I have had discussions with all types of landlords big and small that have been renting apartments for decades and the consensus is the same; screening for good residents is job number one. The entire Landlord/Tenant relationship depends on having a pre-qualified renter who will respect the other residents, respect the property, respect the rental agreement, and pay the full rent on time when due. This is the cornerstone to running a successful rental business and you must be firing on all cylinders for this one. Missing any one of these components will eventually lead to cracks in the foundation of trust in the relationship somewhere down the line.
Lets Get Screening.
To do a proper screening you need to have a complete and thorough rental application. Take a look at the rental application your property manager is using to allow renters to reside in your investment property. Does it past muster? A one-page rental application may be a red flag. You want more information about your renter and the occupants that you can fit onto one page. A complete rental application should consider the following:
- Rental History (current and previous landlords)
- Employment History
- Debt/Income Ratio
- Credit Reports
- Photo ID Verification
- Copies of Utility or other Bills
- Local Housing Court Evictions
- National Housing Court Evictions
- Number of requested occupants
- Names of all applicants
- Smoking or Non-Smoking
- Number and types of Automobiles
- Social Media Presence
- Need for a Co-Signer
- Personal References
The list above is a good starter but not exhaustive. You can get creative and ask, “Who is your Attorney?” “In case you run into financial hardship, who can pay your rent?” “Do you have anyone you can think of who may also be looking for an apartment?” Just remember, you are going to be entrusting access to one of your most valuable investment assets to this total stranger. You cannot cut corners here or go on a gut feeling. You need to extend trust, but verify absolutely everything they offer on the rental application. And ask a lot of questions. Ask layered questions when checking out every reference above. A layered question may be, “Where did you go to school?” “That sounds like a nice environment, can you tell me more about that?”. Another great example may be “Tell me about your previous landlord, what were they like?” “They sound like nice people, why did you move from there? If you rent my apartment why or when do you think you may want to move?”
By always asking questions you direct the path of the conversation. But be careful with questions like “Where did you grow up?” If they grew up in a different country you may be dangerously close to asking discrimination questions. Try to keep the questions focused on the property; the neighborhood, what they are looking for in their “perfect apartment” and why they think your apartment would work best for them. You need to get them to visualize living there and how they might arrange the furniture. I know this sounds silly, but asking them questions like, “Would your bed go better on this wall or that one?” “If you have a flat screen TV we could assist you in mounting it into the wall studs.”
My intention here is not so much to go directly to the close to rent the unit. I want to be conversational at first. I need to know what type of people I am considering to move in. Of course if my inquiries reveal that they would like to hang a speed punching bag and mount a full-body kickboxing bag in the living room, I may have an issue with that request. Maybe this is not a good fit.
Not all renters have good credit.
Let’s face it. If most of them did, they would be buying a home, not renting from you. You want to have a discussion about their credit before you go back to the office and pull a report. Let’s save some time on this one. One of the best questions I have ever heard a landlord ask is “When we pull your credit report to get your credit score, what are we going to find in your history?” Then stop talking and listen. If they are hiding something, you will not hear them say too much at all. They may even dodge the question. Take notice on this.
However, if the resident is sincere, they will open up and start to tell the whole story of their credit history. Be patient, be quiet, and just listen. Then ask those layering questions again “What else am I going to find?” If they really, really want the apartment, they tell you everything. You may find out that they have a legitimate reason for that ding on their credit score. We have had resident who had medical issues in the past which caused them to fall behind in rent because they could not work, which later led to unpaid medical bills. Then, they worked really hard to fix their credit, or may be in the process of fixing their credit score. This may be a consideration for a responsible candidate.
But if you start hearing a story about how their previous landlord was a “slumlord” so they withheld rent, and “Would believe that that landlord actually had the nerve to evict us?” But then they assure you by saying “But its OK, when we went to court with our lawyer, we sued the landlord and won for retaliation, so we should be great tenants here in your building.” Do not panic, do not show fear, and just keep asking those layering questions. Get them to open up and tell you even more. You will be glad you did.
Screen, screen, then screen again.
The bottom line is this, there are good renters out there, and you just need to find them. Know the laws concerning discrimination, disabilities, and what you should and should not say. I could write an entire book on the subject but do your homework, create a more powerful rental application process, and put it into action. If you are considering hiring a property manager to do this, you should be “screening” their “screening” process.
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Belaire Property Management
Regional Property Manager
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