen tenants and determine their suitability for your rental property.
Example rental application
A rental application should include several key pieces of information to help landlords assess the fit of potential tenants. Here are some essential details that should be listed on your application:
- Personal and contact information: The application should require the applicant’s full name, current address, phone number, and email address. This information allows landlords to contact applicants and verify their identity.
- Employment history: Requesting details about the applicant’s employment history, including current and previous employers, job titles, and durations of employment, helps assess their stability and income source. This information offers insights into their ability to meet their financial obligations.
- Income verification: A rental application should include a section where applicants can provide proof of income, such as recent pay stubs, employment contracts, or tax documents. Verifying income ensures that tenants have the financial means to pay rent consistently.
- References: Applicants should be asked to provide references from previous landlords or professional contacts who can vouch for their character and reliability. Contacting references offers valuable insights into the applicant’s rental history, payment habits, and general conduct as a tenant.
- Rental history: It is important to gather information about the applicant’s previous rental history, including addresses of previous residences, dates of tenancy, and reasons for moving. This allows landlords to assess their rental track record and helps landlords understand where their tenant has lived and in what types of properties.
- Consent for credit and background checks: Including a section where applicants grant consent for credit and background checks is crucial. This authorization enables landlords to request personal information on the tenant from the right legal entities.
- Additional information: Depending on specific preferences or property requirements, the application may include additional sections, such as questions about pets and vehicle information, or ask any specific questions that might help in determining their eligibility.
3. Run a Credit Report & Background Check
Once you’ve obtained a completed rental application, you can run a credit and background check on the tenant. A credit report serves as a valuable resource for landlords by providing essential information that helps assess the financial responsibility and reliability of prospective tenants. This detailed evaluation allows landlords to gauge an applicant’s ability to meet financial obligations, including paying rent on time.
A background check is a valuable tool that landlords can utilize to gain insights into a prospective tenant’s history. By conducting a background check, landlords can uncover crucial information to help you make informed decisions during the tenant screening process.
Key information that will be found on a prospective tenant’s credit report and background check are:
- Credit score: The credit score provides an overall snapshot of their creditworthiness. A higher score typically indicates a more responsible approach to managing financial obligations. Most landlords like to see a score of 700 or above.
- Payment history: In the applicant’s payment history, landlords can look for patterns of late payments, delinquencies, or accounts in collections. Consistent on-time payments demonstrate a tenant’s financial responsibility.
- Debt-to-income ratio: The debt-to-income ratio indicates their level of financial obligations compared to their income. A lower ratio suggests a better ability to manage additional rental expenses.
- Outstanding debts: Look for any outstanding debts or judgments against the applicant, as these may affect their ability to pay rent consistently.
- Criminal records: Check for any criminal records or convictions. While minor offenses may not be immediate grounds for rejection, serious offenses should be carefully evaluated.
4. Verify Income & Employment
Verifying income and employment helps landlords select tenants with the financial stability to fulfill their rental payments. Landlords should have a general guideline for income requirements needed from tenants. A common guideline often followed by landlords is the “three times the monthly rent” rule.
This means that applicants are typically expected to have a monthly income that is at least three times the amount of the monthly rent. For example, if the monthly rent is $1,500, applicants would generally be expected to have a minimum monthly income of $4,500.
However, you can choose to increase or decrease this multiple. For example, in New York City, tenants are required to make 40 times the rent to qualify for an apartment. So, if you want to rent a $2,000 apartment, you must make $80,000 per year.
Use our tenant income qualifier below to calculate if your tenant is eligible for your building. Input the following numbers:
- Gross Monthly Rent: The amount of money you will be charging tenants each month to live in your property.
- Tenant Gross Yearly Income: The amount of money, before taxes, that your tenant earns annually.
- Income Multiplier: The number you will use to qualify your tenant’s earnings.
The outputs will show:
- Tenant Income Qualifier: The amount of money your tenant needs to earn to qualify for the apartment
- Gross Monthly Tenant Income: The tenant’s annual income divided by 12 months to get the tenant’s monthly earnings.
Some landlords may have higher or lower income requirements based on their specific circumstances and preferences. Landlords can verify income and employment by contacting employers, requesting pay stubs, and employment contracts, or using professional verification services like RentPrep. Check out our RentPrep review if you’re interested in learning more about this tool.
Take a deep dive into the paperwork you can use to verify proof of tenant income in the article 10 Proof of Income Documents Landlords Use to Verify Income.
5. Check Previous Addresses, Landlord & Eviction History
In addition to verifying income, when learning how to screen tenants for rental property, it’s essential for landlords to verify an applicant’s previous addresses and landlord and eviction history. Thoroughly vetting application information increases confidence that the applicant meets your rental qualifications and will be a good tenant.
