Good tenants can make your landlord experience smooth and profitable; bad tenants can destroy property, skip out on rent, and make you wish you’d invested in the stock market instead. The key to zeroing in on the best tenants is research.
You want to look for tenants with a proven track record of both financial responsibility and personal responsibility. People who’ve changed jobs frequently or moved around a lot probably won’t make good tenants; when you’re looking for stability, past commitment history tells you what you can expect going forward.
To gather the basic information you need, create a comprehensive rental application for each tenant to complete (if more than one person will be named on the lease, have each fill out a separate application).
Then take the time to follow up and verify that information before you settle on a tenant. And always trust your gut: even when a tenant looks great on paper if your instinct says something feels off, move on.
Below are the best ways to verify your tenant:
1. Prepare A Thorough Rental Application
A thorough rental application can act as a great tenant-screening tool. It helps you organize and evaluate the information you collect on prospective tenants and provides the data and permission you need to run credit and background checks. To cover the costs of those checks, most states allow you to charge application fees, though some limit how much you can charge. A basic rental application asks for information such as:
- Name and Social Security number
- Complete contact details
- Employment history (company name, salary, dates of employment, full reference information)
- Rental history (at least three years, including landlord contact information and reason for leaving)
- Basic screening questions (such as, “Have you ever declared bankruptcy?” or “Do you smoke?”)
- Signature that explicitly (a) verifies the information on the application is true and (b) gives permission for credit, background, and reference checks
Keep every rental application, even for the people who don’t become your tenants. Then if a rejected applicant tries to sue you (usually under the Fair Housing Act), you’ll have a solid paper trail of protection that spells out why someone else was a better candidate.
To streamline this process (and make things much easier for you), consider using an online rental application tool. These can help you stay organized, allow applicants to upload documents (like W-2s for income verification), and save on paper storage space. Websites such as Zillow (www.zillow.com) offer free screening and rental application services for landlords.
2. Verify With The Employer and Prior Landlords
Once a prospective tenant fills out a rental application, it’s your job to verify that information. Call the employer to confirm the prospective tenant’s job status, earnings, and how long she or he has worked there.
Contact prior landlords (ideally, at least two) to see what kind of tenant he or she was. If the tenant is including alimony or child support in her income, ask to see the court order and six months of bank statements showing that money was received regularly. (In many states you can’t discriminate based on source of income— but you don’t have to rent to someone who can’t prove he or she is actually receiving that income.)
No matter how much you like a prospective tenant, do your homework. Verifying the information will save you a lot of hassle (and potentially eviction proceedings) down the line.
3. Run a Credit Check
Before you rent to anyone, you need to know that he or she can and will pay the rent. The best way to find that out is by running a credit check. You can either do that on your own (which is inexpensive or sometimes free) or hire a service (which costs more but usually includes a thorough background check as well).
To DIY the tenant credit check, contact at least one of the three major credit bureaus (Experian, TransUnion, and Equifax) and request a credit report. Experian (www.experian.com) offers free tenant screening credit reports to landlords.
TransUnion (www.mysmartmove.com) offers tenant screening services starting at $25 each. Equifax (www.equifax.com) tenant screening reports start at $15.95. Before you can order credit reports, you need explicit permission from every tenant who’s at least eighteen—and you should check this for all adult tenants.
To pull the report, you’ll need basic information from the tenant’s application, including his or her full name, birthdate, and Social Security number. Also, all adults who will be living there should be named on the lease, even if they’re not technically responsible for the rent; i.e., occupants rather than tenants.
4. Do a Criminal Background Check
Criminal history is a matter of public record, for even minor offenses. You’ll want to look into this thoroughly for the safety of your property, your other tenants, your maintenance workers, and yourself. A complete background check calls for looking at several sources, including:
- Criminal court records searches at the local, state, and federal level
- An “offender search” through the Department of Corrections
- The sexual offender database
Some of those searches are free; others may cost between $10 and $30 (on average). Since there’s not a nationwide criminal database, running a thorough check can be tricky—especially because criminals may lie on their rental applications.
5. Consider Going with a Pro
It’s tough, time-consuming, and potentially expensive to do a thorough background check, especially if the prospective tenant has lived in several different states. Make your life easier by using a full screening service like SmartMove (www.mysmartmove.com) or MyRental (www.myrental.com).