How are you feeling about your ability to effectively and consistently screen the tenants who want to rent your South Jersey rental property? This is an important part of the leasing process. The tenant you select will have an enormous impact on your rental experience.
If you’ve ever had the displeasure of working with a bad tenant, you know that they cost you a lot of time and money. They take up a lot of mental space, too.
A well-qualified tenant, however, will provide you with reliable income, immediate reports of maintenance issues, and a generally pleasant lease term. There’s less conflict. No disputes. Easy communication.
We want you to find the most qualified tenants.
The most qualified tenants deliver predictability and profit; you’ll bring in reliable rental income each month, your property will grow in value, and your ROI will steadily increase throughout the tenancy. You won’t lose money on turnovers, property damage, and eviction.
A solid screening process is the best way to ensure you’re only placing qualified residents into your property. But, you’re not a psychic. You don’t know how a tenant will perform. Even those renters who look good on paper and after being fully screened can have something happen that causes late payments or a lease break.
Screening requires you to understand fair housing laws. A standard screening practice is necessary so you can demonstrate you’re treating every application the same.
You need to take your time and put in the work that’s required to find the best tenant. If you are struggling with time or resources, hand the process over to a professional South Jersey property manager. Property managers can immediately identify the red flags that would make an applicant questionable.
Here’s our best guide for landlords who need some help screening tenants without the benefit of a professional property management company.
First Things First:
You Need Some Standard Qualifying Criteria
Before you begin collecting applications and checking credit, you need to establish a written set of qualifying rental criteria. What is that and why does it matter? We’ll tell you:
|WHY YOU NEED TO ESTABLISH STANDARD RENTAL CRITERIA
If a tenant feels like you discriminated against them during the screening process, they can file a fair housing complaint against you. That’s going to be an expensive and time-consuming fight to have, and if you’re found to have violated fair housing laws, you can face fines that are tens of thousands of dollars.
Avoid the chance that such a discrimination claim could even be made.
This is how standard rental criteria can help you. When you want to find great tenants and avoid discrimination lawsuits, you must create a set of written tenant screening criteria. The criteria must be objective, legally compliant, and consistently applied to every single applicant you encounter.
|WHAT YOUR STANDARD RENTAL CRITERIA SHOULD INCLUDE
What should this document look like? You’ll want to set some minimum standards for the tenants who are approved for your property. Your standard rental criteria can include:
When you’re more detailed, you can have an easier time deciding between several qualified applicants.
Some additional good reasons to include standard rental criteria in your leasing and screening process outside of the obvious protection against discrimination claims include:
- You can streamline the tenant screening process. You’ll know early in the process whether your applicant does or does not meet your minimum screening criteria. You can then deny the application before you invest time and effort calling references and conducting a background check.
- Your prospective tenant can decide whether or not they have a chance of being approved for your property. They might look at your criteria and realize that they’re not qualified, thus saving themselves an application fee.
Your rental criteria eliminates your own personal and very subjective opinion out of the process of placing a tenant.
You Also Have the Opportunity to Do Some Pre-Screening
When you have effectively marketed your South Jersey rental property with high quality photos, engaging descriptions, and strategic placements on all the best rental sites, you’ll likely have people calling to schedule showings or ask for more information.
Don’t allow just anyone off the street to schedule a showing. This is an excellent opportunity to do a bit of pre-screening so you have an idea of whether or not the interested party will actually be a good fit for your property and meet your screening criteria.
Answer any questions they have, and then ask a few of your own.
Here are what some of your pre-screening questions must include:
|When do you plan to move?||Why do you want to move?||How long have you lived in your current home?|
|Do you own any pets?||Do you have any previous evictions?||How many people will be living in the property?|
The answers to these questions will tell you whether your property is right for the person who wants to see it. There’s no sense in showing the home to someone who won’t be ready to move for three months. If you don’t allow any pets in your rental home, you don’t want to schedule a showing for someone with four cats.
What to Know About Fair Housing Laws During the Screening Process
When you’re looking for well-qualified tenants, you have to follow all state, local, and federal fair housing laws.
We don’t know a lot of landlords who intentionally discriminate, but it’s easy to make some big fair housing mistakes without realizing it. Language is especially important. The easiest way to make an unintentional fair housing mistake is by:
- Saying the wrong things in your advertising and marketing. For example, you cannot write that a home would not be good for children. You cannot say that your rental property is ideal for a specific religious group. Saying that a property is perfect for families or in a neighborhood that’s popular with one particular culture can get you into trouble.
- Asking the wrong questions during a showing or the screening process. You cannot ask if a tenant has children. You cannot ask if two tenants looking at the property together are married.
Make sure you know the local, state, and federal fair housing laws and how to follow them before you begin screening any of your tenants.
Document your entire process for tenant screening so you can demonstrate that everyone is held to the same standards.
Next: The Rental Application for South Jersey Tenants
You have your standards and your process in place. You’ve shown the property to a number of interested tenants. Now, you have to provide an application.
How does that work?
For starters, we strongly recommend an online application. People don’t want to be filling out a paper application and then handing it in. Online applications are far more common, they’re very secure, and they’re more convenient. Send tenants a link to the application form or provide them with the document you’ll be using to screen via email or text.
