The Ultimate Guide to Tenant Screening

By: , Contributor

Published on: Dec 25, 2019

Are you screening your tenants thoroughly enough? Want to avoid bad renters, unpaid rent, and damage to your properties? This tenant screening guide can help.

A good tenant screening process can be your most valuable asset as a real estate investor. It can help you sift through the noise, evaluate applicants equally and thoroughly, and ensure your rental property (and profit) is in good hands.

Are you new to being a property manager? Just want to make sure you’re doing tenant screening right? This guide can help.

Why you need thorough tenant screening

There are dozens of reasons you need a thorough, detailed tenant screening process, but the top one? That’d be your pocketbook.

The truth is, your tenants make or break you as a real estate investor. The wrong ones could:

Having a good tenant, however, is like having a golden ticket. It means consistent, on-time rent, a well-cared-for property, and hopefully, no vacancies for many years to come. A great screening process is the key to achieving just that.

Tenant screening checklist

The best tenant screening process is one that’s multi-faceted. It should cover the basics (verifying who they are, where they work, what they make, etc.) as well as the deep-dive stuff (criminal records, credit score, eviction history, and more).

Here’s a detailed checklist you should follow when screening any potential new tenant:

General tenant verification

You need to make sure their ID is valid and authentic, and double-check their address history against their credit report. Do they match up? You should also verify their employment by calling their employer (past ones, too) and making sure they’re being truthful about their job history and earnings.

Criminal background checks

Do a thorough tenant background search that covers not just national criminal records but state ones, too. You should also conduct a sex offender search -- especially if your rental property is near a school or community center.

Credit score checks

Always pull a full credit report for any tenant you’re considering. Check the tenant’s credit report for bankruptcies, overdue balances, and other negative marks, and look at the balances on their current debts and obligations. Does it leave enough to comfortably cover their new rent, utilities, and other costs?

You should also look at their credit score. It’s a good reflection of their overall risk, as well as their ability to meet their financial obligations.

Eviction reports

Generating an eviction report is critical, too. In fact, you should get a full rental history (at least for the last 5 years) so you can verify each address and speak with their past landlords, too. Important questions to ask past landlords include:

  • Did they pay on time?
  • How did they leave the property when they moved out?
  • Would you rent to them again?

Extras

Many tenant screening services offer extra evaluation tools -- things like resident or tenant scores that predict their chance of late payment and eviction. If you’re on the fence about a tenant or are comparing several applicants at once, these ratings can be a helpful decision-making tool to have.

What it looks like

At the end of the day, you want your tenant screening report to be as detailed as possible. It should include the applicant’s name and contact information, financial details, credit info, rental history, eviction and bankruptcy cases, and much, much more.

View a sample report to get an idea of what you should be aiming for. If you use a professional service, you can typically expect to pay anywhere from $10 to $40, depending on how thorough it is. In many cases, you can pass that cost off to the applicant.

Ask questions, too

You should also have a detailed application for them to fill out, and make an effort to meet them (in person or over the phone), too. Aside from the basics like employment history, salary, and residence history, you should also ask them things like:

  • What’s your current living situation, and why are you looking to change it?
  • What’s your ideal move-in date?
  • Do you have pets? What types, sizes, and breeds?
  • Do you smoke?
  • What sort of activities do you participate in at home? Do you host get-togethers or parties often?
  • Who were your past landlords? What is their contact info?

Make sure to keep fair housing laws in mind when creating your application and speaking with potential tenants. Any amount of discrimination could put you in serious legal trouble.

You don’t have to go it alone

If tenant screening sounds like a lot of work, well, it is. Fortunately, you don’t have to do it all on your own. Check out our list of the best tenant screening services and get the help you need to stave off bad renters.

Do a thorough tenant background search that covers not just national criminal records but state ones, too. You should also conduct a sex offender search -- especially if your rental property is near a school or community center.

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