There are over 43 million renters in the U.S., according to HUD’s latest data. These renters spent over $485 billion on rent in 2021.
Do you want a share of this lucrative rental market? Becoming a landlord can be fulfilling and rewarding. But finding tenants that won’t result in damages and evictions takes a lot of careful screening.
Do you need to know how to screen tenants? This guide will go over the best methods for screening tenants safely and effectively.
The U.S. has many federal and state laws to protect people from being denied rent applications due to discrimination. This means you must be careful when asking for certain information, and other information is forbidden entirely by law.
Personal Information you can legally require includes:
- Driver’s License
- SSN or ITIN
- Employment history
- Proof of income
- Credit score and history
- Past rental history
- Eviction history
These are all relevant criteria to fairly help landlords evaluate rental applications. You need to know whether or not a tenant can afford rent, or if they have multiple evictions for property damage. You also need their tax number to run background checks.
Some personal information, however, should make no difference when screening tenants. The Fair Housing Act lists seven protected classes:
- National Origin
- Family Status
Federal and state laws forbid denying, approving, or modifying rental applications based on protected class status. If you ask for potential tenants to mark their disability or race on your rental applications, you could end up facing civil penalties and lawsuits.
Some personal information doesn’t fall under federal laws but is still regulated under state laws. For example, California state fair housing laws include protections for sexual orientation and receiving public assistance.
How to Screen Tenants
Once your rental applications are figured out, screening tenants takes only a few basic steps:
- Review and verify rental application information
- Run a background check
- Run a credit check
- Contact references and/or prior landlords
It may not be necessary to do a tenant interview, but you can avoid potential problems by going over the rental agreement with them. This ensures there’s no confusion over rental terms or conditions.
There are several tips and tricks for finding tenants and avoiding costly conflict. They can save you and your renters considerable time, stress, and money.
Simply the Tenant Screening Process
You can save both you and your renters a lot of time by listing your basic rental terms and conditions upfront. This can include:
- Rental contract options (monthly, yearly)
- Late fee policies
- Pet policies
- Smoking Policies
- Amenities (pools, fitness centers, parks)
- Features (washer and dryers, dishwashers, security systems)
- Parking fees and restrictions
You don’t want potential tenants to constantly contact you to find out this information. Many rental listings like Apartments.com include it automatically.
Use Rental Screening Services and Software
If you have a lot of rental properties, you can use rental screening services to take over the process for you. You can also try out rental application software that manages applicants for you.
Establish a Good Working Relationship with Your Tenants
Even the best and most carefully screened tenants can run into unexpected hardships and financial setbacks. Know what to do when a tenant is late on rent before you have to start a stressful and costly eviction and new tenant screening process over again.
All the Real Estate Information You Need in One Place
Knowing how to screen tenants will help you avoid common landlord pitfalls. You can enjoy your time and rental revenue with less stress.
For more handy real estate research tips and tricks, check out additional articles on our site!