Effective Tenant Screening: 5 Essential Steps

Tenant screening entails the evaluation of potential tenants by landlords and property managers to determine whether or not they are likely to hold up their end of a lease or rental agreement. Conducting thorough screenings and implementing effective tenant lease insurance tracking can be essential for successful property management.Failure to conduct such due diligence leaves landlords vulnerable to significant inconveniences, including missed payments, property damage, lawsuits, and more.

1. Create Appropriate Tenant Criteria for Your Listing

Deciding on suitable tenant criteria enables landlords to effectively evaluate prospective renters and make informed decisions about tenancy. This includes defining specific parameters that align with the property's requirements and the landlord's preferences.

Be sure to include the following:

• Property Information
  • Smoking Policy
  • Pet Policy
• Rental History
  • Number of Evictions
  • Noise Complaints
  • Broken Lease Agreements, Etc.
• Income Requirement (Should Be Appropriate for the Property Offering)
  • Percent of Gross Monthly Income
• Employment History
  • Months Employed With Current Employer or Within the Same Field of Work
• Credit History
  • Bankruptcy Discharge
  • Credit Score
  • Rental Collection/Judgement
  • Tax Liens
• Public Records
  • Criminal Records
  • Address Records

These standards must comply with fair housing laws, which prohibit discrimination against individuals based on protected characteristics such as race, color, national origin, religion, sex, familial status, and disability. Screening criteria and practices must not discriminate against applicants on any of these grounds, including avoiding discriminatory language in rental advertisements and applying consistent screening criteria to all applicants.

2. Conduct Pre-Screening Phone Interviews

At the start of your renter search, you’re most prone to deal with a diluted applicant pool. Concentrate that pool before collecting official rental applications by simply conducting a short, 30-minute phone interview with interested parties to determine whether or not they may be a good fit. Just be sure to review legal lines of questioning in your state before doing so. We suggest keeping your tone conversational, to avoid lawfulness coming into question.

3. Collect Rental Applications

We suggest charging an application fee. While it will likely lower the overall number of applicants, this often helps improve the quality of those you’ll deal with. Anyone who isn’t serious about renting your property, or who doubts their own qualifications, is more likely to be deterred by the prospect of an application fee than someone confident in their financial status who fully intends to follow through with the move.

4. Run a Rental Background Check

A rental background check will endow you with a more well-rounded understanding of your prospective renters’ past actions, beyond the information they willingly disclose on an application. This will include a detailed credit check and a criminal background check, among other telling insights.

A credit background check enables you to make decisions based on the details of someone’s credit history, rather than their credit score alone. Information for the credit check is mostly pulled from these three major credit bureaus:

• TransUnion
• Equifax
• Experian

Other reports that are part of a full rental background check include, but are not limited to:

• Address History
• Employment History
• Public Records
• Eviction Records

Privacy considerations can play a significant role in tenant screening processes. It’s important to handle personal information collected from applicants with care and follow applicable privacy laws, such as the Fair Credit Reporting Act (FCRA). This includes obtaining consent from applicants before conducting background checks and securely storing and disposing of sensitive information to prevent unauthorized access or disclosure.

5. Call Tenant References to Confirm Reported Tenant Details

Tenant references may include past landlords, employers, or family and friends. Here are some appropriate questions to ask each:

Past Landlords:

1. What is the address of the property that my prospective tenant occupied?
2. Were there additional names listed on the lease? If so, whose?
3. Did the tenant’s occupancy last the full duration of the lease agreement?
4. What was the cost of rent?
5. Were there any complaints about the tenant from neighbors?

Employers:

1. Can you confirm that this tenant is employed with your company?
2. For how long has this tenant been in your employ?
3. Have you ever had to discipline this tenant at work, for any reason?
4. Does the tenant generally show up to work on time?
5. What is the tenant’s monthly salary?

Friends & Family:

1. Is the tenant a smoker?
2. For how long have you known the tenant?
3. Can you describe the tenant’s overall character?
4. What does the tenant like to do in their spare time?
5. Does the tenant have pets?

How BCS Helps: Real Estate

As a landlord, your risk exposure is compounded with each new tenant you grant occupancy. You'll need to track insurance proofs to make sure they don't have any hidden coverage exclusions.

Managing compliance and documentation for tenants can be a daunting task for property managers, often consuming valuable time and resources. That's where bcs comes in.

bcs offers effective certificate of insurance tracking solutions designed to streamline these processes and guarantee compliance across all your properties. With our bcs App, you can track all your tenant lease agreements and insurance documents effortlessly, consolidating them into one centralized location for easy access.

By simplifying compliance management, bcs empowers property managers to focus on delivering value to their tenants.

For more information about real estate screening and insurance tracking with Business Credentialing Services, shoot us an email or schedule a demo, today.