Avoiding problem tenants is a big part of your success as a rental property owner in Visalia.
The tenant you place in your investment property will have a direct impact on the type of rental experience you have. A good tenant delivers consistency, stability, on-time rental payments, and a willingness to help you maintain the home. A problem tenant may pay rent late, or not at all, cause damage to your property, or violate the lease terms.
This is exactly why tenant screening is so important. If you don’t screen thoroughly, you could end up with a problem resident who is difficult to communicate with or bring into compliance.
As Visalia property managers, we know a good tenant when we see one. They have a history of positive rental experiences, zero evictions, and a record of responsible credit and financial management.
How do you find these tenants? You establish a great tenant screening process. We’re talking about screening today, and providing our professional guide for screening tenants and avoiding problems.
Include Qualifying Information in Your Listing
Before we even talk about screening, let’s talk about the application process and what you should provide before a tenant applies to rent your home.
This is California, and fair housing laws are tough. Tenant protections are vast. You want to protect yourself and stay in compliance with all state and federal laws.
You also want to save yourself time when you’re screening, and one thing that will really help you spend less time and effort on this process is limiting your tenant pool to only those who are likely to qualify. Always include the rental amount in your listing, for example, because you want to make sure you’re attracting people who can afford the rent. State whether pets are allowed, what type of income and credit standards you have, when tenants will be able to move in, and the length of the lease term you’re looking for. When you include as much information as possible in your listing, you know that only qualified tenants will apply.
Establish some standard rental criteria, which you will use to evaluate every application, and provide it to prospective tenants before they apply. That way, they’re likely to self-screen. If they know their credit isn’t good enough or they can’t document enough income, they won’t apply for your home, and you won’t have to go through the effort of screening and denying them.
Rental Applications
The strength of your screening process depends on a good application.
Require every potential tenant who is 18 years of age or older to complete an application and pay an application fee (remember that the maximum application fee you can charge as of December 2023 is $60.02). Provide a written application for all interested tenants that collects all the pertinent information including:
- Full legal names
- Contact information
- Social security and driver’s license numbers
- Current and past addresses
- Employment information
- Landlord references
Your application must also require a signature that will provide you with permission to conduct a background check and a credit check on your prospective tenant.
Ask for supporting documents with the application. You’ll need documentation such as a copy of their government-issued I.D. You will also want to collect employment and income documents, such as pay stubs or bank records.
Most applications are online. If you’re still handing out a paper application, you can expect to spend a lot more time screening. Work with a Visalia property manager to effectively screen tenants if you don’t have the technology and the resources to support this endeavor.
Tenant Screening: Check Credit and Financial History
It’s the most basic part of screening tenants: check credit.
While credit is important, the problem is that for a lot of landlords, this is as far as it goes. If they see someone has a decent credit score, that’s all they need.
We recommend you dig a little deeper. You’ll need to check credit because it gives you a good financial picture of the person who wants to rent your home. Don’t accept a credit report that a prospective tenant hands you. Get the information directly from the credit bureaus, and make sure you ask for both a credit score and a full credit report.
Some landlords are looking for perfect credit, and honestly, that’s going to be hard to find. What you’re really looking for with the credit check is that the applicant can meet their financial obligations on time.
It’s also important to look for any past evictions. Sometimes, these show up on a credit check but they might also show up when you check court records. Always check the national eviction database and if you don’t have access to that yourself, work with a property manager in Visalia who includes this as part of their screening process (like us). When you’re looking for a tenant, recent evictions are especially problematic. You also don’t want to see multiple evictions in the applicant’s past. This is an indication that they may have trouble paying rent, even if they have the income to support it.
Check the credit and court records for any bankruptcies or judgments against the applicant. Situations where money is still owed to a former landlord or apartment complex are upsetting because if the tenant didn’t pay those landlords, you might find yourself trying to collect money from them as well.
Set your credit standards but make sure they’re reasonable. More important than their credit card debt is how they’ve treated their housing-related bills. Medical debt and student loan debt are common. Are there utility accounts in collections? A string of foreclosures? These are more concerning when you’re screening.
Collect Documentation that Verifies Income
What are you really looking for when you’re screening tenants? You’re looking for some indication that they can pay your rent. You want to know they have enough income to pay the rent on time. Every month.
So, share your requirements with tenants before they apply, and then ask them about income on the rental application. Most industry standards say that a reliable tenant will earn at least three times the amount of rent. This is ideal, but in a time of rising rents and stagnant wages, it might be a stretch. Some property owners are dropping this requirement to 2.5 times the amount of rent. It’s up to you; the important thing is to establish a standard and apply it consistently to all applicants.
Verifying an applicant’s income can be as easy as contacting the employer or reviewing the documentation that’s submitted. Measure what’s earned against the amount of rent you’re collecting. You want to be sure your tenants can afford the rent you’re charging. Don’t set them up for failure by permitting someone who doesn’t earn enough to move into your property.
This income requirement should cover all of the tenants who are moving into the property. So, adult partners who earn their own salaries can combine that income to meet your requirements. If there are roommates, combine all the earned income when you’re doing the math.
Verifying the income by asking for copies of the last two pay stubs or gathering employment contracts and tax returns. For self-employed individuals, bank statements can be useful so they can show you the deposits that are made.
Verifying a Positive Rental History: Landlord References
Rental history is just as important as financial credibility. You need to know that you’re not welcoming a problem tenant into your property. Are they prone to conflict? Impossible to get along with? Difficult to collect rent from?
There is a specific population of people who can reliably answer those questions.
The applicant’s current and former landlords.
Collect contact information for rental references on the application, and get in touch with those people by phone or by email. Ask whether they would rent to the tenant again. If they say no, you’ll want to ask for details. Find out if rent was paid on time, if any property damage was left behind, if the lease was violated, and if enough notice was given before the tenant moved out.
Once you’ve exhausted all of these screening details, consider the entire application. We recommend that you also run a criminal background check as well and maybe do a pet screening if there are pets moving in. Don’t be afraid to do a little pre screening during the showing, or when they call for more information. Ask when they plan to move and why.
Once you complete your tenant screening process, you’ll have to issue an approval or a denial. Put everything in writing and make sure you document when and why the approval or denial notification went out.
It’s easy to make a mistake when you’re screening tenants. We don’t want you to miss any red flags, and we definitely don’t want you to unintentionally violate a fair housing law. Let’s talk about why it might be better to have a Visalia property manager conduct the screening for you. We have a lot of resources and technology, and we screen tenants professionally every day.
Please contact us at The Equity Group.
