If you’ve ever had a rental that a tenant destroyed, you understand the pain and cost of not placing a qualified tenant in your property.
One of the most important things we do at Byrd Property Management, is screen potential tenants. Read on for a breakdown of how we screen all applicants to find the right fit for each rental. (And in a later article, we’ll discuss how independent landlords can adopt a similar process.)
What is the Byrd Tenant Screening Process?
- Online Application. Potential tenants complete an application on our website. The application asks for detailed personal information like name, address, and other contact information. It also requires details on residential history, like where they lived and who they rented from (if applicable).
We also ask for employment details – how much they get paid, where they work, etc. Both the residential history and employment history require contact information for landlords and supervisors. We also have a set of five questions that potential tenants must answer. All of this information goes into a professional property management system for processing (currently we use Appfolio). - Automated Reports. The system will provide some automated information like credit reports and some basic criminal background checks. The credit report is important, but just one part of a much larger picture we review. We require an absolute minimum credit score of 600, but we also look at the details in the credit report. If an applicant has a lot of outstanding debt or shows accounts in collection, those are important things to be aware of and would most likely cause us to deny the application.
- Credit and Income Review. The credit score shows how well potential renters use their credit, but income is also critical. At a minimum, we look for a total household income of at least 3x the rent. Remember, that’s household income, so we count the income of anyone who will live there. Also keep in mind that just because someone makes 3x the rent does not mean they will be automatically approved. Paying 33% of your gross income to rent can mean a very tight budget, so we look for tenants that are well above 3x the rent. The application requires copies of pay stubs or other verification of income.
- Criminal History. Our software does an automated check of court records, but the automated checks don’t always pull up everything. Courts are still disconnected, and no automated check will turn up everything. Because of that, we also do a manual check of court records in the areas where the property is located and anywhere the applicant has lived in the past.
- Verification. Although most people are honest, anyone can enter fake numbers and information in a form. For that reason, we work to verify the information in the application. If anyone is earning money, they should have a paystub attached to their application. It’s important to review it closely. We look at gross income but we also note any significant or unusual withholdings – like child support payments. From there, we send emails to previous landlords and employers. It’s important to note the email addresses provided. Are they using a corporate email or a personal email? Those with verifiable corporate email addresses are used but if a tenant puts a personal email address (like gmail or yahoo mail) we will ask for an email address that is clearly connected to the applicant’s employment. If we don’t get verifiable corporate emails, we make one-on-one calls to try and verify the applicant’s information.
- Roadblocks. What happens if you can’t verify the applicant’s information? This is a difficult but common situation, but ultimately we go back to the applicant and tell them we are having issues. Was a landlord’s email incorrect? Is an employer not replying or outright refusing to confirm the information? Most of the time, a legitimate rental candidate can correct or clarify information so the process can be completed. If not, this is a major red flag and may simply end with an incomplete or denied application. It’s not worth taking chances and simply taking someone’s word when we are dealing with extremely valuable assets.
- Pet Screening. Some of our properties allow pets and some do not. This depends on the property and owner preferences. Even if an owner allows pets, we never allow unlimited animals or any type of pet. Just one pet can be enough to do thousands of dollars of damage, so we screen and limit pets. Got a puppy that isn’t house trained? No thanks. Got too many pets? Also a no-go. Each property has slightly different limitations so we always require full disclosure of pet details. Those pets will be added to the lease and no other pets will be permitted without screening and approval.
- Dependents. It’s against the law to discriminate against familial status when screening tenants. Because of that, we can’t deny someone just because they have children. That being said, there are local ordinances that limit how many people can live in a property safely, so we always make sure we aren’t permitting too many people in general. Also, anyone who will live in the house must be on the lease, and if they are 18 or older they must submit an application.
As you can see, there is a lot more to screening than simply glancing at a credit report and pay stub. To properly screen tenants (while staying within the law) is a time-consuming task that requires the right experience.
