As you may know from previous experience, good tenant screening is one of the single most important factors in being a profitable landlord. The right tenants lead to high occupancy rates, low attrition, and steady and reliable income. They cause fewer headaches, do less damage to your property, and simply make your life easier on a daily basis.
The problem is that not every landlord understands how to properly screen tenants in a manner that’s both meticulous and legally sound. There are lots of different strategies, but it ultimately comes down to the questions you ask – as well as the ones you don’t.
The sooner you can get good information from a prospective tenant, the better. Nothing is more frustrating than spending hours talking with a tenant, showing them your property, and processing paperwork and background checks, only to find out that they’ve been evicted three times in the past. The earlier you can ask questions, the more efficient you’ll become. Here are a few of the top questions to ask:
The very first question you should ask a prospective tenant is why they’re moving from their current place. This should give you a pretty good insight into their situation. For example, is their landlord kicking them out? Or are they simply changing jobs and looking for a place with a shorter commute?
Before you get too far along in the vetting process, you need to make sure that the dates line up. If it’s August 1 and you want a tenant in by August 15, but the prospective tenant can’t sign a lease until September 1, then that’s two weeks of lost income. You’ll probably want to go with a tenant who can move in sooner.
Contrary to what some landlords believe, it is legal to ask a prospective tenant how much money they make. As a rule of thumb, you want a tenant to make three-times the rent payment. So, if the rent is $1,200, you want a tenant who brings in at least $3,600 per month. While there’s nothing stopping a person from being foolish with their money, this lets you know that they have the means to cover rent without being too financially strained.
As a landlord, one of the best tools you have for understanding a prospective tenant’s history is a background and credit check. With these documents, you gain access to important facts that could remain hidden in normal conversation. You do, however, have to get consent from the tenant. If they refuse, this is a red flag that something is probably lurking in these documents.
Finally, you should ask if it’s okay for you to speak with the prospective tenant’s current landlord. Landlords typically shoot each other straight and this will give you the opportunity to ask about how they’ve treated the property, whether or not they’ve paid on time, and other important questions.
As a landlord, you have to be very careful not to purposefully or unintentionally discriminate. There are strict guidelines under the Federal Fair Housing Law and you don’t want to flirt with trouble by breaking them. Here are some specific questions to avoid asking:
Under no circumstances can you ask what race an individual is. It doesn’t matter how you frame it or whether you’re simply curious as to where they’re from. Any questions about race or nation of origin can be deemed discriminatory and are firmly prohibited.
Here’s a tricky one. While you are allowed to ask someone if they’ve ever been convicted of a crime, you can’t ask if they’ve ever been arrested. There’s often a big distinction between being arrested and convicted of a crime. It’s best to just conduct a background check and leave it at that.
Here’s another question that may seem innocent, but is technically illegal. When you ask someone whether they have a significant other, you’re getting close to sensitive issues that involve marital status, gender, and sexuality. Again, this might seem like a simple question, but it could come back to haunt you if you end up selecting another tenant and it appears that you did so because of the answer to this question.
You can’t ask a person how many kids they have, as the law believes the response to this question could lead to discrimination in certain situations. An alternative question that you can ask is: How many people will be living on the property? This answer is allowed, since you’re obligated to follow occupancy rules in your county.
You absolutely cannot discriminate against a prospective tenant because of a physical or mental disability. Even asking the question with the intention of finding out more about their situation and how you can better accommodate them isn’t appropriate. They can voluntarily discuss these issues with you if they desire.
Tenant screening isn’t easy or fun, but it’s one of the most important processes involved in being a successful landlord. It’s definitely not something you can skimp on.
At Green Residential, we understand that you have a lot of responsibilities on your plate. Whether you’re a full-time real estate investor or have a full-time job in addition to being a landlord, we want to help make things easier on you. That’s why we offer compressive tenant screening services that allow you to get the best tenants with a fraction of the effort. If you would like to learn more about what our screening process looks like, please contact us today!
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