Screening Tenants
Before I became a landlord, I assumed that the business of acquiring tenants was relatively simple. Post an ad in the newspaper or place a sign on your lawn, and Bingo!, instant renters. Unfortunately, the renting game is not quite that simple. Unless you want to spend all your time chasing rent money and dealing with vicious dogs, I strongly suggest that you use a standard screening process every time you need to find a new tenant.
Although it might be tempting to go with your gut instincts, the best screening process is objective and does not judge people based on how much you liked them when they came to look at your place. Unless there is something glaring about a person that turns you off when they visit, I have found that making decisions based on an objective set of criteria will usually get you tenants that work out better in the long run.
The best way to measure the objective criteria is to obtain information from your prospective tenants. The first source of information is their phone call to you. Ideally, you will have placed a sign on your lawn or an ad in the paper with a phone number that is dedicated solely for rental purposes. Instead of answering this phone, record a voice message that describes your property, as well as lists the exclusions that would prevent someone from renting from you, such as smoking, pets, or a price that is out of their range.
As you receive messages from prospective tenants, schedule appointments with those that appear to meet your initial set of criteria. When a tenant comes to visit your property, if all signs point to go, have them complete a standard rental application. This application should include permission for you to contact references as well as run a credit check.
Once you have a completed application, scan it for problems. If a prospective tenant has failed to complete a section, you may either contact them or simply reject their submission. Be sure to call the tenant's references, however, be aware that they may not be the most objective sources of information.
If contacting references goes well, you can then run a credit check on the individual. Credit checks may be run inexpensively from Websites such as Rentcheck.com. One way to cover the cost of running credit checks is to charge a nominal application fee to potential renters that you will refund if they are the successful applicant. Doing so also may reduce the number of poor applications you receive, because it signals to tenants that you will actually check their credit.
Look over their credit report and make sure that they have a history of paying bills on time. If there are any red flags on their credit report, it is best to take a pass. In general, I have found the credit report to be the single best indicator of how responsible a tenant will be in paying their rent on time.
Finally, as part of the application process, make sure that the tenant has ample income to cover rent and expenses at your property. If, after doing all of these checks, you believe that you have a winner, go for it and sign a lease. Just remember, do things by the book and you will avoid problems down the road.