Screening Tenants in Five Easy Steps

Screening tenants helps ensure new tenants pay rent on time, take care of your property and get along with neighbors. Doing it right—without violating fair housing laws—saves you a lot of problems later.

“Never listen to a prospective tenant’s sob story,” says John Rosenberg, certified property manager and professor, University of Cincinnati Real Estate Center. “Ultimately, their sob story will become your sob story when they don’t pay the rent. Base the decision objectively on their ability to pay and past history with other landlords.”

1. Treat Everyone Fairly

First and foremost, require a written application from everyone to avoid running afoul of fair housing legislation. According to the Fair Housing Act, you can’t refuse to rent a dwelling on the basis of race, color, national origin, religion, sex, familial status or handicap, and you can’t set different terms, conditions or privileges for different people.

“Always get a written application, no matter who the person is,” Rosenberg says. “If you have processed an application for one person but not for another, you are not treating everyone identically and could subject yourself to a fair housing lawsuit.”

2. Maintain Objectivity

You also need to develop a tenant screening system that takes the subjectivity out of evaluating prospective tenants. “The two things that will keep you out of trouble when processing applications with regard to fair housing are being consistent and screening the behavior, not the person,” says Robert Britigan III, certified property manager and spokesperson for the Institute of Real Estate Management.

As part of the application process, have the applicant give you signed authorization to run criminal background checks and credit histories. When you are checking people’s credit, make sure they do not have collection efforts or civil judgments against them from previous landlords or utility companies.

3. Check Ability to Pay

Verify the applicant’s employment history by checking with current and past employers. If they have not been at the current job for a long period or have a history of switching jobs, then that should raise a red flag about their ability to pay.

Generally, you want to make sure your tenant will not be paying more than a third of his or her income on rent. You will also want to make sure a prospective tenant has a track record of making payments on time.

4. Follow Up with Past Residencies

Too often, property managers don’t follow up with past landlords and end up with a resident that doesn’t pay rent or damages the unit. “The cost to evict an undesirable resident is far greater than to not have rented at all when you have significant damage and lost rent,” Rosenberg says. “A lot of these problems could have been avoided by simply contacting the previous landlord.”

Request a list of previous landlords on the application going back at least five years. Have the prospective tenant sign an agreement authorizing you to contact prior landlords without being retaliated against if you don’t accept the tenant.

Some past landlords might be reluctant to say negative things about a tenant. One way to get a straightforward answer is to ask for a response in writing instead of simply making a phone call.

“Let the landlord know you will keep the information confidential,” Britigan says. “Ask the landlord how long the tenant was there, whether rent was paid on time, and whether the tenant has created disturbances that affected the quiet and peaceful enjoyment of other tenants. The biggest question to ask them is whether they’d rent to this tenant again; the answer is often very revealing.”

5. Establish Criteria to Accept or Reject Application

Assign a numerical score to each applicant based on the results of the screening. To remove all subjectivity from the equation, you can hire a third-party company to screen and rank each candidate. If a candidate does not achieve a certain predetermined score, they are automatically rejected. If you reject a tenant, send them a letter indicated why they were rejected.