As a landlord, you know how important it is to find the right tenant for your properties. Whether you rent out a single home or own multiple properties, it’s understandable that you’ll want to find tenants who will pay their rent on time and treat your property as they would their own home.
Seasoned property managers understand how a tenant can look good on paper, but leaves your property trashed, doesn’t pay their rent on time, or is a nuisance neighbor. If it is your first time renting, you’ll want to make sure you avoid these kinds of tenants at all costs. Here’s how to set up a tenant screening process for your properties, why it’s important, and how to stay on the right side of the law. We also include the best tenant screening services available today.
Table of Contents
- Why is Tenant Screening Important?
- Tenant Screening and the Fair Housing Act
- The Tenant Screening Process: Step-by-Step
- Step 1: Set Up Your Tenant Screening Standards
- Step 2: Create your Tenant Application Form
- Step 3: Initial Call And Interview With Potential Tenants
- Step 4: Show Potential Tenants Your Property
- Step 5: Tenant Applies if Interested
- Step 6: Generate a Tenant Screening Report
- Step 7: Verify Tenant Applications
- Step 8: Score Tenants Based on Tenant Screening Report
- Step 9: Call Tenant References for Verification
- How Can I Get a Tenant Screening Report?
- Tenant Screening Tips
Why is Tenant Screening Important?
It’s undeniable that renting your property will always come with a degree of risk. With the risks you face ranging from minor accidental damage to willful damage and withholding of rent payments, you need to make sure that you mitigate as much of this risk as possible. Tenant screening helps you to do just that.
When you screen your tenants, you’re looking for a history of property damage, violent crime, or other serious offenses that could put your properties or the local communities at risk. Screening your tenants will also allow you to see previous eviction notices to learn how they’ve treated properties in the past. While an eviction notice isn’t necessarily a red flag - after all, your tenants might have been evicted because the landlord wants the property back at no fault of their own - it’ll help you to see what kind of tenant they are.
Plus, your properties are a financial investment, and of course, you’ll want to make sure you’re seeing a return. By screening tenants and checking their credit history, you can make sure they’re financially responsible enough to pay their rent on time every month.
Screening tenants doesn’t just protect your business, but it also helps to prevent having to go through the eviction process, which can be costly and time-consuming. A bad tenant has the potential to ruin your reputation, cost you thousands in property repairs, and even lead to legal action down the line. So, if you want to avoid renting to bad tenants, maintain your reputation, and protect your financial investment, then screening tenants is the way forward.
Tenant Screening and the Fair Housing Act
Before we get started with the tenant screening process, it is critical to understand how tenant screening is regulated. Under the Fair Housing Act (FHA), you legally can’t deny housing to people based on certain protected characteristics, such as:
- Familial status
- National origin
When the Fair Housing Act is invoked in legal proceedings, it’s usually because the landlord has shown preference to some people over others based on any of these characteristics during the application or screening process.
To stay compliant with the Fair Housing Act, your screening process can’t take any of these characteristics into account when you’re determining who you’re willing to rent to. You also can’t hold certain applicants to stricter rules than others based on these criteria.
You should also be aware that the FHA doesn’t just cover your official paperwork during the application process. It can also cover off-hand comments, such as:
- Asking where an applicant was born, or what their first language is
- Asking questions that assume marital or familial status
- Mentioning nearby places of worship that the applicant may like
FHA and Felons
Can you refuse to rent to tenants who have criminal convictions? That’s where things hit a legal and moral gray area. In 2016, the Department of Housing and Urban Development (HUD) told landlords that issuing a blanket ban on tenants with criminal backgrounds may violate the FHA. While having a criminal record isn’t a protected characteristic, refusing tenants on this basis will have a disproportionate effect on Black and Hispanic applicants who are more likely to be incarcerated than white applicants.
To make sure you’re not breaking the FHA, you need to have a criminal history policy in place that’s the same for every applicant. You also need to show that this policy:
- Actively distinguishes arrests vs. convictions
- Takes into account the length of time since the crime took place, rehabilitation efforts, and the extent of the applicant’s criminal history
- Contains specific examples of types of criminal behavior that will threaten the safety of the landlord, property, or community
- Makes exceptions for certain types of criminal history
- Legitimately protects the landlord, property, and community
The Tenant Screening Process: Step-by-Step
Now that you’ve got a better idea of why you need to screen your tenants, and how to do so in a way that doesn’t discriminate against characteristics protected by the FHA, here’s an overview of the tenant screening process.
