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A Landlord's Ultimate Guide to Pre-Screening Tenants
As a landlord, or "Home Provider", for over 20 years, I've come to the conclusion that the absolute most important task when renting out a home, is the screening of potential tenants.
How well you screen your potential tenants will be the difference between your success as a landlord and your complete disgust and disdain for the business. The ability to efficiently screen potential tenants will ultimately determine your satisfaction as a landlord, or your supreme frustration.
In this blog post, I want to give you information on how to pre-screen tenants. I've used this technique for the last 20 years that I've owned and managed my rental properties.
The pre-screening happens before the credit checks, prior to calling employers, before the previous rental history checks with two previous landlords, and before the criminal background checks. Those things will not be discussed here because those are the things I do after I've identified a potential tenant that I'm very serious about moving in to my property and entering into a contract (lease) with. That detailed thorough screening takes place later.
The information given here assumes you do not use a property management company to manage your properties, and you are solely responsible for the process of finding renters for your properties. Whether you want to use a property management company is up to you, but I would suggest that you start by managing your own properties, so that you can understand the processes, but again, that is your choice. Whether you manage others properties, have a management company, or manage your own properties, this information is helpful.
Here's 7 quick tips for Pre-Screening tenants and 4 essential questions to ask ALL potential tenants
1. Be sure to pre-screen all potential tenants. I don't care if you are renting to your childhood friend (which I don't necessarily advise, depending on what your goals are), screen 'em. This sounds easier than it is. It can be time consuming and tedious, but it is essential. A lease is a contract. You want to get to know as much about the person you are potentially entering into a contract with, as possible.
Pre-screening allows you to vet all potential tenants and collect rental applications from serious tenants only. You do not want to waste precious time going through an entire pre-screen process with candidates who you know will not make the final cut. Take everyone through this process.
2. As a matter of good morals, it's important to remember that If you pre-screen a potential tenant and you know they are not a good candidate for your property, please do not collect a rental application fee from them. Be honest and ethical and use integrity in this process. When you pre-screen potential tenants, you will know whether or not they have potential. If they do, move forward, but if they don't, be courageous enough to make the assessment early, and communicate it with them. People appreciate honest feedback and when you value their time with up front honesty.
3. You must have standard qualifications that you can measure your potential tenant against, and they should be in writing and not be discriminatory based on the FHA standards. The Federal Fair Housing Acts (42 U.S. Code § § 3601-3619) prohibits discrimination on the basis of race, color, religion, national origin, gender, age, familial status (having children), and physical or mental disability (including alcoholism and past drug addiction). Have written standards that you abide by. You are running a business, so processes, procedures, rules, regulations, and standards, are important.
4. Call and initiate the process of pre-screening via a phone conversation: You learn more in a phone conversation than a text, email, or letter. When you advertise your property, you will get calls back. Call these potential tenants back and start the process. Again, no text and no emails. You want to hear a voice. Hearing a voice and listening well will help you determine a lot about a person. Make it a quick 3 or 4-minute conversation at the most. Get the most out of it by listening intently and carefully asking the right follow-up questions. You are fact-finding, so be courteous and efficient.
5. Take notes or create a spreadsheet to record the information you learn from each potential tenant. Never rely on your memory. You may also want to compare potential tenants when making the final decisions on who to show the property to and who not to show the property to. Writing down the key information you learn from each tenant is important, and keeps you organized. Check out my blog post 7 Reasons I Take Notes.
6. Check Social Media Profiles as a means of seeing who you are potentially renting to. Whether its Facebook, Pinterest, Instagram, Twitter, or LinkedIn, look for the person online. Why? Because you want to see how the person has decided to portray themselves to others. Don't make a decision based on a social media profile alone, but do take it into strong consideration. You are checking for details and whether or not the information you find matches up with what they tell you. You are in business, so do your due diligence as such.
Are they associated with anything that may not be a fit for your property? Is there a photo of them changing the oil on their motorcycle in the living room of their current property? You want to know these things!
7. Ask lots of questions during this phone conversation. Some of them may sound a bit personal, but tell the potential tenant that you are asking lots of questions because you "want to make sure they are a good fit for the home, and you don't waste their time, or your time". People understand that.
