Why is screening an applicant so important? How do you interview them? Are there red flags in your process? We will share some of our processes and criteria. We have a zero eviction rate for all the tenants we have placed. So we feel we are doing something right and perhaps the information here can help you.
Tenant Selection Criteria –
Develop a simple criteria which you follow for every applicant, no exceptions. Once this is in place, the process is easily repeated and there is a streamline in your flow. There are several criteria out there, Google “tenant selection” and you will find one that suits your model, and the population you serve. There are some differences on how a Landlord selects versus the expectations of a property management company. However, in order to be safe, we believe everyone should adhere to Federal Fair Housing rules.
One standard of practice is the applicant should earn three times the rent, which can be a combined household income. Don’t take someone, in an act of desperacy, who earns only a fraction more than the rent. You will regret it later! You will incur costs of make ready and marketing and/or eviction. Eviction is a lengthy process and no one wins. Be sure to verify their rental history. This bit of information is crucial and tells you many things about the applicant. Are they responsible, can they manage their finances, do they have stability, all information you can gather from previous landlord(s) by asking simple questions. Do they pay rent on time? Did they have any NSF’s? How long have they been there? Did they give you at least a 30 day notice? Did they hand in keys and the property was clean upon move out?
Verify their employment history by calling their employer. Request a copy of their paystubs for your records. There is a possibility of a discrepancy between pay stub and the information provided by employer. So it is important to be diligent and verify all information – what is their current salary? What is their title? How long have they been employed? This is valuable information in determining if this applicant is approved.
A credit score is typically a good indicator of someone’s character, of course there are exceptions (divorce, medical situation, etc.). A low credit score can be acceptable, however we increase the security deposit since this person is a higher risk. Most people who have a high credit score are going to be responsible and will work to keep that score high. They will not jeopardize anything that will negatively affect their credit.
Those are some of the basic practices when screening an applicant. An example of another criteria is will you accept someone with a criminal background? Is a felony okay or a misdemeanor? There are times when an applicant committed a crime 20 years ago as a teenager, does that make a bad tenant today?
We personally interview each applicant in our business. Once the application has been processed we review it and have a conversation with them. We have some red flags which we monitor. For example, do they need to move today? This kind of urgency could possibly mean they are not responsible individuals and cannot plan their life. Another example is they have cash TODAY. This usually an automatic decline and most likely they have something in their report that does not meet our criteria. When we ask how many occupants often we get an answer, it’s just me but my boyfriend might come on the weekends. This usually means the boyfriend has something in his background and does not want to fill out an application.
This is a system which has evolved over time through trial and error. It’s not a perfect system but it is effective. We look at the applicant as a whole and not just focus on one criterial. Fair Housing prefers property management companies to consider all the information in the application, not just one piece of the puzzle. The only way you can achieve a zero eviction rate is by a thorough screening process and adhere to your criteria. To achieve the zero eviction, remember – No Exceptions!"