Step 1: Set Up Your Tenant Screening Standards
To begin this process, you need to come up with your tenant screening criteria. This will not only help you protect yourself from bad tenants, but also protect your current tenants, neighbors, and the community from potential lawsuits.
As we covered earlier, you’ll also need to have a policy in place that creates a rock-solid defense in case any applicants or tenants file a discrimination claim against you. You’ll have to show that your tenant screening criteria doesn’t discriminate against certain characteristics. Also, you must prove that it has processes in place to negate any potential discrimination, such as screening for criminal histories.
One major factor here is that your screening criteria can change between properties, but must be consistent for each property. So, you can’t have harsher criteria for some applicants than others. Your policy will have to show that you apply any screening criteria equally to tenants and take into account individual circumstances, such as criminal or credit histories.
Even if you think your criteria are watertight against an FHA lawsuit, hire an attorney to review your tenant screening process. It’s an extra expense, but given that FHA fines start at $20,000, it’s cheaper than a lawsuit.
You should also determine which qualifications your applicants will need to rent from you. This covers items including:
- Minimum credit score
- Occupancy limits
- Photo identification and social security number
- References from employers and previous landlords
- Verifiable income
Step 2: Create your Tenant Application Form
Once your attorney has checked over your screening criteria and has confirmed that it’s FHA compliant, you need to create a tenant application to collect all the information you need for the screening process. Here’s what you need to include in your tenant application form.
You need to know who your prospective tenant is. Items you’ll need to ask for include:
- Date of birth
- Full name, including middle names
- Previous or current aliases
You’ll also need supporting documentation to verify your applicant’s identity. At the very least, you’ll want to ask for their social security number. While some applicants may not have a driving license, you can add a driver’s license number as an optional field for additional verification.
If you’re planning to allow for multiple tenants to fill the same application form, then the identity section should also contain fields to identify:
- Who is the primary renter?
- Who is the designated point of contact (if different from the primary renter)?
- What is the relationship between the tenants?
Asking for contact information upfront saves time if you accept the application, and allows you to quickly contact potential renters if you need more information. You should ask for the following information:
- Home & daytime phone number
- Mobile & evening phone number
- Email address
You should gather this information for all potential tenants that are filling out the application form. If there is only one applicant, then you should also ask for an emergency contact number and the tenant’s relationship with that person. If there is more than one tenant, then you can either ask for one of them to be nominated as the emergency contact or ask for an additional emergency contact number.
Rental and Residential History
One of the most important things you’ll need to know as a landlord is your applicant’s rental and residential history. You’ll need to ask for:
- Current address
- Previous addresses (usually within the last three years)
- How long they lived at these addresses
- Whether the properties were rented, owned, part-owned, or if they had other living arrangements
- If any previous addresses were rented: name of landlord, contact information, reason for leaving property
- If they have previously been evicted, and if so, why
You’ll also need to know if your applicants are able to consistently pay their rent on time. This means you should collect the following information:
- Name of current and previous employer
- Contact details of current and previous employer
- How long they have been employed in those positions
- Current monthly gross income
- Other sources of income outside of employment
Additional Rental Information
While you’ve got your main tenants’ information, you’ll also need to know any additional circumstances of their tenancy, such as:
- If any dependents under the age of 18 will be living in the property full or part-time
- If the applicants have any animals that will live in the property full or part-time
- If the animal is a pet, a working animal (medical alert, service, guide, hearing, etc), or is used for hunting, sports, or business
- If the applicants will have vehicles kept at the property full or part-time
Criminal History Information
As we covered earlier, it is critical that you uncover the specifics of an applicant’s criminal history, but your policy should only cover certain crimes rather than be a blanket ban on anyone with a criminal history or conviction.
By asking applicants to state upfront if they have a criminal history, you can gauge how honest this applicant is likely to be with you by checking their answer against the resulting criminal history check you’ll run.
Asking applicants where they found your property listing isn’t a necessary part of the application. However, this data will help you discover which marketing channel is succeeding, and inform future marketing campaigns.
Statement of Consent
You need to tell your prospective tenants what you plan to do with this information, and ask for their consent to use their information. Here are the items you’ll need to ask for consent:
- Background check
- Credit check
- Criminal records check
- Eviction history check
At the end of the application, you need to include a legal disclaimer to protect you and your property. While the language can differ, a typical statement to include is:
I, [name of applicant], declare that the information I have provided on this application is true and accurate to the best of my knowledge. I agree that if any of the information provided in this application is later found to be deliberately false, my lease may be terminated.
