Important Criteria for Screening Tenants When You're a Landlord
When you're a landlord, the seven protected classes that you should never use to discriminate against or in favor of people who are applying to rent from you are as follows:
Your state may extend protection to additional protected classes.
However, you don't want to rent to just anybody. You need to screen out anyone who's unlikely to pay rent on time, care for the premises, or get along with his neighbors. To weed out potentially bad renters legally, use the criteria presented in the following sections.
First impressions provide insight into a person's character. When a prospective renter visits and tours your property, look for the following positive signs:
Nice, clean car
Of course, you may need to adjust your standards depending on the market. A hard-working person who drives a jalopy and shows up in work clothes may be the ideal candidate.
A rental application can tell you a great deal about an applicant. Make sure the application meets the following standards:
Complete: An incomplete application indicates that the applicant probably has something to hide.
Legible: If the person didn't care enough to present an application that's legible, you have to question how well they'll take care of the property plus you may not be able to timely or properly screen the applicant if you can't read the application.
Accurate: You probably can't tell from just looking at an application that it's accurate; you'll find this out when you verify employment and other details.
Copy of government-issued photo ID provided: A valid ID helps ensure that you're dealing with the person you think you're dealing with.
Rental or mortgage history
Most applicants, unless they're moving out of their childhood home for the first time, have a rental or mortgage history, which should meet the following standards:
Current, reflecting the most recent six months or longer
Positive recommendations from current and previous landlords
No serious rental contract violations, especially none resulting in an eviction
No history of missed mortgage payments (for renter who previously owned a home)
If the resident has no rental or mortgage history, you may want to require a co-signer and/or higher security deposit. Also consider putting the applicant on a month-to-month lease for the first six months, so you can more easily terminate the contract if the person doesn't work out.
The applicant should provide at least three references — one from a previous landlord, one from the current or a previous employer (if any), and one personal reference.
Check references by making phone calls and asking questions about the applicant. Ask the reference whether she feels the applicant is trustworthy and is likely to pay the rent on time, take good care of the rental unit, and get along with the neighbors.
Every applicant should have a source of income that's sufficient to cover the rent and other living expenses. Consider setting the following criteria for employment and other income:
At least six consecutive months of employment (unless relying on nonemployment income or assets)
Gross monthly income of at least three times the monthly rent
Verifiable by employer, pay stubs, tax returns, or bank statements
For consideration, the applicant must agree to allow you to perform a credit check. The applicant's credit history should comply with your standards set for:
Reasonable amount of debt, if any
Housing provider or utility accounts in collection
No active or recent bankruptcy
Past behavior is the best indicator of future behavior. If a person has had trouble paying bills in the past, she's likely to have trouble paying the rent.
Perform a criminal background check in all 50 states for every applicant. Although you may be open to approving applicants who've been convicted of petty crimes, consider rejecting any applicant who's been convicted or pled guilty or entered a no-contest plea for any of the following crimes:
Sex offenses, especially child molestation
Assault, battery, intimidation
Drug dealing, trafficking, or possession
Illegal possession or use of a weapon
Don't ask whether a person has been arrested, because rejecting an applicant for an arrest that didn't result in a criminal conviction could be deemed illegal discrimination. In addition, your state may not allow you to reject an applicant for any crime — the crime must be one that indicates the person would pose a threat to other residents or their property.