By asking for references and rental history information on the tenant application, landlords can uncover information about a prospective tenant’s previous addresses, eviction history, and former landlord relationship status. Details you want to discuss with a tenant’s former landlord are payment history, adherence to lease terms, property maintenance, behavior as a tenant, and any issues or disputes during the tenancy.
When contacting a tenant’s former landlord, consider asking the following questions:
- Can you confirm the applicant’s tenancy at your property?
- How long did the applicant reside at your property?
- Did the applicant consistently pay rent on time? Were there any instances of late payments?
- How would you describe the applicant’s communication and cooperation during their tenancy?
- Did the applicant maintain the property in good condition?
- Were there any reported issues or complaints from neighbors or other tenants related to the applicant?
- Did the applicant provide proper notice when planning to move out?
- Were there any lease violations, disputes, or conflicts during their tenancy?
- Would you consider renting to this applicant again in the future?
Financial dashboard (Source: Baselane)
Landlords can offer tenants an easy way of paying their monthly rent online to guarantee on-time payments with Baselane. Tenants can easily submit rent payments online, eliminating the need for paper checks or in-person transactions. This streamlined approach not only saves time but also ensures timely and consistent rent collection. Additionally, Baselane provides landlords with financial management tools to allow them to track income, expenses, and quickly generate detailed financial reports.
6. Interview Applicants & Ask Screening Questions
Once you’ve reviewed all application information and you’ve determined that you would like to proceed with a prospective tenant, then conducting face-to-face or virtual interviews with applicants may help you finalize your decision.
However, if you already have reasons to reject the applicant based on the provided information, in which case you would proceed by jumping to the next step below.
Landlords should prepare a list of questions when screening potential renters. These questions should be tailored to your specific requirements, covering rental preferences, lifestyle, and ability to meet rental obligations. Observe their communication skills, professionalism, and general demeanor during the interview to gauge compatibility.
Here are some suggestions for what landlords can do during the interview process and sample questions they can ask to assess if the tenant will be a good fit:
Example Questions You Can Ask | Example Questions You CANNOT Ask |
|---|---|
Do you have any pets? | Do you have any medical conditions? |
Are you willing to comply with the property's rules and regulations? | What is your sexual orientation? |
Can you pay the lease application fee? | Do you have any plans to start a family? |
Have you ever broken a rental agreement? | Are you married or single? |
Are you able to meet the monthly rent obligations? | Do you have any disabilities? |
To avoid breaking Fair Housing Laws during the tenant interview process, landlords should ensure that the questions asked during the interview are legal and objective. These questions should be directly related to the applicant’s qualifications as a tenant. Focus on factors such as income, rental history, and references. It can be helpful if landlords develop a standardized interview format with a consistent set of questions for all applicants to ensure fairness and avoid potential accusations of discriminatory practices.
7. Accept or Reject the Applicants After Screening
After carefully evaluating each applicant’s qualifications and determining whether they align with your renter criteria, landlords must decide whether to accept or reject their tenant’s application. Landlords should base their decision on a tenant’s creditworthiness, rental history, income stability, and overall compatibility to make an informed decision. Communicate your decision promptly and in compliance with applicable laws and regulations.
To help with the evaluation process, landlords should develop a clear set of screening criteria to objectively evaluate potential tenants. This is especially helpful when you have multiple applications, and you need to pick the applicant best fit for your property. Some screening criteria to help you with accepting the right tenant:
- Sufficient income: The applicant should have income that meets or exceeds the requirement of three times the monthly rent.
- Stable employment: A stable work history shows a continuous duration of time in their current job. This indicates reliability and a higher likelihood of consistent income.
- Verifiable income: Verify the applicant’s income through their current employer documents or tax returns. This helps confirm their financial stability and ability to meet rental obligations.
- Satisfactory credit: Assess the applicant’s credit history to make sure they have a strong credit profile. This indicates responsible financial behavior and increases the likelihood of timely rent payments.
- Clean criminal background: Check for a criminal background free of felonies or misdemeanors to prioritize tenant safety and security.
- Positive rental history: Evaluate the applicant’s previous residence and landlord history for a favorable track record of fulfilling lease obligations and maintaining their past properties.
After you determine whether the prospective tenant meets your criteria, you will be able to either accept or reject their application.