This gives you a way to terminate the tenancy agreement if you discover that the applicant deliberately obstructed or falsified information in order to rent your property. As we mentioned before, you should have an attorney review your application, so it does not violate the FHA, and to make sure that the statements of consent and legal disclaimer will protect you.
Step 3: Initial Call And Interview With Potential Tenants
The first stage is to schedule an initial interview with potential tenants. These should ideally take place over a phone or video call to save time if you have multiple parties showing interest in your property. To prepare for a call, you should have a list of questions to ask your potential tenants. Some question to consider include:
- Do you have any other income sources?
- Do you have any previous criminal convictions?
- Do you have pets or live with any other animals?
- How soon are you planning to move in?
- How would you describe your relationship with your current landlord or letting agent?
- Were you evicted previously?
- What kind of work do you do?
- Who would be living with you?
- Why are you looking to rent a property?
You’ll want to keep this initial interview brief, and get more details later on if they decide to apply to rent your property. If you’re happy with the answers your potential tenants have given, then you could consider asking for their future availability for viewing your property.
Step 4: Show Potential Tenants Your Property
When it comes to showing your property to potential tenants, you’ve got a few options depending on if a tenant currently lives on the premises and how much time you have. Individual viewings allow you to get to know your potential tenants. It takes more time, particularly if you’ve got a lot of people who are interested in your property, but it gives you a chance to talk to them, and gauge their interest. You could also have an open house if your property is currently empty. However, the downside is that you can’t always give your potential tenants individual attention or judge their level of interest.
Step 5: Tenant Applies if Interested
At this point, potential tenants will tell you if they’re interested or not. They might tell you at the viewing, or if they’ve got other properties they’re interested in, you should hear back within a week if they’d like to apply. It’s worth deciding ahead of time if you’ll be willing to follow up on interested parties or if, a certain amount of time after viewing, you will assume they’re not interested.
Step 6: Generate a Tenant Screening Report
Once potential tenants have filled out and returned their application forms, it’s time to generate a tenant screening report to learn more about their background. Thanks to solutions, like Avail and Buildium, you can start the process with a single click.
One of the many reasons why tenant screening is so important is that it’s easy for people to falsify their data on application forms. It is the best way to reduce the risk of taking on a bad tenant, which can leave you with costly property repairs and eviction proceedings. Tenant screening reports offer the following information on your potential tenants:
- Credit report
- Criminal history
- Eviction history
- Identity validation
You can then use these reports to compare potential tenants. It’s recommended that you look carefully at the different types of tenant screening software solutions on the market because they can vary in pricing, thoroughness, and, in some cases, validity. Buildium is a great option if you want a simple solution, as it offers all of the reports listed above for one simple cost. Plus, Buildium also offers an application form builder, a viewing scheduler, and even a website builder to showcase your properties.
However, if you don’t need a full-scale solution, you can pay per screening with Avail, Cozy, and TurboTenant. Typically, you’ll get an identity, credit, and criminal check with these services, but you’ll have to pay extra for eviction screening.
But, who pays for the tenant screening services?
That’s up to you. Some landlords will ask their applicants to pay, while others will eat the cost as a factor of trying to find a tenant. Some platforms, however, will give you a discount if you pay for the screening process. For example, with Buildium, it costs $15 per screening for you, but if you choose to pass the cost on to the applicant, they’re charged $30.
Step 7: Verify Tenant Applications
Even after you’ve got a tenant screening report, you still need to verify that your tenants haven’t falsified any other information or documents. Here are some items you’ll need to verify:
- SSN and driver’s license
- Employment, both current and former
- Tenancy, both current and former
- Any pets on the application
- Correct work or student visa
Step 8: Score Tenants Based on Tenant Screening Report
To stay compliant with the FHA, you need to show that you’ve considered each applicant based on the same criteria. It’s not enough to show that you have a set criteria list for your tenants. If a potential or current tenant files a lawsuit against you, you’ll need to show that you considered each applicant fairly. You need to create a scoring system based on the criteria you set. The simplest way to do this is to give tenants a point for each part of the screening report that matches your criteria, and then set levels at which you’ll accept or reject an application.
Step 9: Call Tenant References for Verification
If your potential tenant scores well on their report, then you need to call their references. This is yet another way to verify the information in their application, but also a good indication of an applicant’s character and manner. It’s a good idea to verify the references by asking how they know the tenant, and don’t be afraid to ask the reference more questions to get to know your applicant. If you’re happy with the references, then it’s time to hit accept and welcome your new tenant!
