When listing your home for rent, there’s plenty to do like creating an application, finding tenants, and signing a lease agreement. One thing you’ll need to learn about is how to screen tenants during the application process.
In this Redfin article, we’ll give you the step-by-step guide to screening renters, from setting application requirements to pre-screening tenants and verifying their information. Whether you’re renting your home in Austin or renting your condo in Chicago, read on to find out how to screen tenants.
1. Understand Fair Housing laws
Before screening any potential tenants, you’ll need to understand Fair Housing laws. While you can choose the renters that fit your requirements, you still need to follow local, state, and federal laws. Under the Fair Housing Act, you can’t reject a tenant based on race, color, national origin, religion, sex, familial status, or disability.
Some states have additional protected classes and laws preventing housing discrimination. Familiarize yourself with local and state laws to make sure you’re not inadvertently rejecting a tenant based on protected classes.
2. Set application requirements
By setting application requirements, you can better objectively determine the best tenant for your property. Here are some things to consider when setting up your qualifications.
Income
It’s common to set income requirements for your property to ensure that tenants are capable of paying rent on time. Many landlords use a rent-to-income ratio to determine income requirements for their applicants. You want to make sure that any prospective tenants are going to be able to cover rent costs without stretching their budget too much. Choosing an income requirement that’s disproportionate to the area you’re renting in may cause your property to stay vacant longer than you’d like.
Credit history and score
Many landlords require a higher credit score, often above 670. This means you’re often looking for tenants who have a credit score in the good range or better. Higher credit scores can be indicative of a more reliable tenant who pays bills on time. However, someone with a lower credit score isn’t necessarily unqualified to rent your home. It’s possible that they’ve recently begun building their credit or have unpaid debts, like student loans.
You can read their credit history, ask questions, or ask for references if you want to have a lower credit score requirement for your property. Potential tenants may also have a good rental history report that supports their ability to make on-time payments – even if they have a lower credit score.
Previous evictions
You may want to require applicants to disclose any prior evictions. If an eviction appears during your screening process, consider asking for additional details and requesting permission to contact the previous landlord or property management to better understand the circumstances.
Criminal history
Set clear guidelines on how criminal history will be evaluated. While certain convictions, like a DUI, may not be valid grounds for denial, more serious offenses—such as arson—could be. It’s important to ensure that any criteria for denial are based on safety concerns and legal standards. Consult with an attorney to clarify what qualifies as a “dangerous criminal conviction” under the law.
3. Pre-screen renters
While pre-screening renters may sound like you’re interviewing them before they submit the application, that’s not the case. The way you pre-screen tenants is through the rental listing itself. Some information you might include:
- Monthly rent
- Security deposit
- Application fee
- Background check
- Credit report fee (if applicable)
- References from previous landlords
- Smoking policies
- Pet policies and pet rent
- Any additional rules
Listing out information allows tenants to decide whether they want to apply to your rental. For example, if a tenant has multiple pets, and you don’t allow pets in your rental, they likely won’t apply, saving you both time and money.
4. Create an application
Having the same application for all applicants is a great way to keep the tenant screening process fair and objective. You’ll need to request information like their current address, employment history, current and previous landlords, references, gross and monthly income, monthly debt payments, and any information about pets. To streamline this, you can use a template or online form builder to ensure consistency. All this information can help identify qualified tenants and help you follow Fair Housing laws.
5. Run a credit check
Running a credit check can be more than just seeing an applicant’s credit score. It can also show any bankruptcies (up to 7-10 years later, depending on the type of bankruptcy), late or missed payments, and other financial problems. You can also use a credit check to verify their name, past addresses, current and previous employers, and date of birth.
For more information, you can ask tenants to submit a credit reference. Depending on what the credit report details, you can consider asking the tenant to have a cosigner or a higher deposit amount if you have concerns about their financial situation.
6. Conduct a background check
Another important part of the screening process is to conduct a background check on potential tenants. Running a background check will identify any criminal records and public records, such as court cases. If an applicant’s background check shows violent criminal records, you may be able to legally reject their application. However, certain types of criminal behavior are not legal reasons to turn down an applicant. You’ll need to evaluate each tenant on a case-by-case basis to ensure you’re following any laws – and making the right decisions.
7. Verify other information
There are other types of information that you’ll need to verify. This includes W-2 forms, recent pay stubs, and speaking with their employer. You can also reach out to their current or previous landlord to learn more about their payment history. Or you can contact any personal references they’ve included on the application.
8. Meet potential tenants and ask questions
It’s not a requirement to meet potential tenants, but if you would like to learn more about them, you can. However, there are plenty of questions that you can’t ask them, as it can violate Fair Housing laws. Here are some example questions to ask:
- What is your intended move-in date?
- Why are you moving?
- How long do you intend to stay? (ex. 6 months, 12-months)
- How many people will be living here?
- Do you have any pets?
- Do you smoke?
- Do you have any prior evictions?
- How many parking spaces are you looking to have?
Meeting applicants in person or speaking with them on the phone can also give them the opportunity to ask you about the home’s features or any additional questions.
9. Decide on tenants
Once you’ve collected all the information on your prospective tenants, you’ll need to evaluate each one objectively. It can sound like a difficult task, but there are some tips that can make it easier.
Follow the requirements you’ve listed above – these can highlight which tenants fit your criteria. Don’t judge applicants based on subjective criteria, which in most cases is illegal. Consider leasing to the first tenants that meet your criteria. For example, if you have nine potential tenants who all meet the criteria, consider choosing the first person who applied, “first person, first served.”
At the end of the day, creating clear guidelines for screening tenants can help you keep the process objective. Finding the right tenant takes time, but following a streamlined process can make the screening potential tenants easier.
The post How to Screen Tenants: Step-by-Step Guide to Screening Renters appeared first on Redfin | Real Estate Tips for Home Buying, Selling & More.