The success of your rental business is dependent on finding the right tenants. But how can you determine which prospective tenants are worth renting to. Proper tenant screening is key to being a successful property manager. Here is how we do it at Rovira Realty, and how we have achieved high numbers of satisfaction between our Property owners and tenants.
Create the Ideal Tenant Profile Before Advertising the Property
In order to be able to create the ideal tenant profile for your rental property, we need to look at various factors. Let’s begin with the most important aspect, the rent amount. The rent ratio is going to play an important role, meaning that if you rent a property for $1000 per month, you will need a tenant who makes at least three times the rent in income, which is equal to $36,000 per year.
The second thing we look at in a very detailed manner is the credit report. When we receive an application for a property we are renting, the first thing we want to verify is if you meet our credit criteria. Here at Rovira Realty, for example, we require a minimum 650 credit score. It shows us your ability to pay on time and your sense of responsibility. However, there are exceptions that we make for applicants. For example, in the past we have received applications from individuals with less than our desired credit score due to certain unpaid credit accounts. Delinquent or derogatory accounts related to medical bills usually fall within our exception guidelines, as we understand that everyone could fall into hard times related to their health and find themselves unable to keep up with medical expenses.
One red flag to keep a look out for is any derogatory or delinquent account related to utilities, phone bills, or unpaid child support. These types of delinquent accounts reflect very poorly on an applicant’s ability to pay basic living expenses. We make very few exceptions in these cases.
After we have evaluated your credit, we then move onto the background check. This can give us an idea of the person we are putting inside our homes.
Criminal Background & Eviction Report
Let’s dig in deeper into the background check process.
Once we have received your application, the background checks can be a determining factor in our pool of applicants. We always do a Criminal Background Check. We like to provide a safe environment, not only for our future tenants, but as well as for the neighbors. The Criminal Background Check will give us an idea of a person’s life decisions. Violent crimes, especially those that are more recent, tend to be difficult to get past, unless there is a valid explanation for it. When we receive an application from someone who has a criminal history, we always interview them one on one to understand the circumstances of the charges. Depending on the answers that we get, we will make an informed decision. We have noticed that, those applicants with criminal histories who are forthright about their past issues, tend to be people who have learned from their mistakes. If a person tries to conceal their criminal history without being honest upfront, this is a red flag.
The third, yet almost as important as the credit check, is the Evictions Report. An eviction report shows you if the applicant has ever had an eviction notice given to them, or has had an eviction filed against them. If any of these cases apply, we tend to reject the application, as this applicant is not in the most ideal or desired range of prospective tenants.
Once the applicant passes all of the above-mentioned screening criteria, we will give them a phone call, where we introduce ourselves and attempt to get to know them. One of the most common questions we ask is about where they currently reside and why they would like to move out, just as a point of company reference. Some other things we may ask are, for example, the day they would like to vacate their current residence and move into ours, or if they have pets, etc. Interviewing the applicant will give you additional insight regarding their character.
One of the core values and things we try to implement in everything we do here at Rovira Realty are respect and courtesy. We always make sure that our new tenant has informed their landlord that they are planning on moving into one of our rental properties instead of just leaving them in an abyss of confusion and financial issues that would come in the months of vacancy. Once they have done this (If they haven’t done so already) we would normally proceed and call the landlord for a landlord reference.
Landlord references are also a key point in our screening process. It is extremely important to us because we are just starting to become, or, are planning to become your new property manager, and we would like to have a better understanding of the type of tenant we will be dealing with. Some of our most common questions include asking if they pay their rent on time, if there has been any problem between both parties, and what would they say about the tenant. Of course, this is a private conversation we hold with the landlord and it is kept at our discretion.
The last step before approving an applicant is to verify employment. We always call their employer on record to ensure that they, in fact, work where they say they work. If the phone number provided is disconnected, that is a red flag. Similar to the landlord reference, we ask questions to their employer regarding their character and quality of work. We also ask the applicant to send us either copies of paystubs or bank statements to prove that the amount of income they are claiming they receive is correct.
Tenant screening, in the end, is more of an art form. There is no perfect process, but by following the steps that we take to screen our applicants, you can better position yourself to minimize the cost of renting to a bad tenant, which can lead to eviction or an unhealthy tenant-landlord relationship.