As a landlord with a rental vacancy, you seek a quiet, long-term, personable, tidy tenant that will respect your property, gets along well with the neighbors, and who pays their rent when it is due.
However, before you can begin to find the” ideal” tenant, it is very important that you establish and set a standard for the qualifications you require of anyone renting your property. Keep in mind that, as a landlord renting to the public, you must be familiar with and abide by the rules and regulations of the United States Fair Credit Reporting Act (FCRA) and the United States Fair Housing Act (FHA).
- Is your property non-smoking?
- Do you allow pets? If so, set the rules for the type of pet, weight, and size of allowable pets?
- Do you rent to adults only or do you accept families with children?
- Do you require a criminal background check?
- If it is a roommate situation, do you require all adult tenants to be on the lease?
The tenant screening process is complicated and can by more than a bit tricky. As a landlord you can spend the money to check credit scores yourself and invest the time do a background review on every person that may want to rent your property, however the process is frustrating.time-consuming, and you may put yourself in legal jeopardy by creating potential compliance problems by unwittingly discriminating under the regulations of the US Fair Housing Act.
To avoid violating the Fair Housing Act, it is vital that all potential tenants are asked the same questions and required to meet the same conditions. Property managers strongly suggest that prospective tenants meet the following benchmark for residency approval.
- Proof of employment or source of income
- A verifiable monthly income that is at least three times the amount of the monthly rent
- A credit report with a credit rating of 620 or above
- A favorable rental history verified by the previous landlord
Another way a landlord can pre-screen a potential renter is to check to see if they have pages on social media sites. A review of Linken, Instagram, and Facebook may reveal information that validates their employment history or reveals the person as a potential problem.
If you have been plagued with problematic tenants, engaging the services of a reputable property management company can help eliminate the headaches and hassles of managing and maintaining your investment properties. A great deal of the work of finding the ideal tenant for your rental is taken care of in the pre-screening process.
When advertising your vacancy, your property manager will clearly state if you accept pets, or if a criminal background check is required: when requirements are clarified, some potential renters will bow out before they even make an application. Using state-of-the-art screening technology and tools, your property manager will further qualify prospective renters by:
- Verifying income and employment history
- Conducting a criminal background check
- Verifying residence history
- Asking past landlords if they would rent to this tenant again
Utilizing the three primary credit reporting services, (Equifax, Experian, and TransUnion) your property manager will then evaluate an applicant’s debt history and determine if they pay their bills promptly and if their income to debt ratio is within acceptable guidelines. Most property managers suggest a credit rating of 620 or better be required if the property is to be rented without another party co-signing the lease agreement.
Talk to your property manager to establish if you are flexible and will consider tenants with a “less-than-perfect” background or credit history if they can document extenuating circumstances such as job loss, death of a spouse, divorce, military deployment, or a family medical crisis.
Filling your vacant property by renting to a responsible, long-term tenant may seem like a daunting task. However, this is where your property manager will prove to be invaluable by asking the tough and probing questions needed to glean more information about the tenant’s requirements and to confirm the applicant’s personal background information.
As a landlord, it can be dicey trying to check a potential tenant’s credit history as the law mandates that persons seeking credit information on another person must comply with all the rules and regulations of the Fair Credit Reporting Act( FCRA) including how you source the information and what data is sought and what is obtained. A violation of the correct procedure can cause a landlord to violate the FCRA regulations unwittingly.
Keeping in mind that you can not discriminate because of sex, religion, familial status, race, color, or national origin, you can be confident that your property manager will help ensure that you find the right tenant while remaining in compliance with federal, state and county laws.
Our FREE Tenant Screening Checklist is now available, and it covers the beginning tasks—such as setting criteria—to onboarding your new tenant once they've worked through the steps. Download your free checklist! Just click the link below right now to get started.
As a top producing Realtor and Property Manager; Terry specializes in sales, extensive construction homes, rentals, REO’s, short sales, and all aspects of Real Estate. After graduating the University of Michigan with a master in MBA, Terry continued his endeavor and now has over 15+ years of experience in the Real Estate world. If there is anything that has to do with Real Estate and sales, you can always be sure of Terry to provide important, specialized knowledge.
