Landlords often want to fill their vacant rentals as soon as possible—empty units mean loss of income. Even though this sense of urgency is legitimate, it’s never a good idea for landlords to blindly accept the first applicant that comes along.
As a landlord, finding tenants who will pay rent on time isn’t your only concern: You also need to find tenants who will keep the premises in good condition and be respectful of other tenants and occupants. Failing to do so can mean lost rent, endless conflict, and even court costs. Because the stakes are so high, screening applicants for your rental is one of your most important tasks as a landlord.
Landlords who want to carefully screen for qualified and responsible tenants should:
Create a List of Tenant Qualifications
It’s good practice for landlords to develop “good tenant criteria”: a list of minimum requirements acceptable applicants will have in order to qualify to rent an available unit. Having objective, demonstrable criteria will make it easier to whittle down your stack of applications, yield better tenants, and help you avoid fair housing complaints.
For example, you might require tenants to have:
- stable employment at the same employer for at least a year
- gross monthly income that’s at least three times the rent
- no evictions in the past ten years
- a strong financial history and credit score, and
- positive (or at least neutral) references.
Establishing minimum qualifications before screening candidates allows you to be consistent in your choice of tenants—a key step if you ever needed to defend a fair housing complaint brought by someone who claims you used discriminatory practices in your rental decisions. It also keeps you clear on what you’re looking for as you look to fill a rental.
Use Rental Applications and Verify Their Contents
Requiring potential tenants to fill out a rental application is a good way to start your screening process. Your application should gather comprehensive information that will help you make an informed decision about whether the applicant will meet your rental standards, such as:
- current income and bank account information
- current and past employers
- previous rental history
- Social Security and driver’s license numbers
- past evictions and bankruptcies
- contact information for past landlords, and
- personal references.
It’s always a good idea to note on the application whether you plan to do a credit check (see #7) or background check. Be sure to get written permission to run a credit or background check. Consider including a clause in or attachment to your application where the applicant gives you permission to run the check.
While you can create your own application (on your own or with the help of a local landlord-tenant attorney), sample residential rental applications can be found online or from local real estate associations. You’ll want to make sure that any application you use complies with all applicable federal, state, and local laws.
Meet With the Potential Tenant
Though rental applications can tell landlords a lot about a potential tenant, there’s nothing that can substitute for having an actual conversation with the applicant. Talking to an applicant gives you a chance to ask questions that aren’t on the application, such as why the tenant plans to move and if they work from home. Better yet, an in-person (or on the phone) chat will give you an idea of what the person will be like to interact with on a regular basis.
While you’re gathering information (both in your written application and in any conversations), you should avoid asking questions that are or could be interpreted as discriminatory. Discussions relating to the applicant’s age, religion, race, or marital status (as well as any other protected categories under the fair housing laws that apply where your rental is located) could violate the federal Fair Housing Acts or state or local fair housing laws. Even seemingly innocent inquiries—such as asking a clearly pregnant applicant when the baby is due—might lead to your receiving a fair housing complaint.
You can learn a lot about applicants by taking time to talk with them in person, by phone, or by video chat. Once you’ve had a positive conversation with an applicant, you can feel confident about investing the time to verify the information provided on the application.
Verify the Applicant's Employment and References
Investigating an applicant’s employment background can give you a sense of the person’s stability and ability to pay rent. It’s generally a good idea to ask for contact information for a current employer and at least two past employers.
The best practice is to contact all provided employment references. By checking all of them, you’ll get a picture of not only the applicant’s continuing ability (or inability) to pay rent, but also of the applicant’s overall dependability. You’ll want to find out what the applicant’s role is, what the applicant’s salary is, and why the applicant left previous jobs.
Contacting employment references also gives you a chance to make sure the applicant provided accurate and complete information in the application. If you find that a past or present employer has negative things to say about the applicant, think twice before taking the person on as a tenant—bad behavior at work will likely translate into bad tenant behavior.
Check Past Landlord References
On the rental application, be sure to ask for previous landlords’ contact information, along with the addresses of past rentals, how much rent the applicant paid at each, and the applicant’s reason for leaving. If you see any gaps in an applicant’s rental history, it’s worth investigating—consider asking the applicant to fill them in. If you don’t get a solid explanation for the gaps, it’s probably a good idea to pass on the applicant.
Following up with previous landlords listed on the application is just as important as talking to employers. Past landlords are in the best position to tell you what type of tenant the applicant will be. Be sure to ask past landlords whether the applicant ever made late or incomplete payments, caused damage to the property, or disrupted other tenants or residents.
If you encounter a landlord who doesn’t want to provide a reference or is hesitant to say anything positive, that’s also good information to have. This might be a sign indicating the applicant wasn’t actually a good tenant, and it might be better to pass.
Verify the Applicant's Financial Stability
To check if an applicant is financially stable, you’ll need to find out if the applicant’s income is steady and will cover rent and other expenses. It’s a good idea to have in mind how much income a tenant must have to comfortably cover the amount of rent you’re seeking. If the rent will take up a substantial portion of the applicant’s income (over one-third of monthly gross income), the applicant might feel pressured to choose between paying rent and other necessities.
In addition to verifying the applicant’s source of income, consider asking for documentation of financial resources, such as bank account and credit card statements that include balances and minimum monthly payments.
If an applicant is self-employed, you can ask for copies of recent tax returns or bank statements to check financial stability. You can also ask all applicants for information on other sources of income, such as disability, workers’ compensation, or child support.
It’s wise to be skeptical of potential tenants who have no checking or savings accounts, or who offer to pay rent only in cash. This might be a red flag indicating lack of financial stability and ability to pay rent.
Run a Credit Check on the Applicant
Running a credit check lets you view an applicant’s credit history for up to the past 10 years and see how good they are at managing money. With a credit report, you can find out if a potential tenant has:
- a record of being late or delinquent in paying rent or other bills
- filed for bankruptcy
- a criminal conviction (note that criminal background information is not available in all states), and
- unpaid balances or large loans that might interfere with the ability to pay rent.
When you look at the information provided in a credit report, you’ll get a good idea of how financially responsible a potential tenant is and whether other debts or financial commitments might make paying rent difficult.
In some states, landlords can charge applicants for the cost of ordering a credit check. Whether you charge a fee or not, you should always obtain written consent to run a credit check—many services require it.
Run Background Checks on Potential Tenants
Background checks also give you a chance to better screen tenants by providing a detailed report of an applicant’s past—many access a number of public records to provide you with details of the applicant’s eviction history, criminal history, and other information allowed by state law.
If a background check turns up a recent eviction or a pattern of not paying rent or child support, it’s unlikely the applicant will be any more reliable about paying rent.
Find out if the Potential Tenant Has a Pet
In addition to any other human inhabitants, landlords should find out if a potential tenant has any pets. If so, it’s a good idea to meet the animal to make sure it’s well-behaved and taken care of. If the applicant has had the pet for a while, you can ask past landlords if the pet caused any damage or other problems while living there. Keep in mind that you will need to accommodate support animals, even if you have a no-pet policy.
Once you’ve carefully screened applicants, you can feel confident in accepting your choice and signing a lease or rental agreement. When you’ve invested time and effort in screening upfront, you have a better chance of keeping a quality tenant for the long term.