A major part of rental property management is placing the right tenant. Today, we’re talking about how to screen tenants for your investment property.

Pre-Qualifying Tenants

Prior to showing the property, you’ll place an ad and get inquiries. When people inquire, you can ask questions to qualify or disqualify them. Ask why they’re moving. Valid reasons include wanting to be closer to school or work, or because they’re relocating. If they are having a landlord dispute, check into it further. You don’t want to assume what you’re hearing is right.

Ask who will live at the property. If it’s a one bedroom condo, four people moving in would be a problem. Ask about pets, and if you’re accepting a pet, ask what breed. Don’t accept a bully breed. That’s an insurance risk and a bite risk. If it’s an acceptable pet, you would be asking for a pet bite policy and a renter’s insurance policy. You also want to be sure you get vet records for the pet. Make sure they’re current. If it’s a service dog, any breed would have to be accepted.

Another question is - when are you looking to move? They might say two to three months. If your property is vacant, you don’t want to wait. Vacant properties should be filled within two or three weeks. Even if it overlaps with their current lease, a good tenant will accommodate your timing. If you have a tenant in place, you want to make the move-in date closer to the move-out date of your current tenant.

Screening for Credit

Ask about credit. A lot of people don’t really know their credit score, but you can ask for basic information such as whether they owe creditors or have past due bills. If they talk about potentially filing bankruptcy, that might be a problem. It could be costlier to evict them, and it will take longer to get them out if you need to. Asking these questions up front can save you trips to the property and helps you to qualify them prior to showing.

Criminal screenings can show everything from criminal arrests to traffic tickets. Sometimes people have very common names, and you’ll see that you can’t tell if the person is a match. Your credit provider should be able to determine these things and verify a match. Don’t just guess; you need to know.

Verify Employment and Rental History

Verify work and income after running credit and criminal checks. Ask them for a pay stub, which usually has Year to Date income on it. If the tenant is an independent contractor or owns a business, they should be able to provide a Schedule C or 1099 to show their annual income.

Call the employer, and talk to the current landlord. Ask if rent was paid on time, and what the condition of the property is. You can go further and ask previous landlords the same questions. Ask about late rent and NSF checks.

Tenant Communication

Let the tenants know how long it will take to get the application processed and finalized. If you take too long, people will continue shopping for properties. It’s best to jump on the process and do your verifications and run your credit and criminal checks. If you cannot move forward with prospective tenants, send a letter stating why they were not accepted. Give them the name and number of the credit agency you used to run their criminal and credit reports.

One more thing to remember: be aware of fair housing laws. You can unintentionally make a statement that could be perceived as discriminatory. Even if you didn’t realize you were doing it – be aware of it.

If you have any questions about tenant screening, I’d be happy to answer them. Please contact us at JML Realty Investments with any Orlando property management needs.