The way a landlord navigates accepting a tenant application is critical to starting the new landlord-tenant relationship on a positive note. There are clear steps that a landlord should follow to finalize the leasing process. This process involves clear communication, the preparation of a lease agreement, and ensuring a smooth transition into the rental property. The following actions should be taken when accepting a tenant application:
- Notify the tenant: Inform the tenant or their agent representation of your decision to accept their application. Landlords should promptly communicate the good news and express their enthusiasm about their tenancy.
- Provide lease agreement: Prepare a lease agreement that outlines the terms and conditions of the tenancy. Decide whether you are drafting a one-year lease or a month-to-month tenant agreement. The lease should include important details such as the rental amount, lease duration, security deposit, pet policies (if applicable), and any other specific terms.
- Schedule a meeting to discuss lease terms: Arrange a meeting with the tenant to go over the lease agreement in person or virtually. Be available to clarify any questions they may have.
- Conduct a move-in inspection: Schedule a move-in inspection to document the condition of the rental property before the tenant moves in. Walk through the property together and note any existing damages or necessary repairs. Have the tenant sign the inspection report for mutual agreement. Check out our move-in checklist in the article Normal Wear & Tear Versus Property Damage Guide.
- Exchange contact information: Make sure you exchange contact information with the tenant so that you can reach your tenants or they can reach you when needed. You may also provide them with your preferred method of communication for future correspondence.
- Provide a welcome package: Creating a welcome package can be helpful during this transition process. The package can include important information like a copy of the signed lease agreement, contact details for maintenance requests, garbage disposal instructions, and any additional property-specific rules that you may need them to follow.
Apartment rental agreement example (Source: pdfFiller)
These next steps of accepting a tenant’s application will help landlords establish a strong foundation for a successful tenancy. Once your tenant has moved and settled in, it may be helpful to continue to check in on them periodically to ensure there are no issues that need to be addressed.
When choosing a tenant, it’s better to forego a candidate than to rent to a potentially bad one. Although it might not be pleasant, the process of evicting a tenant is much worse. If there are clear indicators that a candidate is problematic, then you are within your rights to decline them. However, make sure you comply with adverse action Fair Credit Reporting Act (FCRA) laws.
The FCRA plays a crucial role in how landlords can utilize consumer credit reports when making decisions on tenant applications. When denying a tenant application based on information obtained from a consumer credit report, the FCRA requires landlords to provide an “adverse action letter” to the applicant. This letter must outline the reasons for the denial, and include the specific credit information that influenced the decision.
Some legal reasons to deny an applicant after screening include:
- Their income can’t support the rent
- Their credit is too low, or payment history is poor across several accounts
- They have a criminal history that indicates potential risk
- Employment is unverifiable, they have too little work history, or the employer indicates workplace trouble
- Prior residence research turns up evictions, judgments for property damage, unpaid rent, or problems with neighbors or law enforcement
Be prepared with supporting documentation when declining a prospective tenant and stay within the boundaries of the law. Online tenant screening provides the necessary data to ensure you do not make subjective decisions or improperly deny candidates.
Tools to Assist With Screening Tenants
Landlords can leverage advanced software to screen prospective tenants. These tools offer a variety of features like automated rental applications, online background checks, and credit assessments. By using tools throughout the tenant screening process, landlords can save time, reduce manual paperwork, and make data-driven decisions. This ultimately helps with selecting the most qualified and reliable tenants for your rental properties.
For a list of tenant screening products, review our article 6 Best Tenant Screening Services for Landlords.
Bottom Line
By taking the time to learn how to screen tenants in your property will reduce the headache of having to evict a bad tenant in the long run. Landlords should implement a thorough tenant screening process to minimize potential tenant scams, secure responsible tenants, and foster a positive landlord-tenant relationship. Leveraging technology and software tools can streamline the screening process and provide valuable insights into prospective tenants.
Frequently Asked Questions (FAQs)
To attract prospective tenants, utilize various marketing channels, such as online rental platforms, social media, local classifieds, and signage. Ensure your property listing is visually appealing and includes accurate details, attractive photos, and key selling points of the property. Respond promptly to inquiries and schedule property viewings efficiently.
It is important to understand the legal requirements surrounding security deposits in your jurisdiction. Generally, landlords are required to hold security deposits in a separate account, provide tenants with a written receipt, and follow specific procedures for their return or deduction. Familiarize yourself with local laws and regulations to ensure compliance and avoid disputes.
Building a positive relationship with your new tenants is crucial for a successful landlord-tenant partnership. Tenant appreciation gestures can go a long way in fostering a positive relationship. Small gifts or tokens of appreciation are nice, especially if they are long-time tenants that you have not had any issues with. Additionally, addressing tenant concerns promptly and fairly can help strengthen the relationship and encourage long-term tenancy.
