Tenant Screening - What You Need to Know

As a real-estate investor, tenant screening is a critical step in the process. Deciding who will live in the property you own is a major decision and, if done wrong, can lead to costly troubles that can negatively affect your investment. Knowing what to look for and how to go about tenant screening can help you select reliable and long-term tenants that are a both safe and profitable.

The Basics

Tenant screening involves collecting information from an applicant to ensure they are able to meet their financial and legal obligations and will be a good tenant. The goal is to make sure the tenant is a reliable payer, can take care of the property, and is familiar with the laws.

Most landlords check the tenant’s credit history to determine if they have a good record of paying bills on time. The credit report will reveal if the tenant has any debts such as unpaid rent or bills, as well as previous bankruptcies. Landlords may also request previous landlords and ask for references.

In some cases, landlords may also search for criminal records and court documents to make sure the tenant has not been charged with any criminal activity, assault, or theft.

It’s important to thoroughly research prospective tenants to avoid financial losses that can come with poor tenant selection.

What to Look For

When screening potential tenants, it’s important to look at their financial history, such as their previous rent payments and credit scores. It may sound obvious, but seeing the score isn’t enough, you need to look at the report itself. If something looks off, it’s best to move on.

When looking at a tenant’s income, make sure it meets the minimum requirements for rent, including utilities, taxes, and other fees. If the applicant has a good income but has difficulty explaining their expenses, it could be a sign of financial instability.

Other factors to look at include the applicant’s employment records, property maintenance history, and lifestyle. Ask questions like “how long have you been employed at the same job?” and “Do you currently live in an apartment or a house?” Doing this can help you get a better idea of how responsible the applicant is and if they are likely to take good care of your property.

Making Tenant Screening Easier

To make the tenant screening process easier, many landlords are using online tools like Tenant Harbor, which allow landlords to easily gather information from applicants. These tools can provide quick access to an applicant’s credit report, criminal background check, and landlords’ reference.

Tenant Harbor also offers additional services like tenant-provided rental history, tenancy risk ratings, and an automated acceptance decision system. By leveraging technology, landlords can make informed decisions quickly and easily.

Conclusion

Tenant screening is an important part of the process for real-estate investors. Knowing what to look for and having a solid process in place can help landlords make sure they are getting reliable and long-term tenants. Online tools like Tenant Harbor can also help landlords make more informed decisions faster.