Tenant screening is one of the most important jobs of property management. Screening is done to discover what the prospective tenant is really like, and whether he will be able to pay the rent. Application forms cannot reveal much and they can be falsified; hence, an effective tenant screening procedure must be in place, which will not only confirm the details that the tenant has provided, but also analyze outside information that can provide a reasonable estimate of who the tenant really is. Here are certain guidelines for effective tenant screening.
Checking Whether Tenant can Afford the Unit
The first thing that needs to be checked is whether the tenant can afford to pay the rent of the unit. As a rule, tenants who are earning at least thrice the rent amount will be able to afford the unit, and are least likely to stop their rent payments. Most tenants feel they can afford the unit, even when they really cannot. Hence, it is up to property management to set rules about income thresholds. Usually, income that is thrice the monthly rent is considered sufficient.
Checking for Income Stability
A tenant might be earning three times the rent right now, but property management also needs to check whether the tenant will be able to earn that much over the long term. For this, you need to check the type of job, past history of unemployment, and if the tenant is in the habit of switching jobs frequently.
Checking Rental History
Even when tenants are able to afford the rent, some of them will not pay it on time. Property management will have to check the person's rental history to find out if he has been flagged for late payments. Also, check whether there were any complaints about the tenant being untidy, unruly, or was known to create disturbances. As a general rule do not accept people who have been evicted from a property in the past unless they have squared themselves away, perhaps agree to pay higher rent, and seem level headed when you are meeting with them.
Checking for Criminal History
People who have a history of doing illegal activities, drugs, and criminal behavior are obviously not fit to be tenants, as they will only cause problems in the community, and eventually you will have to evict them, which is going to be expensive and time consuming.
Minimum Requirements should be met Before You Accept any Application
Set certain minimum standards, which should include:
ü Minimum income of thrice the monthly rental
ü No felonies or criminal background
ü No evictions in the past
ü Good references from previous property owners
When a prospect contacts you, make sure the minimum requirements are made clear to the person on the phone. This will save a lot of time, since persons not meeting these criteria should not even see the application form. Why waste their time at all if they do not satisfy the basic threshold?
During the application process, collect the following:
v Personal details such as the name, current address, phone number, social security number, date of birth, and so on.
v Details about past and current property owners where the person was a tenant.
v Credit report.