How To Screen Tenants: I’ve Analyzed 1000s of Applications
How to screen tenants? This is one of the most frequent things people ask me. Finding a tenant and then screening them scares people. It shouldn’t.
I’ll write a post and share my application in the future. For now just know I screen people before meeting with them and walking them through. This gives them a chance to screen me and understand deal breakers with the house.
What do I look for when screening tenants? Long term behavior and thinking. The most expensive thing to me as a landlord is having a vacancy. I am losing out on rent and I need to have the house fixed up. So I look for track records especially with jobs and rental history.
Next think how to screen tenants like you as if you are lending them money, because that is essentially what you are as a landlord – a lender.
Table of Contents
How To Screen A Tenant: The Fice “C’s”
In lending there are The 4 C’s. Credit, collateral, capacity, and character. I never had a checklist I followed. I just looked at those 4 things. There is also a 5th C that I heavily weight: Communication.
Communication
More than anything I screen tenants on their ability to communicate with me. My thought process was (and always is) simple: if they can’t communicate with me when they want something from me and we are on good terms than how can I expect them to communicate with me when there are problems.
I want tenants that tell me they are going to be late. I waive the late fees when they do. Unpredictability leads to stress. Strive for predictability. I’m comfortable if a tenant is predictably late, and lets me know.
Collateral
This doesn’t really come into play other than icing on the cake. If they have assets or money in the bank then it’s easier to collect a judgment if needed. It’s also more likely that they will pay on time if the asset is in the bank and isnt a car.
Capacity: What Is Their Capacity To Pay?
Credit I do look at credit. I use Experion Connect. But not because I care about their credit. It’s because I want to see if their story lines up with their reality. If they tell me their credit is bad. I ask why.
Then when we pull it I see if it lines up. It’s more about character then it is credit. Some of my best tenants have had the worst credit.
Character
Do they seem like a good person. Does their story make sense? Was there anything inconsistent with what they told me and what my homework shows?
I also use free sites to look at court records. Oftentimes its just googling your state’s name and “casenet”. If I saw any landlord actions I would really quiz the tenant on it. We are innocent until proven guilty, but why was the relationship bad enough that the landlord filed a case?
Communication between landlord and tenant should cut off many problems. Not always of course, but that’s why court cases that were resolved before court date are red flags for me and not deal breakers. I ask a lot of questions from court cases.
I call the prior landlord and ask basic questions. Early on I caught on that the tenant can be their friend’s name and phone number as their landlord. So before calling the landlord I look up that the name of the landlord is the same as the owner. If it isn’t I ask questions.
I also ask the tenant to email me from their work email. For most jobs the tenant has a work email The easiest way to determine if they are employed where they say they are is to send an email from their work account.
Does It Make Sense To Rent To This Person?
Analyzing the entire picture is what matters. See if their story makes sense. Ask a lot of questions. I look at income, credit, rental history, communication, etc. Treat the person like a person. Understand their story.
I also really focus on efficiency in everything I do. Early on I realize that I was wasting timing walking unqualified people through vacant houses. It was such a waste of time. Oftentimes there were no shows and even when the people showed up they would end up being unqualified.
So I started asking many questions and screening people before walking them through. This was so valuable. It stopped wasting my time. It also stopped wasting prospects time.
Bottomline: if you want to know how to screen tenants, just ask questions and then verify the answers.
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