When it comes to screening your applicants, you just cannot skipthis process, and doing your due diligence the applicant that is applying torent your property. Next to buying aproperty right, this is THEONE THING that can make or break a profitable landlord!
When you manage your properties, getting a good tenant in thatproperty should be your number one priority. You really should take some timeto ask the right questions, make sure they're filling out the right paperwork,and above all else, make sure you're doing everything consistently for each andevery single one of applicants that you take. You don't want to be accused ofany discrimination, and you want to always follow federal, state housingguidelines.
With that being said, every single applicant that comes throughour door to apply for one of our properties, we have them sign a tenantscreening criteria form. This one pieceof paperwork can save you hours of work, and help to focus on those applicants,who once informed, will move forward with the verification process.
Once you have received one or many applications, the TenantSelection Criteria form does two things to help you in the process of approvingan applicant:
1. Notifies the applicant ofthe documentation, background screening and other information you are going tobe asking for AND verifying.
2. Gives the tenant in writing the items, based on the backgroundcheck their application maybe denied.
PRO TIP: In any advertising we do for our properties,we upload the application AND the Tenant Selection Criteria Form. Get into the habit of just getting thissigned when the applicant completes your application. Making it part of the initial paperwork can“weed” out any applicants who don’t like your rental requirements or yourbackground check process. How you decide to implementthe Tenant Selection Criteria form, just make sure you implement the same wayeach and every time, with each and every applicant.
The Tenant Selection Criteria form is used to notify the tenantyou as the landlord will be obtaining the following reports:
1. Credit Report
PRO TIP: I recommend knowing how to read a credit report, what you are lookingfor are those items, should the person have a garnishment, would affect theirability to pay. As of this writing,student loans are a debt that could not be forgiven, and if in the event, theapplicant’s wages were garnished, might have an impact on their ability toafford the rent.
NOTE: During my years as aproperty manager, we were not concerned about the credit score – as far as anumber. What I looked for was:
o Were rent and utilities paid
o Was car payment made, or was there a repossession
o Credit Card Debt – only in one instance did we this impact ourdecision, since the credit card debt was over $100,000
o Collections & Judgments – Look for utilities, evictions andbankruptcies
o Medical Collections – this was never counted against a person asthis situation happens to the best of us with the way the health care industrydoes their billing!
2. Criminal History
I can tell you that in the 15 years of property management, weonly had one applicant that had a felony, served his time in prison. The applicant met all our other criteria, andthe owner decided to give the person a second chance – He turned out to be oneof our best tenants!
3. Income Verification
Our requirement: GrossIncome is 3 x times the monthly rent
PRO TIP: Check out my video on how to calculate an applicant’s income! Step #3
4. Rental History
PRO TIP: A third party verification that includes rental history is worth theweight in gold! Most single-familylandlords – if they have a bad tenant, are not going to give you theinformation you need, as their goal is to get the “bad” tenant out of theirproperty!
5. Pets – please note this section does not address emotional supportanimals or service animals. There arefederal housing laws that every landlord must follow.
6. Now, the last one, I do believe in renting to folks with furbabies because they're part of our family. Right? But unfortunately, not all ofour insurance companies will accept breeds that have been consideredaggressive. So, I want to let that applicant know upfront, "Hey, if youhave a German Shepherd, love them, but I can't rent to you. Okay? Because myinsurance will get canceled." And you know what this does? When youprovide that tenant selection criteria, then you can let your applicants knowupfront, "Hey, this is what I'm going to be checking for," and theycan decide if they want to move forward.
I have found that this is just a huge way to handle any headachesabout someone that might have something on their background, their credit, orsomething like that, that they're not going to meet your qualifications, andyou know what, that didn't pay the application fee. Because in propertymanagement, we don't get rich off of application fees. And I would rather letpeople know upfront, "Hey, this is what I'm going to be checking. This iswhat my criteria is for you to lease one of my properties."
Learning how to screen applicants will save you time and money,but you need to make sure you have a process in place to do so. Below you will find a link to an exampleTenant Section Criteria I use.
I hope these tips are helpful to you for streamlining yourapplication process. If you want to learn more, check out the linkbelow to my online Property Management Master Class that gives you all andeverything you would need to manage your own rental properties.
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Link to my online Property Management Master Class: https://bit.ly/3sEN2cm
Visit my website to find out more about me: www.nancywallacelaabs.com
Example – Tenant Selection Criteria Form: https://bit.ly/3vuKkrx