How to Screen Tenants for Rental Property (7 Essential Steps)

Looking for high-quality, long-term tenants for your rental property? Tenant screening is an essential skill every landlord must either master or outsource to a professional. In this article, we’ll show you how to screen tenants, step by step, and share best practices to help you keep this process fair (and legal). Keep reading!

Summary:

• Investors, landlords, and property managers should be aware of local housing laws and the Fair Housing Act when screening tenants.

• To screen tenants properly and fairly, create your criteria before collecting applications and performing credit and background checks.

• Tenant screening is both difficult and time-consuming, which is why many investors delegate it to an experienced property manager.

What Is Tenant Screening?

Tenant screening is the process of evaluating potential tenants before deciding to rent to them, which can help reduce the risk of tenant-related issues, such as late payments, property damage, or legal disputes. This process involves reviewing rental applications, verifying financial and rental history, and checking credit scores and criminal backgrounds.

Landlords can screen their own tenants, or they can hire a property manager and delegate the entire process to them.

Don’t want to screen tenants or deal with rental property maintenance? Buy a turnkey rental and we’ll handle all of this for you!

What to Know Before Screening Tenants

Whether you’re an investor, landlord, or property manager, it’s crucial to maintain a fair screening process. Here are a few factors to keep in mind when fleshing out your criteria and application form:

Local Laws

Fair housing protections and landlord-tenant laws vary at the local and state levels, impacting how landlords charge rents and fees, handle security deposits, and evict tenants. If you’re a self-managing landlord, make sure you stay up to date on all legislation.

Check out our list of the most landlord-friendly states!

The Fair Housing Act

The Fair Housing Act forbids landlords and property managers from discriminating against color, disability, familial status, national origin, race, religion, and sex. This applies to not only the application process but also operations once tenants are placed.

One Major Exemption

The “Mrs. Murphy Exemption” states that if you own a property with one to four units and live in one of them (also known as house hacking), the home is exempt from the Fair Housing Act. Just keep in mind that this only applies to tenant approval decisions. You may not discriminate in your advertising.

How to Screen Tenants for Rental Property (7 Steps)

Ready to get the best tenants for your property? Follow these seven steps for screening tenants properly, fairly, and legally!

1. Set Minimum Requirements

First, develop your tenant criteria. This not only reduces the risk of accepting bad tenants but also ensures you vet applicants fairly. You’ll need to determine your minimum credit score, minimum monthly income, and deposit amount. Just make sure your requirements are realistic for your market, or you won’t have much of a tenant pool!

2. Prescreen Tenants

Including your minimum requirements, rent, fees, and policies in your rental listing will help you attract more qualified tenants and limit the number of applications you have to sort through. You can also prescreen tenants with a quick phone call or short questionnaire! Sending out a Google Form with the most basic of questions to start can help weed out applicants who won’t qualify. 

3. Collect Applications

In your rental listing, provide a link for potential tenants to apply, and don’t forget to charge an application fee. This will not only help you cover the costs of background checks and tenant screening software but also narrow the pool down to serious renters. Just make sure you get the applicant’s consent to verify their information and run credit and background checks.

Work with the turnkey experts for a hands-off rental property investment! 

4. Run Credit and Background Checks

You can use credit and background checks to not only review the potential tenant’s credit score and criminal record but also verify their identity. These reports will also disclose whether the applicant has ever been evicted, declared bankruptcy, received any financial judgments, or been convicted of a crime.

5. Verify Information and Rental History

Even if the applicant provides a wealth of information and their recent renting experiences, you still need to do your due diligence and verify their information. Confirm active employment through their employer and verify income using their recent paystubs or last W-2. When verifying rental history, contact past landlords. Their current landlord may want them out!

6. Interview the Applicant

If you have a shortlist of qualified tenants or want to speak with an applicant before approving them, you can meet them in person or interview them over the phone. Just be sure to avoid asking them discriminatory questions that violate the Fair Housing Act or local fair housing protection laws.

7. Decide on the Tenant (and Sign the Lease!)

Finally, make a decision on the tenant’s application. If you approve them, provide move-in instructions and execute the lease (have both parties complete it online or arrange a time to sign it in person). If you deny them, send them a letter disclosing the reason why their application was denied.

If the screening process sounds like a ton of work, it is! Check out our turnkey properties for sale, which come with property management and qualified, long-term tenants in place!

15 Crucial Questions to Ask a Tenant

Use your prescreening, application, and interview processes to learn more about the tenant and determine whether they’re the right fit for your property. Here are several helpful questions you can ask:

• What are you looking for in your next residence?
• When are you looking to move in?
• How long have you lived at your current residence?
• What do you do for work? What is your monthly income?
• May I contact your current employer and past landlords?
• Have you ever broken a lease agreement? Why?
• Have you ever been evicted?
• Have you filed for bankruptcy recently?
• How many people will live with you?
• Do you smoke? Does anyone living with you smoke?
• Do you own pets? How many?
• Will you agree to credit and background checks?
• Are there issues I should know about before running credit and background checks?
• Will you pay the application fee and security deposit?
• Do you have any questions about the application or move-in processes?

Credit and background reports will include much of this information, but asking tenants can provide context and give them a chance to explain themselves!

A Screening Opportunity for Higher Rents 

There are times when having flexible or slightly less stringent criteria can benefit both landlord and tenant. If you’re in a neighborhood where landlords don’t typically allow dogs, for example, you could gain an advantage by raising rent and accepting dog owners. This ensures you’re paid for the extra risk, and dog owners have a rental to apply to!

How to Deny a Rental Application

The Fair Credit Reporting Act (FCRA) requires landlords to disclose the reason for denying an application if it’s based on findings from a credit report or background check. In most other cases, you are not required to provide a reason for denial, though it’s polite, professional, and helpful!

Valid reasons to decline an applicant include:

• Insufficient income
• Low credit score
• Too many debts
• The application is incomplete
• Providing false information
• Poor/insufficient rental history
• Prior evictions
• Criminal convictions (if they put tenants or property at risk)
• Previously filed for bankruptcy
• Too many occupants listed
• Smoking (if you prohibit it)
• Pets (if you don’t allow pets)

Do Your Own Tenant Screening (or Leave It to a Pro!)

Want to find tenants who pay on time and take great care of your property? Follow the tips above to screen renters quickly, properly, and fairly. Keep in mind that tenant screening is time-consuming, and a wrong decision can be costly. When you buy a turnkey property, a professional handles this for you, and screened tenants are already in place!

How to Screen Tenants FAQs

How to Do Your Own Tenant Screening?

Investors and landlords can do their own tenant screening by listing their rental property and criteria online, collecting applications, and performing credit and background checks. Because it often takes weeks and sometimes months to find a high-quality tenant, many investors delegate screening to a property manager!

What Background Check Do Most Landlords Use?

Landlords typically use third-party property management software or screening services to screen tenants. An all-in-one service like TurboTenant, Avail, or Zillow will give you all the tools you need to properly vet tenants and manage your rental properties.

How Do You Screen Out a Bad Tenant?

Quality screening is the key to weeding out bad tenants. Verify the tenant’s information, conduct a thorough background check, and consider criminal history that could endanger other tenants or past evictions that could put your property at risk.