How do I screen a potential tenant ?

While a Senior Property Manager for HUD I wrote a 37-page tenant selection plan which was modified, edited and adopted by managers of apartment complexes nationwide.  You probably don’t need all 37 pages, as most of the content helped property owners comply with the myriad of HUD Housing and Fair Housing regulations.

Most tenants do what they are supposed to do; pay the rent on time, keep the property in reasonable condition,  keep the noise at an acceptable level,   don’t sublease,  run a day-care business, add an unacceptable number of occupants, or drive their motorcycle into the living room.

However there are a few applicants that you don’t want renting your property.  I find that just by using Tips # 1 and  #2 below I eliminate a lot of wasted time as well as avoid potential problem tenants.   (The other eight tips should be followed also.)

 As soon as you tell tenants that there will be an application fee and a background check many don’t even show up for the property showing appointment.  Others who do show up will sometimes take an application form to save face, but never intend to fill it out so that you can check references.  Don’t worry about these contacts:  It will save you a lot of time and frustration later when you have to deal with the tenant problems and possible eviction.

Remember:  The only thing worse than a bad tenant who leaves is a bad tenant that stays.
 
Here are a few basic tips:

Social Security #
Current & pervious addresses,
Current & previous landlords
Employment data
Emergency contact
Number & type of cars
Current bank information
Credit info authorization

 Have applicant(s) sign to allow you to perform credit and background checks.

2.  Charge the applicant an application fee, enough to cover your costs.  ( You can “credit” the fee toward the rent in the fourth month of occupancy if you wish)

3. Have each adult (18 & over) fill out and sign an individual application.  Do not accept applications that have “missing” members of the household who will show up later.

4. Get a copy of a photo ID for each adult applicant.

5. Meet everyone who is going to reside in the unit, including dogs, if you allow them.

I “interview” the dog to see if it is a potential liability problem, collect a $300.00 non-refundable cleaning deposit for each dog, and absolutely do not accept Pit Bulls, Rottweilers or Dobermans.

6. Do not accept applications you cannot read. All spaces must be legible. Have applicant redo the application and use BLOCK letters if more than one area is illegible.

7. Verify everything on the application prior to the screening that cost you money $:

a)  Call previous landlords (the current landlord may not be a good source of
     information, as they may want to “get rid” of the tenants)

b)   Verify employment;  the employer probably won’t disclose wages, but usually
       verifies length of employment.

8. Do a credit check, a criminal check, a sex offender check, and an eviction check on each applicant over 18. Develop a set of criteria that you will “measure” the applications by according to what is in the reports. For example I don’t rent to sex offenders, persons with a felony within the last 15 years, anyone who has ever been evicted. “No”credit may not be bad credit, but I have the applicant get a co-signer who does have good (verifiable) credit. (The co-signer must also complete an application and release of informationform.)

I sometimes overlook outstanding medical bills if there is a dispute with the insurer, but  never approve applications with numerous collection write-offs.  If they don’t pay AT&T they won’t pay you either.

9. Finally, if you still don’t have a clear picture of the applicant(s) do a visit to their present home. I Know I know , you don’t have time…but you will have plenty of time later won’t you, to hire a lawyer, go to court for eviction, clean up the mess and repair the damages.

Just knock on the door and say “ I have some good news” and ask to come in. When in, ask to use the bathroom (even if you don’t have to use it) and walk in (close the door) and look around. When you come out, ask for a glass of water, follow applicant into kitchen, and again, look around. How they are treating their present abode is how they will treat your property, no matter how many horror stories they have about the present landlord.

If you like what you see the “good news” is that they are approved. If you don’t like > what you see the “good news” is that there is just one other applicant ahead of them, and you will let them know the status in a few days.

10. Have a good lease. Get several leases, read them and combine the best parts into a form you are happy with. Do not rely on the “Realtor’s” lease. The standard lease for Florida Realtors does a great job of protecting the broker but not so good when it comes to protecting the owner. The lease should make late fees “additional rent” , allow inspections on short notice, and prohibit changing of the locks.

I know the above is a lot of detail, but you are entrusting, for example, a $500,000.00 asset to persons who will pay you $1500 -3,000 a month. With bad tenants, or tenants that just don’t care, the value of your asset can go down much faster than the amount you collect.

SCREEN YOUR TENANTS

David Fenwick, Atlantic Property Management February 26, 2008