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How to Effectively Screen a Tenant

There are 5 critical pieces for selecting a good tenant: credit report, employment/income verification, eviction report, criminal history, and landlord reference. If you follow the steps outlined in the article, you are guaranteed to select a great tenant.

Credit Report

A credit report is an excellent method to find out if someone is responsible with personal finance. However, you need to be mindful of some pitfalls. For example, traditionally people with perfect credit can qualify for a loan and may not be a long-term renter. If you only select based on high credit score, your unit might suffer from a high turnover rate. There is also a large group of people that went through a foreclosure during the financial crisis that destroyed their credit scores. But they might be your perfect tenants if they have a stable job with a stable income. Overall, I suggest that you always look at credit score, but do not make it the only way you screen a tenant.

Employment / Income Verification

In my mind, the most important piece of tenant screening is employment and income verification. Unfortunately, many employers make it difficult to do. They typically do not directly say no to verification request, but they will give you a website to subscribe to, ask you to send them a fax, or give you an 800 number to call. You will likely have to pay for the verification. In the end, many landlords are deterred by the hassle and the cost, and decide not to do employment and income verification.

Needless to say, this is a wrong reason to not do tenant screening. Tenant screening is hard. If you want to do it yourself, the best method is to just ask the applicant to provide recent paystubs or tax returns. Sometimes bank statement also work, as long as you can see direct deposits from an employer. Sometimes you are still not sure after seeing their documents, you should try to contact their employers.

Be very careful for tenant fraud when you do employment / income verification yourself. It is very easy to download a bank statement / paystub template online these days. When you make a call to the “employer”, it is possible it is a friend of the tenant on the other end.

If you are worried about the hassle and fraud risk, a good way is to out-source employment/income verification to companies with a great track record. Tenantify is a perfect example of such service providers that offer a verification layer for rental transaction.

Eviction Report

An eviction is a landlord’s nightmare. You should strive to never let it happen under your watch. The best way to prevent it is to never accept a tenant with a eviction history. If someone is being evicted, they are usually out looking for a place to rent as soon as possible. They likely will say, “I have to be out by the weekend” or “I have 2 weeks to move”. That’s a red flag, so be very careful. There are also national eviction database you can search to ensure a clean slate.

Criminal History

There are many nationwide services on criminal history. You should be careful when you are screening applicants with common names like Mike Smith or Mark Jones. The best way is to try to limit the search to just a state or county, but without losing sight on a national search. Also, be mindful that a person with no criminal past is not necessarily a good tenant, so always use it as a supplemental method.

Landlord Reference

A current landlord reference, in my opinion, is useless. The landlord typically has an incentive to get rid of problematic tenants. If you call, he/she will only say good words to speed up the process. So do not be fooled to take other people’s monkey on your back. That said, however, if you can get to a previous landlord, go pursue the reference, as it will be much more reliable.