Why Tenant Screening is Important for Landlords

Why Tenant Screening is Important for Landlords

If you’re a landlord, then you’ve likely invested a lot of time and resources into your rental property. It’s one of your more valuable assets, so it’s something you need to protect. And just as you wouldn’t hand over your car keys or lend a piece of priceless family jewelry to a random stranger, you shouldn’t let just anyone live in your building. That’s why it’s so important to learn as much as possible about your prospective tenants. You can do this by utilizing proper tenant screening services.

For landlords and property managers, the benefits of a tenant screening process are obvious, but these benefits are also afforded to the other parties involved. Neighbors, other renters and even the potential tenants themselves all have something to gain from tenant screening.

I. How do landlords benefit from tenant screening?

How do landlords benefit from tenant screening?

Property owners have to be mindful of a few issues when searching for potential tenants. The tenant screening process is designed to help landlords find the right tenants for the space, which has a few immediate benefits.

1. Legal Protection

Screening all of your potential tenants helps to protect you from any legal issues that could arise when applicants are inevitably rejected from renting your property. After a full screening, you will legally and fairly be able to point out any issues to renters who may question a denied application.

2. Property Protection

It is a major priority to keep the actual physical space safe and free from damage. Destructive or careless tenants can quickly end up costing a landlord hundreds or even thousands of dollars. Screening your applicants helps to mitigate the risk.

3. Maximum Income

Tenant screening can also help to maximize the income generated by the rental. By properly vetting each potential tenant, landlords can help ensure the rent will be paid in full and on time. Potential tenants will also prove they can afford the unit, since credit and employment checks are also part of the screening.

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4. Less Turnover

If a unit remains unoccupied or is constantly being turned over between tenants, the landlord will lose money. Finding the right tenant will encourage more stability and more of a long-term relationship. The screening process also makes it far more likely that the landlord can avoid evictions, keeping the unit occupied and the income flowing.

5. Reduced Stress

Tenant screening is streamlined, consistent and fair for all. It helps to arm landlords with the most unbiased facts about all applicants, without discrimination. This allows the landlord to make the most informed decision on who will rent their property, stress-free.

While proper tenant screening might require some time and resources, the process will always save more over the long term, creating a more gainful situation for your income property.

Why Tenant Screening is Important for Landlords

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II. Who else benefits from tenant screening?

Who else benefits from tenant screening?

1. The Community

Everyone wants to feel safe around their neighbors. The community around your rental property will benefit from knowing their new neighbors have been screened and found to be a safe addition to the area. This can also help the landlord’s reputation. The neighbors will appreciate that you have done the right thing.

2. Existing Tenants

This is especially true if you own a larger property with multiple units. These people will be neighbors living in relatively close quarters with your new tenant, so you want to prevent as many issues as possible by performing a proper screening. You’ll benefit from this one, too, since there will be fewer issues for you to address with your tenants.

3. Potential Tenants

Believe it or not, the potential tenants themselves also have something to gain from the screening process. Reputable renters will feel better about you as a landlord knowing that you’ve done your due diligence.

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III. What are the aspects of the tenant screening process?

What are the aspects of the tenant screening process?

There are a few typical aspects of the tenant screening process. A landlord is looking for as much relevant information as possible to know that they are renting to the right people. Most screenings consist of checking the tenant’s credit history, verifying their employment, looking into any potential criminal charges and any prior evictions, and sometimes checking in with past or current landlords.

1. Credit History

If an applicant regularly has trouble paying bills or has a habit of incurring unreasonable amounts of debt, then they have a greater chance of being unreliable with the rent. A credit check can provide important information about a potential renter’s responsibility with money.

2. Employment Verification

You’ll want to verify an applicant’s employment for two main reasons. First, you want to make sure the tenant is trustworthy, and that the information they’ve provided to you is accurate. This is along the lines of a character check. Honesty will go a long way in the landlord-tenant relationship.

Secondly, you want to verify the tenant’s salary information for rent collection purposes. By confirming the renter’s income, you’re confirming they will be able to afford the monthly rent.

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3. Criminal history

This one is for the safety of everyone involved. An applicant who may have been involved in criminal activity is a risk to the property, the landlord and the community. As the landlord, you must make sure to protect yourself from a legal standpoint as well, and a criminal history check goes a long way toward that protection.

4. References

It may be beneficial to reach out to past or current landlords to obtain information that may not have been available in the official background checks. Here you can find out things like how noisy or messy the tenants might be.

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IV. Steps for Running a Tenant Screening for Landlords

Steps for Running a Tenant Screening for Landlords

1. Know your standards.

If you’re attempting to rent out living space, you should understand exactly what you would look for in an ideal tenant. Does your property have space for full families, or is it more suited for single renters? Are you going to allow pets? What are you looking to charge for rent? It will be easier to find a good situation if you know the answers to these questions already.

2. Communicate expectations clearly.

After deciding on the standards for your rental, be sure to communicate them to the public. This is true when creating a listing for the property or when speaking with potential tenants for the first time. Being clear about your requirements ensures that both you and the tenant know if the partnership will work.

3. Use a thorough application and collect documents.

The actual application is the first major step toward a tenant taking up residence in your rental. Your actual application should ask all of the relevant questions, collecting as much information from the applicant as possible before running the official screenings. This will help keep the process as efficient and streamlined as possible.

You will also want to collect any documents you may need, such as pay stubs from the applicant’s employment or W2 tax forms.

Why Tenant Screening is Important for Landlords

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4. Perform the actual screening.

This is where you officially screen the applicants, following the steps in the previous section. You’ll know all you need to know about the applicants at this point.

5. Inform the rejected applicants.

You may find something in an applicant’s background check that disqualifies them from renting your property. This is where you must inform them of your decision to reject their application. When you do this, you must keep in mind any fair housing laws that exist, as described in the next section.

6. Prepare the lease and hand over the keys.

Finally, once you’ve screened your applicants, you can choose the right fit, have them sign a proper lease and hand over the keys to their new residence. Then you will start to see the return on the investment of your money and time.

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V. Important Considerations

Important Considerations

1. Fair Housing Laws

All landlords should be familiar with the federal government’s fair housing regulations designed to protect tenants from discrimination based on race, color, national origin, religion, sex, gender identity, sexual orientation or disability.

Many states also have their own sets of guidelines around these practices. Be sure to keep all of this in mind when deciding on your standards and expectations for renters.

2. Attention to Detail

Of course, there will be times when the screening process uncovers an issue that requires more follow-up. Perhaps an applicant’s student debt looks significant in the report, but you can see that they always pay on time. Some people may have had unfair experiences with unreasonable landlords in the past. It’s always important to follow up when the situation requires to ensure you are getting the complete picture of a potential tenant.

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When dealing with something as important and valuable as a rental property, it’s always better to take the extra steps to protect it. Even though the tenant screening process can require some extra time and money upfront, there are too many benefits over the long term to ignore this step.

From protecting your property to keeping the community safe to ensuring that you can continue to see a return on your investment, finding proper tenant screening services will help create the best situation possible.

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