Thorough Screening Will Lead to Better Tenants

I have bought, sold and owned a lot of rental properties. For the past ten plus years I had the privilege of learning how to be a landlord from the ground up. Although I read some books, none really prepared me for the real life situations of dealing with tenants.

They all tell you how to buy property, some even with no money down (which I have done myself), but none teach you the right way to screen potential tenants.

A lot of headaches associated with the eviction process, late rent payments and damage to your property can be avoided or at least minimized with proper preparation and research completed before someone ever moves in.

Start with the rental application. You can pick up any generic one at your local office store like a Staples or Office Max. They request ample information. Over time you might develop your own based on your area, but for me the generic one works.

You can eliminate potential candidates right away when you see that they have not completely filled out the application. If you are new to being a landlord this may surprise you as to why someone who needs a place to live will not fill out the application in full. If you are experienced then this is of no surprise because you already know they are hiding something.

Any application that is incomplete disqualifies a person. You must hold your ground on this. If the application is filled out completely it is time to do your homework. It doesn't take that long to verify people's applications but it is necessary. You must call the references they listed on the application.

Before you start calling make note of what the total salary is for the tenant or tenants that will be living there. You must calculate that they can afford to pay the rent. If they make a total of $1000 per week of take home (after taxes etc.) over a 4 week period that calculates to $4000. To me that means they can afford up to $1,200 per month in rent. I use a 30% rule. This means 30% of their income goes towards rent. If your rent, in this example is $1200 or less then they can afford the place. Or at least they should be able to.

Start with the job references beginning with their current place of employment. When you call ask for the human resource department or whoever is in charge of personnel. Once you are on the phone with that department you are trying to verify if they work there. Simply asking the person on the line that you are calling to verify if John Doe works there, will suffice. If they say no, then the applicant lied and they are now disqualified. If they say yes, then you need to ask how long they have been employed and if they are in good standing. They should give you the answer to the first question, some companies might not answer the second question but you need to ask it.

Verify that the date the employer gives you is the same date the tenant put on their application. If it is not and when I say is not I mean if they put that they started in January of 2001 and the employer says they started in January of 2006, then the tenant has obviously lied and their application gets rejected. However if they put January 2001 and the employer says February of 2001, then I will give some leeway.

If the tenant has been at the job for 2 years or less you must call the next job reference they have listed. You need at least 5 to 7 years of an employment history. If you notice the applicant is a job hopper, in other words never lasts more than a year at a single job, you will need to mark that application as high risk and put it at the bottom of the pile. Being a job hopper does not exclude the person, it only makes them a low choice candidate. The reason being if they job hop chances are they will move jobs again possibly putting the rent at risk. Why people do this I will never know, but they do.

Once they have passed job screening it is time to move on to calling their current AND previous landlords. Most landlords will be straight up and honest about a tenant. However I have seen in the past where the current landlord will tell you how wonderful a tenant is because they are trying to get rid of them. Think it won't happen? Guess again.

Nevertheless you have to call them. Ask them how they were as a tenant. Were they clean? Did they report problems to the house in a timely manner? Did the neighbors have problems with them? Did they pay the rent on time? Did they pay the utilities on time? Did they notify you when or if they made any changes to the place such as painting a room a new color, adding cable service etc.?

Now you may not get all of this information but the more of it you do get the better decision you can make.

That is it, you are done. Notice how I don't call personal references? To me I figure what is the point. Chances are if they are a personal reference they are not going to say anything bad about them anyway, so I don't bother. Other landlords disagree with me on this, but that is just how I do it.

Notice also I do not pull a credit report. I would only do that if I had a rental in an expensive area where credit is very important or if I have multiple candidates who are so close that I can't make decision. When this occurs I will pull their credit scores only.

That is it. Compare the information you have collected and make a decision. You now have all the information you need to arm yourself with finding good tenants. Now get out there and start screening!