Look deeper when conducting tenant screening

A few years ago, I penned an article about The Art of Finding the Right Tenant.  While that article remains useful today, America’s troubled economy further complicates the already difficult procedure of choosing a tenant.  Landlords still need to do the legwork ensuring that application information is complete, consistent, and truthful.  However, because today’s tenants may have a more “precarious” economic situation, Analysis of application data is important.  Landlords in 2012 need to think a few steps ahead and outside the box when making their tenant screening decisions.

1.  Don’t rely on a credit score.  Analyze the information in the credit report.  Because of short sales and foreclosures, many people have bad credit scores.  Even when a good credit score is not bad, landlords should try to see behind the numbers.  Examine things like the prospective tenant’s available credit.  If the tenant had a major catastrophe (lost a job, health problem, car breakdown), does the tenant have enough room on those credit cards to “ride out the trouble”?  Be careful if those credit cards are maxed out.  If a landlord makes a negative decision based on information in the credit report, it is important that the landlord provide the tenant with an adverse action notice.

2.  How old is the tenant’s automobile? Why would this matter?  Old cars break down.  Break downs cost money.  Old cars need new tires.  New tires cost money.  Is a second car available?  When there is no car, the tenant may not be able to get to work.  If the tenant can’t get to work, the tenant might not be able to pay the rent.  Old cars also create an eyesore in the driveway when they are broken down or, worse yet, they can leak automotive fluids all over the landlord’s driveway.

3.  How far does the tenant work from the rental unit?  Gas is expensive.  It will probably get more expensive.  Will the tenant be able to meet the obligation to pay rent in the face of rising gas costs?  Having a tenant is usually a good thing, except when the tenant is just barely able to afford the rental unit.

4.  Visit the tenant at home.  Find a way to drop in on the tenant, maybe to drop off a copy of the lease and supporting disclosures.  Seeing how the tenant lives now gives an important glance into how the tenant will live in the rental unit.

5.  Use the internet.  All landlords should be doing basic internet screening of their tenants.  Many web pages for circuit courts will allow a search of a tenant’s name to see if there are any past evictions.  Many people do not have a clue how to use privacy settings on facebook, myspace, flikr, and the like.  A simple google search may lead to lots of important information about the tenant that is “in plain sight” and could be relevant to making a rental decision.

Obviously, these tips should be incorporated into a broader tenant screening process that is clear and consistent.  Landlords are smart to establish appropriate rental guidelines in advance.  These guidelines should be applied to all rental applicants on an even basis and in compliance with fair housing laws.

Finding that “good tenant” is as important as ever.  Good luck!

2 thoughts on “Look deeper when conducting tenant screening”

  1. Very useful advice! I never even considered most of these options, I’ve had success with simply screening my prospective tenants’ background.

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