Property Managers: Tenant Screening 101

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Purpose: To provide property managers with insights on how to screen tenants for their property.

Highlights:

  • What makes a tenant a good fit for your property?

  • What do you need to know about the Fair Housing Act?

  • How can you automate tenant screenings when you manage multiple properties?



It’s every property managers’ dream to have a building full of responsible tenants. But, what exactly makes a tenant a good fit for your property?

Here, we’ll discuss everything you should consider when searching for good, reliable tenants that will pay rent on time. Plus, this post details important tenant screening information, like the Fair Housing Act and automated tenant screening options.

What is tenant screening, and why should I do it?

Tenant screening is a process used by property managers to assess potential renters and tenants. The main purpose of tenant screening is to predict whether or not the renter will be capable of fulfilling the terms of their lease, such as paying rent and abiding by property rules.

Ultimately, this type of screening is an intelligent choice that benefits both property managers and tenants. Through this process, renters will understand the expectations of the property and property managers will get to know their potential tenants.

How to screen a tenant:

When screening tenants, it’s important to implement clear and consistent protocol for all applicants. Be sure to screen all tenants, including the renter and other co-applicants, like roommates, partners, etc.

Here are three must-do steps when screening tenants for your property:


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1. Interview

As a property manager, it’s ultra-important to get to know your tenants before they move in. Not only will you want to get a feel for how they’ll be as renters, but you’ll also have a chance to discuss logistical aspects of their move. Here’s a list of top questions to ask prospective tenants:

  • Why are you moving?

  • When would you like to move in?

  • Do you have any previous evictions?

  • Can you provide me with a reference from a previous landlord?

  • What is a rough estimate of your income? (Typically, rent should equal no more than one-third of the tenant’s monthly income)

  • Can you provide me with a reference from your current employer?

  • How many people, if any, will be living with you?

  • Do you have pets?

  • Do you have any additional questions for me?

These questions can be asked in person, over the phone, or via an online questionnaire. Getting to know this information about potential tenants upfront will save you time, so you can weed out renters who don’t qualify for your property from the get-go.

This may also be a good time to establish basic expectations, like the lease period, the price of the application fee, and the expected security deposit payment.

2. Application

After the initial tenant review comes the official application. During this time, individuals apply for an opportunity to rent a space at your property. Whether completed in person or online, be sure to keep a record of tenant applications. It’s important to keep track of renter information, and indicate if an applicant was accepted or declined, and why.




3. Formal Report

Finally, during the tenant screening process, you’ll want to have a formal report of your applicant. Generally, property managers gather information from:

  • Credit reports

  • Criminal background checks

  • Eviction reports

  • Sex offender records

These documents will provide insight into what type of tenant the applicant will be. For example, poor credit history may be a red flag, because as a property manager you’ll want to find renters who can consistently make their payments on time.

However, one scratch on a tenant’s profile is not always a cause for disqualification. If the interested renter has a mostly clear report, discuss your concerns with them. Regarding credit history, they may have hit a rough patch financially after being laid off or acquiring unexpected medical bills, but have otherwise paid bills responsibly.

No matter what, be sure to conduct a comprehensive review of all potential tenants. And, always screen every tenant equally.

Fair Housing Act

As a property manager, it’s your responsibility to ensure all tenants are screened respectfully and fairly. Always follow the same protocol for each and every applicant, and steer clear from personal bias.

It’s a good idea to familiarize yourself with your local Fair Housing Act and the federal Fair Housing Act — which protect against tenant discrimination — prior to screening applicants. And, be sure to brush up on this information annually, so you’re always up-to-date on what you can and can’t screen while examining potential tenants.



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Lease Agreement

After you’ve screened potential tenants, you can introduce the lease or rental agreement. This document should be extremely clear and cover all details associated with the rental period, tenant responsibilities, property management responsibilities, and any other pertinent information. You may consider having your legal counsel review the terms of your lease to ensure every detail is included in the agreement.

If the tenant accepts all terms within the document, they will sign the lease and the rental agreement will begin.

Automate Tenant Screenings

We’ve touched on a few ways to automate tenant screenings. By using technology to your advantage, you’ll be able to save time on the tenant screening process, and you’ll likely be able to conveniently file tenant information. Here are tenant screening services that can easily be automated:

  • Online tenant interview or questionnaire

  • Online submission of tenant application

  • Online payment of application fee

  • Online payment of down payment

  • Online lease agreement

  • Online signing of the lease

In Conclusion

Tenant screening is an imperative step in the rental process. Property managers benefit from screening interested renters; they can establish lease expectations and get to know their potential tenants. Renters will also walk away from the screening process with important information, like property rules, cost of rent, and more.

Be sure to fairly assess every potential renter. And, consider automating steps in the tenant screening process to speed up and improve your property management systems.

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