Your application will ask for a lot of information, and it absolutely MUST include:
|Full legal names of all applicants||Contact information for all applicants|
|Social security and driver’s license numbers||Current and past addresses|
|Employment and income information||Landlord references|
Your application must also provide permission for you to conduct a background check and a credit check on your prospective tenant. Make sure your tenants acknowledge that you’ll be collecting this information, and make sure there’s a signature granting you permission.
Good Tenants vs. Questionable Tenants
We’ve noticed some things about how prospective tenants handle the application process.
|Good Tenants Will:
||Bad Tenants Will:
It’s more than just the application form.
To properly screen tenants, you’ll need documentation such as a copy of their government-issued I.D. and pay stubs or bank and tax statements that verify their income. Allow them to securely upload those documents to you. If you don’t have a system that supports this, consider working with a South Jersey property management company or a screening company so this entire process is automated for you and your prospective tenant.
Once you have the application submitted, you can begin the process of screening it. Depending on your technology, experience, and ability to manage a lot of details, the screening process can take a few hours or a few days.
Work through the screening quickly and efficiently. You want to get back to your tenants as soon as you can.
What Are You Looking for?
Use your standard rental criteria to work through the process of screening your tenants. As you gather information, we recommend that you focus on these aspects of your prospective tenant’s personal, financial, and professional lives.
Look for Prior Evictions – Especially Recent or Recurring Evictions
The first thing to look for is any record of past evictions. Your application should ask tenants outright if they have previous evictions. Not all of them will be honest, so it’s important to check.
Not all credit reports reflect evictions, so you’ll need to conduct a national eviction search. You can visit court websites to search for any evictions your applicant may have been part of.
When you’re looking for a South Jersey tenant, recent evictions are especially problematic. You also don’t want to see multiple evictions in the applicant’s past. This is an indication that they may have trouble paying rent, even if they have the income to support it.
You might be willing to accept a tenant who was evicted from a home 10 years ago but has established a good rental history since then. Or, maybe you’ll want to adopt a strict policy of not renting to anyone with an eviction on their record. Make sure your criteria reflects your decision.
Check Credit and Financial Stability
Check the credit and court records for any bankruptcies or judgments against the applicant.
Situations where money is still owed to a former landlord or apartment complex are huge red flags because if the tenant didn’t pay those landlords, you might find yourself trying to collect money from them as well.
Running a credit check is a standard part of any tenant screening process. We know that a lot of owners will have a credit score threshold that applicants must meet. This can be valuable in determining who will be considered and who will not. But, the score doesn’t always matter as much as the details in the credit report. Medical debt and student loan debt are pretty common, for example. They can drag down a credit score, but that type of debt doesn’t mean a prospective tenant is a risky tenant.
More important is how they’ve treated their housing-related bills.
- Are there utility accounts in collections?
- Is there money owed to a former landlord?
- Is an apartment complex collecting past debts?
- Do you see a foreclosure?
This is more of a concern when you’re screening. You can use the credit score to eliminate an unqualified group of tenants, but pay more attention to the full credit report.
Measure Income Against Rental Amount
What you’re really screening for is an applicant’s ability to pay rent.
That’s going to require steady income.
Checking and verifying an applicant’s income is perhaps the most important part of your screening process. Measure what’s earned against the amount of rent you’re collecting. Best practices in South Jersey property management say that a tenant should earn at least three times the monthly rent in order to safely cover that expense and meet their other obligations.
With rental rates as high as they are, this can be a difficult threshold for tenants to meet. If more than one adult is moving in, you’ll want to combine all the incomes. Two adults or a set of roommates will need to make three times the rent combined.
Verifying the income by asking for copies of the last two pay stubs or gathering employment contracts and tax returns. For self-employed individuals, bank statements can be useful so they can show you the deposits that are made.
Rental History References
Checking references can be time consuming, especially when you have trouble reaching the landlords that an applicant has provided.
This is a valuable part of the tenant screening process, however.
A former or current landlord will tell you exactly what it’s like to rent to the person you’re considering for your own property. There’s a lot of valuable information that can be gleaned from checking these references.
In your application, request contact information for at least two landlord references. Once you get in touch, make sure you’re talking to the actual landlord or property manager.
What Should You Ask During a Landlord Reference Check?
|Confirm the dates of residency||Confirm the amount of rent that was paid|
|Ask if the entire security deposit was returned||Ask if rent was ever paid late|
|Ask if the tenant had pets and if there was any damage||Ask if the tenant provided proper notice before moving out|
|Ask if there were any complaints or disputes||Ask if they’d rent to that tenant again|
Checking Criminal History
New laws prohibit you from checking an applicant’s criminal background until after a conditional lease offer is made. According to the Fair Chance in Housing Act, landlords must approve a prospective tenant’s application and then give the prospective tenant a conditional offer before performing a background check.
Once you’ve exhausted all of these screening details, consider the entire application. If you have pets moving in with your tenant, you’ll want to screen the pets as well. You can ask for vet information and proof of vaccination. You can collect a picture of the pet and ask for a pet fee.
Then, you’ll have to issue an approval or a denial. Put everything in writing and make sure you document when and why the approval or denial notification went out.
It’s easy to make a mistake when you’re screening tenants, and those mistakes can often be costly. If you’d prefer to find and place a tenant with the help of expert South Jersey property managers, please contact us at Realty Solutions, and we’ll see what we can do to help you find, place, and retain the best possible tenants. We lease, manage, and maintain homes in Audubon, Collingswood, Cherry Hill, Haddon Heights, Blackwood, and the surrounding communities.