If you’re planning to rent out your home, there are several important steps to take, such as creating an application, finding suitable tenants, and finalizing a lease agreement. One crucial aspect of this process is learning how to properly screen potential tenants during the application phase.
In this insightful Redfin article, we provide you with a detailed guide on how to effectively screen renters, starting from setting application requirements to pre-screening tenants and verifying their information. Whether you’re renting out your property in Austin or leasing your condo in Chicago, continue reading to discover the best practices for screening tenants.
1. Familiarize Yourself with Fair Housing Laws
Before screening any potential tenants, it’s crucial to have a good understanding of Fair Housing laws. While you have the right to select tenants that meet your criteria, you must also adhere to local, state, and federal regulations. The Fair Housing Act prohibits discrimination based on race, color, national origin, religion, sex, familial status, or disability.
Certain states have additional protected classes and anti-discrimination laws. It’s essential to be well-informed about these laws to ensure you’re not unintentionally discriminating against potential tenants.
2. Establish Application Requirements
Setting clear application requirements can help you objectively evaluate potential tenants for your property. Consider factors like income, credit history, previous evictions, and criminal background when defining your qualifications.
Income
Setting income requirements ensures that tenants can afford the rent without financial strain. Many landlords use a rent-to-income ratio to determine suitable income levels for applicants.
Credit History and Score
A good credit score indicates a reliable tenant who pays bills on time. However, lower credit scores may not necessarily disqualify a tenant, as they could have valid reasons for their credit situation.
Previous Evictions
Requiring disclosure of previous evictions can provide insight into a potential tenant’s rental history.
Criminal History
Establish clear guidelines for evaluating criminal history, focusing on safety concerns and legal standards.
3. Pre-Screen Renters
Pre-screening renters involves providing essential information in the rental listing, allowing tenants to self-select based on their preferences and qualifications.
- 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
Providing detailed information helps potential tenants make informed decisions about applying for your rental property.
4. Develop an Application
Creating a standardized application form ensures a fair and consistent screening process. Request essential information such as current address, employment history, landlord references, income details, and pet ownership status.
5. Conduct a Credit Check
Running a credit check provides valuable insights into an applicant’s financial history and reliability. Consider factors like credit score, bankruptcies, and payment patterns to assess their financial stability.
For additional information, applicants can provide a credit reference to supplement their credit report.
6. Perform a Background Check
Conducting a background check helps uncover any criminal records or legal issues that may impact a tenant’s suitability. Evaluate the results carefully and consider safety concerns when making decisions based on criminal history.
7. Verify Additional Information
Verification of W-2 forms, pay stubs, employment details, and landlord references can provide further insights into a tenant’s background and financial stability.
8. Interview Potential Tenants
While not mandatory, meeting potential tenants can help you assess their suitability and address any questions they may have about the property. Ensure that your questions comply with Fair Housing laws to avoid discrimination.
- Intended move-in date
- Reason for moving
- Expected duration of stay
- Number of occupants
- Pet ownership
- Smoking habits
- Prior eviction history
- Parking requirements
9. Select Suitable Tenants
After gathering all necessary information, evaluate each prospective tenant objectively based on the established criteria. Avoid subjective judgments and prioritize applicants who meet your requirements. Consider leasing to the first qualified applicant to streamline the selection process.
By following a systematic approach to screening tenants, you can ensure a fair and efficient process that results in finding the right tenant for your property.