Property Management

How to Screen Tenants for a Rental Property

Screening Tenants for Property Rental

Owning a rental property can be a great investment, but it requires some effort, including vetting the people who will eventually live in the home. It’s an important decision because choosing the wrong tenants may cost you money and peace of mind. To ensure you’re selecting the right tenants and doing so fairly, there are some important things to look for.

At VPMG, we understand the importance of thorough tenant screening, and that’s why we’ve created a guide to help you. Whether you need a tenant screening checklist, insights on background checks, or tips to spot red flags, our guide has you covered. Dive into the essentials of finding the best tenants for your property with confidence and ease.

What To Look For When Screening Tenants For A Rental Property

The screening process is designed to assess risk and ensure you find the most reliable tenants. Just like a lender sets criteria to qualify you for a mortgage, you should establish nonnegotiable minimum requirements to protect your financial health before meeting any prospective tenants.

Potential Tenant Screening Process Criteria

Setting clear qualifying criteria helps lower the risk of issues such as late payments, neighbor complaints, criminal activity, or eviction. Here are some examples:

  • Healthy credit history: A record of timely payments and responsible credit use, showing the tenant’s financial reliability.
  • Proof of employment: Documentation that verifies a tenant’s current job status and income level, ensuring they can afford rent.
  • References: Contact information from previous landlords or employers who can vouch for the tenant’s reliability and character.
  • Proof of identity: Valid identification documents, such as a driver’s license or passport, confirming the tenant’s identity.
  • Rental history: A record of previous rental experiences, highlighting the tenant’s behavior as a renter, including timely payments and adherence to lease agreements.
  • Payment of security deposit and first month’s rent: Initial financial commitments required to secure the rental property and provide a safety net for potential damages.
  • Criminal history: A review of any past criminal activities, ensuring the tenant poses no risk to the property or other tenants.
  •  Background check: An investigation that includes credit, criminal, and rental history to assess the tenant’s overall suitability.

While these criteria are essential, some flexibility can be beneficial. For instance, if a prospective tenant has no credit history or a low credit score, you might still consider them if they have a reliable cosigner. This approach allows you to maintain standards while accommodating potential tenants who might otherwise be overlooked.

What to Keep in Mind During the Tenant Vetting Process

When you’re a landlord, it’s crucial to navigate the tenant vetting process with both legal and ethical considerations in mind. Here are some key points to keep in mind:

State and Local Laws

It’s essential to be familiar with local and state landlord/tenant laws, as well as renters’ rights, including fair housing protections. For instance, many states prohibit landlords from denying rentals to victims of domestic violence.

Additionally, local laws may set limits on security deposits, ensuring they are used appropriately to demonstrate a tenant’s ability to cover rent.

Washington State Laws

Washington tenant screening laws have some unique aspects, so it’s crucial to understand them thoroughly to ensure compliance.

Not every state has the same regulations, and knowing Washington’s specific laws will help you stay on the right side of the rules.

Here are a few key points:

  • Washington laws allow landlords to collect application fees from prospective tenants.
  • The application fee must match the actual cost of the screening service, with no markup.
  • Landlords must provide applicants with a receipt showing the exact cost of the background check.
  • It’s important to note that an application fee is different from a security deposit, which is collected after an applicant is approved. The application fee is typically the first payment you receive.

Tenant Screening Process

When you’re ready to find the perfect tenant, follow these steps to set yourself up for success:

Step 1: Determine Minimum Tenant Criteria

Set your expectations before screening applications.

  • Credit Score: Aim for a score around 650, though you might set a higher requirement for luxury properties.
  • Security Deposit: Decide on a security deposit, typically one month’s rent, to protect against damages or missed payments.
  • Upfront Rent: Choose whether to require first and last month’s rent, or just the first month’s rent and a security deposit, ensuring compliance with local laws.
  • Lifestyle Considerations: Decide on policies for smoking and pets, considering potential odors and damage.

Check other rental listings in your area to help set these requirements.

Step 2: Prescreen Tenants in Your Rental Listing

  • Create a detailed listing to attract qualified tenants
  • Include property details: number of rooms, bathrooms, amenities.
  • Disclose monthly rent, security deposit amount, application and credit report fees, background check, references from previous landlords, and pet or smoking policies.

A well written listing can help attract quality applicants.

Step 3: Collect and Review Applications and Get Consent for Screening

Request detailed applications to learn about prospective tenants and gather information for credit and background checks.

  • Collect the applicant’s name, contact information, date of birth, driver’s license number, Social
  • Security number, previous addresses, names of other occupants, employment and income information, contact information for personal references, and answers to additional screening questions.
  • Select which applicants to screen further and get their written consent before pulling their credit or running a background check. 

Step 4: Run a Credit Check

Go beyond the credit score when reviewing a credit report. Verify the applicant’s name, date of birth, past addresses, and employers, and look for any financial issues like late payments, bankruptcies, or excessive debt. Depending on the findings, you can proceed, ask for a higher deposit and cosigner, or deny the application. Always discuss any discrepancies with the tenant.

Step 5: Run a Criminal Background Check

A criminal background check helps assess the risk of criminal activity and protects you from liability. It reveals criminal records, sex offender registration, and possibly eviction history. Decide on a case by case basis if a tenant with a criminal record can move forward, considering the type of crime and how long ago it happened. Discuss any findings with the tenant for clarification.

Step 6: Verify Other Tenant Information

Confirm other details the tenant provides:

  • Employment and Income: Review recent pay stubs or W2s and contact their employer.
  • Rental History: Speak with their current or previous landlord.
  • Personal References: Reach out to personal references for additional insights.

Step 7: Conduct an Interview

To get to know the tenant better, conduct an interview. Ask questions like:

  •  Why are you moving?
  •  When would you like to move in?
  •  How long do you plan to stay?
  •  How many people will be living with you?
  •  Do you or anyone living with you smoke or own pets?
  •  How many parking spaces do you need?
  •  Have you had any prior evictions?

Avoid questions about medical conditions, sexual orientation, marital status, plans to start a family, or disabilities to comply with fair housing laws.

Step 8: Decide On Tenants and Sign the Lease

After you’ve run background checks and verified all the information, it’s time to choose the best tenant match for your rental property. With all the details in hand, you’ll be ready to make an informed decision and move forward with signing the lease.