Tenant turnover is a profit killer if it happens too frequently, especially if there are unoccupied months between one tenant leaving and another moving in. When a tenant moves out, there are typically several expenses that the landlord must take on before the property can be rented out again, including expenses for cleaning, repairs, and marketing. By screening tenants thoroughly before agreeing to rent to them, landlords can avoid problematic tenants who might have issues paying rent or properly maintaining the property. In this post, we’ll go over the steps for screening potential tenants to reduce turnover and maximize profitability.
1. Create a Clear Tenant Criteria List
Before advertising your property, establish a clear set of criteria for prospective tenants. This list should outline the minimum requirements, including:
- Income level (e.g., three times the monthly rent)
- Credit score
- Rental history (e.g., no prior evictions or late payments)
- Employment verification
Once you’ve defined your tenant criteria, stick to it. This will keep the tenant screening process fair and transparent and make things much easier for you.
2. Use a Detailed Tenant Application
You’ll need to make sure that your tenant application covers all of the information that you want to gather from potential tenants. There are many tenant application templates online that you can use, or consult with a real estate attorney to create one customized for you. The tenant application should include, at a minimum:
- Full name and contact details
- Employment history and income verification
- Rental history with landlord references
- Authorization for a credit and background check
Fully online tenant applications are becoming more and more popular because they can be done from anywhere and are easier to store than paper copies.
3. Run Credit and Background Checks
Use credit checks and background checks to get a look into the applicant’s past and financial responsibility. Carefully consider the information found in these checks when deciding whether or not to rent to the applicant. Minor infractions on either shouldn’t be a cause for exclusion, but a pattern of criminal activity or poor financial management should be a red flag.
4. Verify Employment and Income
Verify that the applicant has enough income to cover the monthly rent with enough money to spare to cover basic expenses. Most applicants will prove this by providing a paystub or letter from an employer, but some applicants may earn income from other sources. Business income or disbursements from trust funds are also reliable sources of income that should be honored.
5. Check Rental History and References
Look into previous rentals the applicant has had and how they ended. Reach out to previous landlords and ask:
- Did the tenant pay rent on time?
- Was the property well-maintained?
- Were there any noise complaints or other issues?
- Would you rent to this tenant again?
6. Meet Prospective Tenants in Person
So much of everyone’s daily business now happens online, but it can be very insightful to actually meet the potential applicant in person. You can observe qualities like demeanor, communication skills, and politeness during this meeting, along with showing them the property in person.
7. Set Realistic Expectations Upfront
During the initial in person meeting with the potential tenant, be sure to review all rules that apply to renting the property and have them agree verbally and in writing. Things like when rent is due, how it can be paid, whether pets are allowed, property maintenance requirements, and community rules should all be covered. A well-informed tenant is less likely to violate the rules.
8. Partner with a Property Management Professional
If tenant screening feels overwhelming or too time-consuming, consider partnering with a professional property management company like Douglas Realty Property Management. Property managers have the tools, experience, and resources to screen tenants effectively, handle all the paperwork, and keep your property occupied with high-quality tenants. To find out more about our services in southwest Florida, give us a call at 239-542-6906 or send us a message online.
