by Peter Nelson October 6, 2017 How to’s: Property Management Tenant Screening
If you have been a landlord any length of time you likely have a tenant horror story to tell. Unfortunately no tenant screening is absolutely perfect. But after over 30 years of leasing experience, there are some tried-and-true tenant screening techniques you can implement to lower your risk and increase your chances of finding a good tenant.
Don’t rely on a credit report
This is the first thing most landlords and most property management companies gravitate to. In fact, we know of many companies that rely solely on the credit report. Big mistake. Credit reports are great…and we use them. (Heck, we have a fiduciary responsibility to use them!) We mainly use them to mitigate risk we find in other parts of the application.
But credit reports only tell part of the story — one small part. If you rely solely on a credit report for your tenant screening then you are only seeing one small piece of the pie. They will tell you of the expectation of the tenant applicant to pay rent, and to pay rent on time. That is all.
They will not tell you if they will comply with the lease, or will respect and take care of the property, and maintain it. None of that is contained in a credit report. For that information you need to dig deeper…
The personal interview
Would you turn over a quarter million dollar piece of property (or more) to a total stranger? Neither would we; not without digging deeper than a piece of paper with a credit report on it. The personal interview is essential to good tenant screening. When showing the property we engage our prospects in a conversation to find out their motivation in life. That means a lot of “why” questions.
- Why do you work where you are working?
- Why are you wanting to move?
- Why do you drive the kind of car that you drive?
- Why do you want to move here or in this neighborhood?
- Why do you like the kind of recreational activities you are engaged in?
There are lots of other questions to be asked, but you get the idea. We want to find out what makes them tick, and whether they would be a good match for the property. We do not want them moving in if we think it would be a bad match because they would be unhappy. Try not to think about what you want, but rather what will be best for the prospect. If you do a good turn then it will come back around to you. Have faith.
With the personal interview you can assess their appearance (how they are dressed), the content and context of language they use (“Yo, bro!”), their body language and mannerisms, and a host of other indicators to help you decide if there is chemistry. Remember — always remember — to never discriminate against protected classes. Besides being illegal, it is also just bad business. But you can discriminate against unprotected classes such as drug users, sloppy or rude people, gang bangers, and the like.
Verification of Rent
The Verification of Rent (VOR) is the hidden gem in our tenant screening. We will go two years back and talk to current and past landlords. The current landlord may ’embellish the truth’ in order to get rid of a nasty tenant. But the past landlord has no skin in the game and will (usually) tell you what you need to know. We will ask landlords many questions. But the two we are most interested in are:
- Did they pay their rent on time?
- Did they leave owing any money?
The second question usual answers the third question — “Did they leave the place clean?” Professional property managers have fiduciary responsibility to protect the privacy of tenants and ex-tenants. So do not expect much from professionals except the standard questions.
But where VORs get real fun and interesting is when you call up Ma & Pa Kettle and start asking them questions. They are not under (or don’t believe they are under) the same rules regarding privacy. They will tell you everything you need to know about your applicants…and then some!
When doing tenant screening, take the time and effort it deserves. Don’t shortcut it and you will be aptly rewarded. Follow these tips, and incorporate some of your own. Or…hire a professional! Best of luck.