What do you do when you know that you have a new property coming on the market? Do you have a plan in place for marketing? For evaluating potential renters? Do you know step by step what to do in order to minimize days on market and carrying costs?
In order to create a truly efficient tenant screening process, you'll need to formalize each step. Many agents and landlords miss out on important aspects of tenant screening because they have not put in place a fixed procedure. By creating a tenant screening checklist, however, you can make sure that nothing is left undone and that you are optimizing each step of your process in order to save time and money while protecting yourself and your property.
We’ve put together a guide to help you formulate a tenant screening checklist that works for your specific needs and your particular market.
What Should You Include in Your Tenant Screening Checklist?
Here are the elements to include as you create a process for tenant screening:
1. Create a Baseline Criteria for Renters
You’ll need to determine what elements you will use to decide between the various applicants for your rental property. Baseline screening elements might include:
- Minimum income requirement - A good example of this is a monthly income to rent ratio.
- Minimum credit score - Learn the difference between a FICO score and a resident score. Decide if a score from one bureau will suffice or if you want a tri-merge credit report.
- Clean criminal record - Be aware that there are limitations to denying applicants based on criminal history.
- Positive rent payment history - The easiest way to verify this information is by speaking with the previous landlord of the prospective tenant.
- Minimum number of references - Typically 2 personal references (outside of the previous landlord and occupation references) are a good indicator of a prospective tenant who is serious about wanting to make a good impression.
- Fits required lifestyle factors for pets, smoking, and lawn care - Take care that you are always compliant with Fair Housing Rules, when considering lifestyle factors.
By setting tenant screening criteria and sticking to them, you’re more likely to avoid problematic renters and enjoy more peace of mind with your new tenants.
2. Market Your Property
You will need to create a plan for marketing your property that you can automatically implement. Some of the ways you may want to market include:
- Multiple Listing Service (CRMLS, Bright)
- Listing sites (Zillow, Trulia, Rentals.Com etc.)
- Local online databases or blogs (Biggerpockets, Inman etc.)
- Your website and social media platforms
- Flyers or direct mail
- Craigslist or other online forums
Include your minimum criteria in your listing description in order to provide transparency and pre-screen potential applicants. For example: “Applicants are required to submit a rental application and submit to a background and credit check. Application fee included. No pets. This is a non-smoking property.”
If you do not currently have a real marketing plan in place, it may be time for you to work with a consultant or service to implement one. While marketing costs money, it also provides you a wider selection of well-qualified, reliable tenants and can often pay for itself by creating more demand -- and higher potential rental rates -- for your properties.
3. Create Pre-Screen Questions to Ask Rental Applicants
Develop a list of questions to ask potential applicants. You may want to have one list for pre-screening, then a more thorough list of questions for serious applicants who take the time to view the property in person and submit an application.
By creating a list of tenant screening questions that all applicants are required to answer, you further protect yourself against charges of discrimination and gather essential information about interested leads. In addition, you give yourself an opportunity to put your instincts to work as you get to know the applicant better.
4. Conduct a Successful Showing
A rental property showing is much more than an opportunity for the potential renter to evaluate the property -- it is your chance to evaluate the potential renter. Create a process for conducting your property showings and determine what you are looking for and what questions you’d like to have answered by the time the showing is concluded.
5. Process Rental Application
Develop a process for obtaining a rental application, determining the application fee, and processing the application. The application process will also include relevant background checks, credit checks, employment history, and other steps in evaluating the interested lead.
While you can manage the application process yourself, working with an all-in-one platform like RentSpree can vastly streamline and simplify the application process and help you find better tenants.
6. Reach Out to the Employer
There are liability issues involved in reaching out to an employer in order to gather information about a potential renter. Determine the rules defined by your local market, including what you can ask, what you can’t ask, and how to gather as much information as possible in order to help you make better decisions.
In addition, you’ll need to create an alternate process for evaluating freelancers, entrepreneurs, and other potential renters who are not salaried employees in order to determine their financial eligibility and the consistency of their income. In the age of side-gigs and startups, you don’t want to leave these motivated and often reliable renters out of the process.
7. Contact Prior Landlords
Determine what questions to ask and how to approach previous landlords in order to find out about the applicant’s rental history, payment history, and behavior as a tenant. Make sure that you reach out on behalf of every applicant in order to ensure a fair and equitable process.
