Many of the new landlords we talk to have never screened a tenant before, and they’re not sure what to look for when reviewing an application. Even experienced rental property owners can hesitate before approving or denying an applicant based on what they see in a credit report or an income verification.
You need to place highly qualified tenants in your rental property. Otherwise, you run the risk of late or missing rent, property damage, and lease violations. For a truly successful investment experience, pay attention to your screening process.
When you don’t think you have the time or the resources to adequately and effectively screen tenants, turn the process over to a professional Charlotte property manager. We have the knowledge and the experience to ensure you’re only placing the best tenants in your property.
Here are some of the most essential things to consider when you’re screening your potential tenants.
Know Your Fair Housing Laws
How well do you know the federal Fair Housing Act? It’s an essential law, and one you have to understand in order to rent property. You’re prohibited from discriminating against applicants based on race, color, national origin, sex, familial status, religion, or disability. You probably wouldn’t discriminate intentionally, but the way you handle each application could lead you to discriminate without even realizing it. That can lead you to an expensive fair housing claim and a potential lawsuit. Screen every applicant consistently.
We recommend that you establish standard rental criteria, including your credit standards, income standards, and whether you’ll be willing to rent to a person with an eviction or a criminal history. When you can provide this criteria in writing to your potential tenants before they even apply, you can demonstrate exactly what you’re using to make your decisions.
Conduct a National Eviction and Criminal Background Check
It’s important to check for a criminal history. Don’t just check in with your local police department; conduct a national search for any history of violent crimes. You’ll have to decide what you will accept and what you won’t. Many landlords are fine with minor offenses from decades ago.
Look for past evictions as well. Again, use your best judgment when you decide whether you will accept a tenant with a prior eviction. Just be consistent. Maybe someone who was evicted 10 years ago but has done a good job establishing a solid rental history since then is acceptable but an applicant with four evictions in the last five years is not. Set some standards.
Credit, Income, and Financial History
Checking a credit report is always a good idea, not only to get an idea about the applicant’s financial stability, but also to make sure that information lines up with what you have on the application. If there are different past addresses on the credit report that aren’t on the application, you may want to explore that. Make sure you’re getting a full picture. When you’re reviewing the credit report, focus on the debt that makes a difference. Student loans and medical bills won’t necessarily impact your decision, but you don’t want to see money owed to former landlords or utility companies.
Checking Rental References
A good way to get a feeling for how a tenant has behaved in the past is by checking rental references. Call or email current and former landlords. Find out if rent was paid on time, the lease was followed, and any property damage was left behind. Ask about pets and whether proper notice was given before the tenant moved out. These reference checks can be invaluable in evaluating how tenants have performed in previous rental homes.
We screen tenants all the time, and we know exactly what to look for. If you need help with this part of the process or you have questions about Charlotte property management, please contact us at AM Realty.