In the last post we discussed getting our property rent ready and “tenant proofing” it.
Now let’s get into screening potential tenants to fill this new vacant property you now have.
If you missed the last post:
The 5 Key Points of Tenant Screening
We are going to cover 5 points that are must do’s for finding a good qualified tenant. There are some others, but these 5 are most vital and necessary.
#1 – Past Eviction
If you are screening a potential tenant and they have past evictions in their history, don’t walk….run away. If it’s more than one then clearly they are not a good candidate.
If there is just one – okay, yes there are cases where good people ran into some bad luck and you can use your discretion, but you are putting yourself at risk. Better to just move onto the next applicant.
#2 - Criminal Record
This is more about the type of crime, because due to new HUD (Housing and Urban Development) rules it is actually illegal to do a blanket disqualification of anyone whose background check comes back with a record.
Look at what the crime was. Did they get busted scalping a few extra tickets they had to the game? Ok no problem.
However, if it’s a violent crime then I am in fear of my safety thus onto the next applicant. If it’s related to destruction of property, well I am in fear of the safety of my property, next applicant.
# 3 – Debt/Credit History
Generally there is a minimum credit score you want to set for approval. This helps weed out applicants that are not financially responsible. 620 seems to be a minimum score that is common throughout the landlord community.
Also, what type of debt do they have? If one applicant has 25k in credit card debt and another has 50k in student loans, which do you think is the better candidate?
If we think about the debt types, credit card debt is consumer debt. Now they may have made purchases due to circumstance, but many times it’s just overspending as the culprit. Do you want someone that is buried in credit card debt owing you rent each month?
As for the student loans - generally that is debt someone used to better themselves and start a career or job. Well, atleast hopefully it got them a better job. Either way, someone that is using debt as a constructive instrument as opposed to a consumer instrument makes for a better applicant.
#4 – Employment
This one is pretty obvious. We must verify their employment and income to know they are able to pay rent each month.
To go about that you should generally ask for the most recent year’s W2 or 1099 and the last two pay stubs.
Also, the employers contact info in order to confirm that the person is indeed an employee.
Some take it another level and ask the employer about their employee. Knowing something like they show up to work late everyday is pertinent information as that could put their job, thus their source of income as risk.
#5 – Cleanliness/Lifestyle
It’s hard to know how an applicant will treat your property without seeing how they live. However there are ways you can get a glimpse into that.
One little trick I like is when after showing the property to a prospective applicant, walk them back to their car and thank them for their time.
Why do this? – Because you can take a quick glance inside their vehicle to see how it’s kept. If you see McDonalds wrappers and soda cans all over the floor what do you think your property is going to look like if they are living there.
There you have it – the 5 points you must cover when screening tenants.
Regards,
Mitchell J
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