The 5 Steps of Tenant Screening

I always say that "95% of your tenant problems can be eliminated in the screening process." If you're like me, you probably find it difficult to relax when you have vacancies. So getting it rented is the main idea, right? Well, from now on, let's say "getting it rented to a properly qualified tenant is the main idea."

Below is what I call The 5 Steps of Screening Tenants.

Step 1: First Contact

From the very first contact with the tenant, the screening process has begun. Whether you are the landlord, real estate agent or property manager, the same still holds true.

First Contact is usually by telephone*, so you need to ask the right qualifying questions in order to decide if you should proceed to step 2. Advise customers of your upfront rent and security deposit requirements and other important facts regarding the rental that may help disqualify the prospect.

I suggest you make a list or prospect card of questions to ask and have it handy while you conduct your first contact interview. For example:

 

Name: Phone: Reason for Moving: # of People & Relationship to You: Intended Rental Term:              Occupancy Date: Pets: Smoking: Credit: Landlord Reference?

* First contact can also be through an internet ad by email. This is becoming a more popular method of rental advertising and I have found huge savings in rental advertising money. Here is a link to my Pre-screening Tenant Prospect Card for internet ads, such as Craigslist or LPA Rental Ads, etc. Pre-screening Tenant Prospect Card

Please note that anyone who has a problem answering your questions (as long as you ask them politely), probably will not qualify for your rental. Serious customers want to make a good impression on you and should be happy to answer your questions. This process can save you and customers a lot of time and trouble.

Step 2: Showing the Property

From landlords to real estate agents, we all have our own style in showing the rental. I think we all need to be aware of certain telltale signs to watch for while evaluating your prospective new tenants.

1. Appearance. Is the prospect neat and clean? Did he or she make an attempt to make a good impression? In most cases, an unkempt person keeps an unkempt lifestyle and home.
2. Car. Does the prospect have a nice car? Is it clean? Although we can't judge people by their car, we should take note of it along with other details.
3. Attitude & Manners. Does this prospect behave respectfully? Does he or she show indications of being difficult to deal with in the future? Did the prospect wipe his or her feet when stepping into the house? Did the prospect walk into the rental while smoking? You can learn a lot about people even before speaking to them. Sometimes it helps to pay attention to details.
4. Criticizing the property. Are the prospects pointing out legitimate concerns, or are they trying to come up with items to negotiate price?
5. Yes or No? Can the prospect make the decision now or will they have to think about it? If they know now that they want your rental, did the prospect come ready to give you a deposit and fill out an application?

Step 3: The Application Process

The first thing you need is a quality rental application. Let the applicant know that his or her application will be considered along with others, and you will notify the applicant once a decision is made. Advise the applicant(s) that it is very important to fill out the application as completely as possible. If you (and I recommend you do) run a credit report on the applicant, I suggest you be sure to collect a screening fee. This is a provision in The LPA Rental Application.

Inform your prospective tenant that the application must be returned as soon as possible to avoid the risk of losing the rental to a competing prospect.

Review and verify the application thoroughly and look for inconsistencies and "red flags". When you are satisfied, you will proceed with approving your new tenant in step 4.

Step 4: The Approval Process

This is usually a fun part, but keep in mind that you are still screening the applicant while preparing him or her for the next step. I like to congratulate the applicant on being approved and let them know they came in 1st place. Also, let them know if you made any special concessions just for them, such as overlooking minor credit infractions, etc.

This process is also an opportunity for you to make sure the applicant can and will deliver. Set the time, date and place for your lease signing. Instruct the applicant(s) to bring the proper amounts of monies, identification (if you don't already have it), and how you prefer to be paid. (Check*, money order or cash)

* Be sure to tell your new tenants that possession or keys will be given only after checks have cleared.

Step 5: The Lease Signing

It is very important that you have a quality residential lease. You'd be surprised at how many people would just sign a lease without reading it! And I don't just mean tenants! I believe it is crucial to read the entire lease with the tenants at a lease signing. It is your agreement with them. Shouldn't you both know what is really being agreed to? As you read the terms of the lease with the tenants, you will be able to conduct your 5th and final step of screening. Does the tenant argue on every item? Is the late charge an issue? And so on.

Of course, if you are unhappy with how your prospect responds to you and/or your lease, you must not rent to this person. I believe: "It is better to have NO tenant than it is to have the wrong tenant." - John Nuzzolese

Source: This article was published with permission from the Landlord Protection Agency

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