4 Tips to Screening Future Tenants
As a landlord, finding a new tenant can be one of the most expensive and time-consuming tasks you may handle. Experts estimate that the process of finding a single new tenant costs landlords an average of $2,500. Depending on your rental property, that may be 2 or even 3 times the cost of a single month of rent! If you own a 5 unit building that experiences tenant turnover every 2 years, you’re looking at more than $60,000 spent on finding tenants over the course of 10 years. That’s a whole lot of cash.
It’s clear that, if you want to find success as a landlord, it’s imperative that you find good tenants. Here are our 4 best tips for screening future tenants who will stick around long term.
Determine Your Deal Breakers
The first step in finding your ideal tenant is to decide who exactly an ideal tenant is. After all, you’ve got to know who you’re seeking in order to find them.
Before you draft any rental listings, sit down and make a list of characteristics you’re looking for in a tenant. That may include things like:
- A certain income, such as 3 times the cost of rent
- A credit score threshold
- A limit on the number of people who can rent the property
- Specifications regarding pets; are pets allowed, and if so, how many and what types?
Next, be sure to be extremely clear about these requirements in your rental listing. It may even be beneficial to make a section in your listing labeled “Requirements” and list, in detail, any of yours. This will help weed out any interested parties who are unqualified to rent your property.
Pre-Screen Tenants
As soon as a prospective tenant contacts you, pre-screen them before scheduling a showing. To do so, simply ask them to confirm that they meet your requirements. If they do, time to schedule a viewing. If a tenant doesn’t meet your requirements, let them know that this isn’t the right property for them.
Note that this is an unofficial tenant screening. You don’t need to pull a tenant credit report, income verification, and more right off the bat. For now, you’ll just need to set the expectation that you’ll do so once they apply, and trust that they won’t waste their time on a property for which they’re unqualified.
Screening Future Tenants: Set up a Viewing
Next, it’s time to take your tenant on a tour of their potential new home. The viewing is as much for you as it is for the tenant. This is your chance to meet face to face with a person to whom you’ll be renting for the next year, and hopefully longer. While they don’t have to be your new best friend, they should be someone with whom you feel you could have a positive relationship.
During the viewing, be very transparent about the property. If there are any factors that may be a concern for tenants, such as plumbing issues, loud neighbors, and more, it’s important to be upfront about them. If the viewer does become a tenant, they’ll discover the issues anyway. The last thing you want is for them to be caught off guard and to lose them after just a year of renting.
Perform a Thorough Tenant Screening
Once you’ve found a prospective tenant who would like to apply, it’s time to thoroughly screen them. Here’s what to do:
- Ask for permission to pull a credit check to ensure they meet your credit score requirements
- Similarly, ask for permission to pull a background check for criminal activity or eviction history
- Request income verification in the form of pay stubs or the prior year’s tax forms
- Get references for both their employer and their current landlord, if applicable
Next, it’s time to pull the referenced reports and contact both their employer and their landlord. Confirm that everything checks out and that there are no red flags. If everything looks good, it’s time to send a lease!
Congratulations, you’ve found yourself a new tenant! If you’ve followed the above steps, you’ll have found a tenant who is not only trustworthy, but will stick around for a while. That’s just the type of tenant you’re looking for.