8. Analyze the Credit Report and Background Check
You have the credit report and the background check from the reporting agencies -- now what do you do with them? Spend some time learning to read the reports and create a checklist of elements to look for, including credit score, current financial obligations, and the type and severity of any criminal charges.
9. Select the Qualified Applicant
Once you have evaluated all of the relevant information, create a selection process. Be aware of tenant screening laws that help protect renters from unfair disqualification. that focuses on the applicant who meets all of your requirements. Notify them of their selection. Be sure to select the applicant who submitted a completely qualified application first. It should be a first come, first serve approach.
Be sure to lock in your successful applicant before rejecting other applicants. In addition, always have a second and third place backup in mind in case your first choice falls through.
10. Notify the Adverse Action Applicants
For applicants who were rejected on the basis of their financial history, you are required to provide an adverse action notification with specific information for their review. Be sure to include this as part of your process and prepare sample letters in order to simplify the process of getting these notices to the rejected applicants in a timely manner.
11. Onboard the New Tenant
Create a meaningful process for onboarding your new tenants. Provide them with all of the information they need in order to make a successful transition to your property. These elements may include:
- HOA regulations
- Security codes, cards, or clickers
- Keys and garage door openers
- Property maintenance rules
- Information regarding rent payment, including automatic payments
- Repair request processes and procedures
For onboarding activities that remain the same from tenant to tenant, you may want to put together a workbook, video series, website, or other documentation platforms to automate and speed up the process of onboarding.
If tenant retention has been a particular problem for you, you may want to spend extra time evaluating your onboarding process. Doing a better job up front in communicating your expectations to new renters can make for a better process throughout the tenant-landlord relationship.
What Makes a Successful Tenant Screening Checklist?
In order to create a truly meaningful and user-friendly process, it’s important for you to define your goals for the tenant screening process and how you will measure its success. Here are some thoughts to get you started.
A successful tenant screening process should be:
If you create an overly complicated process, you simply won't implement it. Don't add extra steps or create unnecessary difficulties during your screening process. Look for ways to streamline and simplify the process in order to ensure that you will actually use it.
In addition, this is not the time for you to try to learn a whole new system. If you are not used to creating spreadsheets, don’t try to do so now. Use a format that works for you; later on in this article, you’ll read about some ideas to get you started.
You may have a number of potential renters or a number of properties to juggle at the same time. Your tenant screening process should be simple to replicate time after time and should include convenient, time-saving elements in order to ensure that you will continue to use it.
Consequently, by making your process easy to repeat, you’ll have everything in place for the next vacancy that comes along. The idea is to be able to respond as soon as you know a current tenant is leaving and develop a plug-and-play process that you can put to work immediately.
You should have a purpose in mind for your tenant screening process. In the past, have you:
- Struggled to rent properties in a timely manner?
- Struggled to find financially responsible tenants?
- Struggled to find tenants who will take care of the property?
- Struggled to find good tenants who will stay for more than one lease term?
- Struggled to implement financial and security checks in order to limit your liability?
By looking at the problems you've had with your previous processes, you can determine your purpose for creating a new, better process. In addition, you'll create the motivation to stick with the process once it’s in place.
To ensure that you continue to streamline and improve your tenant screening process, you need to have a way to measure your results. Track days listed, marketing costs, repair costs, and other measures in order to find out how well your tenant screening process is working, then adjust as necessary.
You are required by law to implement a fair and straightforward tenant screening process. By implementing a tenant screening checklist that you use for each and every potential renter, you'll protect yourself from charges of discrimination or unfair practices. This can save you both time and money and help you to defend yourself in the event of threatened legal action.
What format should you use for your tenant screening checklist?
You can use any of the following to create a tenant screening checklist:
- A paper file folder with a physical copy of your checklist and relevant documents included.
- An Excel spreadsheet in order to track various rental applicants and properties.
- A Google Doc to allow you to collaborate with other decision makers or to share updates and information with potential renters.
- A productivity platform like Slack or Trello to help you create a workflow and manage a variety of people and properties.
In addition, you may want to use a video messaging platform to provide updates, instructions, and onboarding information to your rental applicants. This can save you time, increase engagement, and promote better communication between you and your new renter.