Careful screening can help you avoid legal issues, because you have less need to take legal action against good residents, and they're less likely to file legal claims against you. To screen applicants, take the following steps:

  1. Have the person complete and submit an application.

  2. Order a credit and background report for the prospective resident.

  3. Contact the applicant's employer to verify the applicant's employment or check other sources of income.

  4. Check recent paystubs, W-2s and 1099s, the previous year's tax return, and a recent bank statement.

  5. Contact the applicant's personal references and ask questions about the person's character and reliability.

  6. Contact any landlords the applicant rented from in the past and ask about payment history, the condition the applicant left the property in, and whether the applicant caused problems with her neighbors.

  7. Interview the applicant in person.

When screening prospective renters, you must comply with fair housing laws, so certain questions are off limits. You can gather information about a prospect's employment status, income, credit history, housing history, and criminal past, but you're prohibited from asking an applicant whether she has children, what country she's from, which church she attends, and so forth.

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