How Can I Get a Tenant Screening Report?
There are several property management solutions that you can use to receive a tenant screening report, and we have listed some of them below. In general, the tenant screening processing typically takes less than 24 hours.
TurboTenant offers the most affordable tenant screening reports for a free-to-use solution on our list. Tenant screening reports are paid by your applicants.
Tenant screening fee: $35 to $45
TurboTenant is a free-to-use property management solution used by over 250,000 landlords nationwide. This solution is equipped with several useful tools for property marketing, lead tracking, and rent collection. TurboTenant is ideal for independent landlords managing 1 to 100 units.
Buildium offers the most affordable tenant screening reports on our list. However, you must purchase the platform to use this service.
Tenant screening fee: $15 to $30
Buildium is a property management solution used by over 16,000 property managers. This platform is used to manage a variety of portfolio types including community associations, student housing, affordable housing, and residential properties. Buildium a powerful end-to-end solution equipped with tools to manage the entire property management lifecycle from the initial marketing of your units to inspecting your properties after tenants move out.
Avail is a completely free-to-use solution that offers tenant screening. Avail’s tenant screening reports are the most expensive on our list. Tenant screening reports are paid by your applicants.
Tenant screening fee: $55
Avail is a popular property management solution used by over 200,000 independent landlords nationwide. Avail is best suited for landlords managing 1 to 15 units. This platform includes property marketing tools, automatic rent collection, maintenance request tracking, and eLeasing.
Tenant Screening Tips
Screening tenants isn’t always an easy or quick process. Here are some tips to make tenant screening simpler to manage.
Don’t Break Your Own Rules
The biggest mistake you can make during the screening process is letting potential tenants off the hook on certain criteria because of your intuition. While it’s true that certain criteria can’t be taken in isolation, you need to follow the rules you’ve set yourself. They’re there for a reason, and breaking them can lead to you accepting a bad tenant or, even worse, looking down the barrel of an FHA lawsuit.
Create Application Forms Online
Software solutions, like Buildium, are great because they allow you to create custom application forms without needing to know a single line of code. With online forms, you can set them so applicants have to fill out all of the required information before they can send the application. Many services also offer additional features that can tell if someone hasn’t entered a valid email address, phone number, or current address.
Book Back-to-Back Viewings
If you want to fill your property quickly, and many people are interested in viewing it, then booking back-to-back viewings is a proven strategy. Not only does it save you time and money from going to your property multiple times throughout the week, but it also shows potential renters that there’s competition for the property. By creating this social proof, you’ll often find that people want to apply as soon as possible to increase the chance of renting your property.
Take Notes During Interviews
While you should have a list of questions ready to go when you interview potential tenants, you should also take notes of their responses to check for consistency if they end up applying for your property. It’s easy for someone to lie in your initial interview and on their application, but less easy for those lies to be consistent. If you take notes, you’ll be able to spot any inconsistencies, which can be a red flag they’ll be a bad tenant.
Don’t Write Comments on the Application
If you have a written application from a potential tenant, then the only written comments you should be leaving on it should pertain to your rental criteria only. If you write other comments about the potential tenant’s familial or marital status, race, or any other characteristics protected under the FHA, you end up facing a lawsuit with your own notes as evidence against you.
Always Double-Check Identity on Background Checks
If a background or criminal history check returns information that’s different than what your applicant told you, then make sure to double-check the identity of the applicant in the report. If the applicant has a common name, it is possible that an error occurred in the check. So, remember to check against the biographical information you know about them and any available mugshots.
Always Take References from Two (or More) Landlords
As a landlord, you already know that the fastest way to get a tenant out of your property is to give them a stellar recommendation to their next landlord. Unfortunately, this means you can’t always count on an applicant’s current landlord to tell you the whole truth about the tenant. So, try to call two or more of an applicant’s previous landlords to get the full picture of a tenant’s personality and history.
It’s easy for applicants to list their friends on applications and claim that they’re previous or current landlords. Thankfully, there’s an easy way to counter this.
On the application, potential tenants should have given you their current and previous addresses. You should be able to find a landlord’s mailing address on public records, so when you phone them, ask them to confirm their zip code. That way, you’ll quickly find out if an applicant has tried to pass off their friend as a valid reference.
Tenant screening is key to finding the best tenants for your properties. While tenant screening isn’t complicated, it is important that you avoid common mistakes, so you do not violate the FHA. We covered several best practices that you can implement to optimize the process, and showed several solutions, like TurboTenant, that can help you find the best tenants.