Tenant screening is a vital step that all landlords should take before renting a property out. In a perfect world, a landlord could trust all people who wish to rent from them. However, the world is not perfect and not all tenants are created equal. Screening potential tenants will lower the risk of losing money on a rental property.
There are three main reasons to screen tenants. These reasons for screening tenants are easy to recall if you can remember the Three P’s.
Profit: When a landlord is renting out a property the main goal is to make a profit on the rental. This means that the tenants need to be responsible, dependable and will pay the full amount of the rent punctually. Not only is it important to find a tenant that will pay the rent on time every month, but obtaining tenants who will fulfill the term of the lease is also imperative.
It can be difficult to predict what tenants will be financially responsible. One way to do so is to run a credit check on potential tenants. A credit check will give the tenants’ financial history and it will show whether they have a tendency to miss or make payments late.
Property: A landlord needs to make sure that they protect their property. This can be done by renting to people who have a history of taking care of past rentals. It’s impossible to tell by a person’s appearance whether or not they take care of their possessions or will take care of a property that doesn’t belong to them. The tenant screening process will help the landlord get a picture of whether or not the tenants will protect the rental. Contact former landlords to get an idea of how they took care their past rentals. Be cautious when renting to a first time renter. Contacting references is a way to obtain information on the tenants.
People: It is not just the landlord’s job to protect their profit and property, but it is also important to protect the other people living near the property. This may be other tenants or residents of the apartment complex or neighborhood surrounding the rental. References can help paint a picture of the type of people the potential tenants are. Some jurisdictions allow a background screening to be done in order to make sure that the tenants do not have criminal proceedings against them.
Landlords should set standards for desired tenants prior to starting the tenant screening process. It is important to have clear standards of what is acceptable for in order to avoid discrimination or other violations of the Fair Housing Act. Don’t rush through the process to just rent the property. Instead, take your time in order to protect your three P’s: profit, property, and people.