Landlords - Screen Your Potential Tenants

Screening tenants is an art, not a science. However, in order to make good decisions, you need to gather information about the prospective tenant in a manner both legal and ethical, and which will maintain the dignity of the person.

One of the biggest mistakes a new landlord makes is not screening potential tenants. Yes, John’s check for the security deposit cleared the bank – but what will happen next month? The screening process has one purpose, and one purpose only – to help you make a prediction of the prospective tenant’s future behavior based on their prior behavior.

It is essential that any prospect fill out a thorough rental application, with information on their employment, income, address history, as well as previous landlords’ names and contact information. You should also obtain an emergency contact on the application for several reasons.

Be sure the application requires a signature, and contains a release so you can legally check the information they have given you. If you start snooping around in someone’s background without that signature and release, you could be in violation of state and federal laws, and face an expensive and time-consuming lawsuit.

The first people to contact, and the information source worth the most weight, are the current and previous landlords. They are your best source for determining what sort of tenant the applicant may be in your case.

Key information to obtain from other landlords includes: a) Were they late with the rent, and if so, how many times?; b) How long were they a tenant?; c) Did they damage the apartment?; d) Was any eviction action started during the tenancy?; e) Did the tenant leave owing a balance?

In many cases, landlords will only respond to written inquiries about previous tenants, with a copy of the release signed by the person. It is good practice to maintain written records of inquiries you have received, and to have on file a record of what information you provided. It is also good practice to have a written record of what was said about the previous tenant, if you deny them a lease.

Do not rely solely on the current landlord’s information. In some cases, that landlord has a ‘problem’ on their hands who they would all-too-happily pass off to you.

It occasionally pays to go to the next step, and subscribe to a credit reporting service. If the rents are high enough, the $150 annual fee most services will charge a small business are more than warranted.

However, do not fall into the trap of making one of the biggest mistakes a rookie landlord makes, by relying too heavily on credit reporting services. The reports do not tell you who will be a good or bad tenant. Analyze the patterns. Look at the dates involved. It is possible that your prospective tenant had a financial setback due to illness, injury, or divorce, and they will be an excellent tenant.

If the credit report comes back shaky, ask the person to meet with you for an explanation. Do not be shy about asking pointed questions. If the person is serious about living in your property, they will be direct and forthcoming about the causes.

Make sure you have an emergency contact, preferably a family member, listed on the application.

There are two primary reasons for requiring this information. 1) If something happens to your tenant, such as major illness, injury, or death, you may be the first person to know. 2) If the tenant disappears, this family member may be able to help you locate them.

Following these general tenant screening tips will help you have a successful career as a landlord, as well as keep you out of hot water with invasion of privacy suits, and discrimination claims.

Remember, you became a landlord for the revenue and wealth-building, and it pays to remain blind to everything else.