Your rental property is finally staged and ready for occupancy. You have invested time, effort, and money to present it as an ideal living space, now comes the crucial step of finding the right tenants. Whether for short or long-term leasing, it is paramount to ensure responsible tenants are selected to mitigate potential issues.
The key to protecting your investment lies in comprehensive tenant screening. This means verifying rental history, assessing financial reliability, and evaluating character to ensure timely payments and respectful tenancy. As a landlord, your objective is naturally to secure the most suitable tenants. But how can you screen effectively to identify them?
Experienced property managers review numerous rental applications and believe the process to be a combination of rigorously checking their application, their income and rental history, but also evaluating their character.
The following is a rundown of key steps and tips to comprehensively screen your tenants:
Top 8 key steps and tips to screen your tenants
1. Pre-screen potential tenants
The screening process can start before tenants have even filled out an application. By asking a few simple questions, such as enquiring about pets or mentioning that you will be running background checks, you can reap significant rewards. Gauging responses can turn up red flags, or make you want to pursue these tenants. Either way it is a great first step to weed out the wrong type of tenants without wasting much time.
How they respond can reveal red flags, make you want to learn more about them, or make you want to pursue these tenants. Either way, it is a great first step to filter out unsuitable tenants without wasting time.
Beyond just asking questions before accepting an application, in today's world, it's also smart to take a quick look at a potential applicant’s public social media presence. If their accounts are public, landlords can gather a picture of what their private life is like, and therefore, how they would treat a home.
2. Rental background check
During this process, property managers or landlords evaluate the applicant’s background across several key areas. These checks follow standard screening procedures to help ensure the tenant is reliable and responsible and reduce the risk of future issues.
The assessment typically includes:
- Criminal Records: By identifying any past offences that could pose a risk to the property or neighbourhood safety.
- Credit History: By gauging financial responsibility and determining the likelihood of timely rent payments
- Rental History: By reviewing past behaviour as a tenant, including payment consistency, property upkeep, and any previous disputes or evictions.
3. Proof of income and ID
The rental application is essentially a series of questions to help you profile the prospective tenants. The answers that applicants record can be very insightful and valuable. In the application process, most landlords will want potential tenants to have employment as a way to guarantee that they can cover the monthly rent.
Moreover, being able to pay the rent consistently is a significant consideration when screening a potential tenant. Illustrating the ability to maintain a property and ensure the place remains in good condition is also important when a tenant is being screened. As such, having the tenant provide quality and relevant proof that can support these criteria should go a long way in meeting these requirements.
However, some applicants may put down employment information that is either completely falsified or not current. Therefore the answers to the application questions are only valuable if they can be verified.
As such, it is important your property manager ensures that applicants have given 100 points of ID and proof of income, preferably in the form of their three most recent pay slips and or a bank statement highlighting their income. That way landlords can see that applicants have not only been honest, but can actually afford to live in the property.
4. Assess their character at the inspection
In most cases your property manager will be responsible for showing prospective tenants through your property. This is a good way for them to interview potential tenants away from the formal format of an interview. This allows them to get a better feel for what the tenants are truly like.
With just a quick informal chat, your property manager may be able to find out what kind of person they are, how their job’s going, if they move often and if they’ve ever had trouble in previous rentals.
Not only that, but how they interact with the house itself during the viewing can give you an idea of how they might treat the property once they move in. For additional certainty when making the final call, you may consider joining the tour.
5. Interview
The tenant interview is a significant part of the screening process. Like any interview, selecting important questions to elicit necessary information is a vital part of the property manager's role.
An interview provides an opportunity to address any concerns while also allowing the tenant to respond to questions a landlord may have. For example, if a tenant cannot provide three recent pay slips, a landlord might perceive this as a red flag.
However, the tenant can explain circumstances, such as having taken holidays to care for a sick relative. If the landlord favours this tenant, but the lack of employment was an issue, giving the tenant a chance to explain could put them back in the running for the property.
What questions can you ask your tenants?
One of the key questions a property manager may ask a prospective tenant is why they’re moving. A reliable tenant should have no trouble providing a straightforward answer. However, this question can also reveal red flags, such as a prior eviction from a previous rental property.
Other important questions may include:
- Employment and Income: What is your monthly income after tax? Have you ever declared bankruptcy? Confirming financial stability helps ensure the tenant can meet rent obligations.
- Occupancy and Lifestyle: How many people will be living in the unit? Do you smoke, and if so, are you willing to follow designated smoking rules on the property?
- Property Care and Maintenance: Are you comfortable handling basic upkeep and maintaining the property? Have you ever had disputes with a previous landlord regarding damage or maintenance?
These are just a few of the key questions you can ask prospective tenants to help you build a clearer picture of who they are and decide whether they're a good fit for your property.
6. Reference check
This is a fundamental step. Most typical tenant applications require at least three references, from personal referees, past employers, and previous landlords.
It is the role of your property manager to double-check that the references they've provided are accurate, as well as try and extract some character profiling information from them.
The most crucial reference check will involve a phone call to the property manager of their most recent rental, and if possible, the one prior to that. They should enquire about: what type of tenant they were, whether they paid on time, if they were able to look after the property, whether the bond was refunded in full, etc. Contacting the property manager of their last rental can provide valuable and accurate information, as well as insight into whether or not the applicant was a good tenant.
The reference check step should also include asking their employer to verify their income and to give an overview of their character, how reliable and responsible they are. This can provide a rounded idea of how dependably they'll keep up with the rent.
7. National tenancy database check
If the applicant has met all criteria, your property manager will most probably make the final screening check on the National Tenancy Database.
This information is not free, which is why it isn’t done earlier in the process. This will show if the tenant has been blacklisted, give a summary of their rental history, bankruptcy information, court judgments and validates the identity of the applicant.
Finding out this information before you offer tenancy to the applicant can save a lot of heartache down the line if, in the worst possible scenario, tenants go missing without paying rent or damage is done to your property.
It is completely up to the landlord whether or not they approve someone with a criminal conviction or bankruptcy in their past; however, these are key points about a person that are good to know before putting your property in their hands.
If the database check reveals any unfavourable information, and you have not yet offered tenancy, there remains an opportunity for a conversation before terms are agreed upon, if at all.
7. You have the final say
Your property manager will present you with a short list of potential tenants that they have fully screened and in many cases may recommend a particular tenant over another. However, as the owner, you have the final say on who you select to live in your property.
Under the Equal Opportunity Act you must not discriminate against any of the applicants based on their:
- Gender
- Age
- Race
- Religion
- Marital status
- Sexuality
- Whether they have children
- Mental illness
- Pregnancy
- Disability
Let LJ Hooker help you find your next tenant
Ultimately, the choice of the successful applicant who will become your tenant rests with the landlord. However, with the services and means that property managers have access to, hiring a property manager isn’t just beneficial when your property is occupied.
A property manager can help a property owner screen and judge (on the basis of facts) which applicants will prove the best tenants for your particular property. This kind of advice can prove helpful during the screening stages, as landlords know that property managers are doing everything from checking references to being character judges in order to comprehensively screen, interview, and then offer tenancy to the best applicants.
When seeking to engage a property manager, consider an LJ Hooker property appraisal. Our team of property management professionals will ensure that through a comprehensive application process, the right tenants are chosen for your rental property.
DISCLAIMER - The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.
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