Ask the following 5 questions to ALL POTENTIAL TENANTS:
1st question to ask ALL potential tenants:What are you currently looking for in a property? The answer to this question will tell you a lot about whether your property meets the criteria they are looking for. If they say, "I'm looking for a walkout basement and 3 bathrooms", and your property sits on a concrete slab with 1 bathroom, the conversation ends right there.
You can only fit so much in an advertisement online, so every nook and cranny about your property will never be online for potential tenants to see. By asking this one simple question, you will know immediately if the house meets all of their wants. Often times, this question will either jump start and peak greater interest, or kill the deal right here.
2nd question to ask ALL potential tenants: How long have you been on your current job? Your tenant should be employed and have been employed for enough time that you feel comfortable that they have a secure source of steady income. Explain to the potential tenant what your requirements are, in terms of length on the job. The point here is that you want some stability on the job, which shows they will likely keep a job long enough to afford your property for more than the 6 months or year that they may sign your lease for.
3rd question to ask ALL potential tenants: What is your monthly take home pay? BUT DON'T ASK THEM LIKE THAT! You will get push back. First, the required level of income you decide may be 2.5 times the rent amount or 3 times the rent amount. That is your call. Secondly, you want to learn what is the potential tenants monthly take home pay, but again, you don't have to ask a tenant this. Instead, simply communicate to them that you check with employers to verify time on the job, and then tell them the actual amount you require as a monthly salary compared to the rent amount (i.e. 2 times the rent amount).
For example, you'd ask in a way similar to this: "our rent amount is $900 and we require a person to bring home at least 3 times that amount. Do you fit that requirement"? Simple, quick, and non-invasive. Typically, the tenant will then move on if their salary does not meet your requirements, or they will continue to pursue your property if they meet the salary requirement by simply affirming that their take home pay fits that requirement. By doing it this way, you get information about their salary/income without asking them the question directly, and it feels less intrusive to the potential tenant.
4th question to ask ALL potential tenants: Do you have other forms of income besides your job? The answer to this question will let you know if they receive child support, disability, social security, etc. This, along with the answer to the previous question, will help you make a very informed determination on whether or not the potential tenant can afford your property. Be objective here.
There is a tendency to allow your heart strings to be pulled, but you want to be realistic and honest with the tenant, and yourself! If the tenant can't afford the property, they will usually let you know, but you will run into cases where the tenant, out of desperation, may still push forward, even though they don't meet your income requirements. This is when you have to step in and honestly inform the potential tenant that the property is not a good fit! Be courteous, kind, and empathetic, but move on!
5th question to ask ALL potential tenants: Who will be occupying the property? This question is an opportunity to invite the potential tenant to be honest, upfront, and provide information on who will be living with them. If you ultimately decide to move forward with this person. The number of occupants matters.
If you are renting a 2-bedroom home and they have 6 adults, it won't be a good fit. Don't overlook this question. An overcrowded single family home has exponential effects on the upkeep and maintenance of your home. 5 people flushing a toilet is a lot different than 2 people flushing that same toilet. This can go both ways. You may have a 5-bedroom home and a single person inquires about your property. You still have to question, is it a good fit!
By the end of this brief phone conversation, you will know whether or not this is a potential tenant or not. You should be able to conclude the pre-screen conversation with a positive move forward or with a polite exit from the potential. This is the opportunity for YOU to be upfront and honest with the potential tenant.
When this initial telephone conversation is over, no one is hurt, no extensive time has been wasted by either party, and whether or not they are a good fit for your property has been clearly laid out on the table through good communication and an examination of facts.
If you decide to move forward by showing this potential tenant the property, be sure that the information they ultimately put on your rental application corroborates with the information they shared with you in this pre-screening conversation, which is another great reason to take notes.
Remember, this is the start of the screening process. Your overall screening process will benefit greatly by incorporating these pre-screening techniques into the beginning of the process. By taking 3 or 4 minutes out to pre-screen tenants, you are now equipped with information to make an informed decision on whether or not you should spend the time and effort to show the property to them. Never waste time screening a tenant that did not pass your initial pre-screening!