Tenant Screening for Owners
One of the biggest concerns landlords have, and something we get asked about often, is what is the best method for screening prospects for tenancy. On this one act alone hinges the success of the next tenancy. Get it right, and life is good. Get it wrong, and things can go bad, and go bad quickly! (often ending with an eviction.)
We like to point out that anyone can move an applicant into a vacant property. The difference between a good, caring property manager and one just going through the motions is when it comes time to move the tenant out. How will the unit be left? Clean? Trashed? We consider this task of property management to be far and away the most critical of all the tasks we perform for our clients.
We need to point out here that we do NOT discriminate against classes of people protected under the Fair Housing Act. To do so would be both illegal and stupid. We do not accept Section 8 vouchers except where required by law. But we do discriminate against one class of people not (yet) protected — and that is what we affectionately call "deadbeats".
We all know them. These are people that either do not pay their rent or do not take care of the property, or both.
Tenant Screening Process
The process flow below explains the various steps Full Service Property Management takes to insure we only accept good tenants. But of all of the steps shown, the two bolded tasks are the critical ones that we take seriously — The Showing and the Verification of Rent. The others are important, mark our words. But the importance we place on these other two is the cornerstone to our success. Please read our criteria for tenants to know who we will accept and (more importantly), not accept.
Our screening process begins even before it begins! When we write our ads, we write them to attract a certain kind of individual. We know we have only a brief period to accurately assess the prospect, so we do everything we can to make the most of it. We want to relate to people who exhibit two important character traits:
We are looking for tenants that are resourceful — that have resources in the event something should go awry. Conversely, we are not looking for tenants that are living hand-to-mouth and won't be able to pay rent if the transmission on their car goes out.
Resourceful tenants have available resources for overcoming those bumps in life that dog all of us at one time or another. Unresourceful tenants have no options. They are stuck. And when they are stuck that usually means the landlord/manager is stuck as well.
That is why we never offer "move-in specials". Move-in specials attract tenants who have little money for moving. Not the type of tenant we want.
We also have set up our move-in monies (deposits, fees, etc.) to attract tenants that have planned their move in advance rather than deciding last minute.
We want tenants that show respect to us and the property. If the kids are running up and down the halls, or there are fast-food wrappers littering the backseat of their car, we aren't interested. We utilize a series of what poker players call "tells" to help us see past the persona and into the motivation.
Most of our inquiries come in the form of a telephone call or email message. From the moment an inquiry is received, our leasing agents have been trained to immediately begin the filtering process. A conversation is started and a relationship begun which will springboard the agent into making an informed decision into the suitability of a prospect.
*** Showing ***
This is a super-critical step. While the prospect is checking out the house, we are checking out the prospect! A conversation is initiated that continues the interview process. Content and context of the prospect are analyzed. Visual observations are noted such as body language, social interaction, and interaction amongst themselves.
If the prospect is interested in the property, and we also agree on grounds of suitability, then we will encourage the prospect to put down a $500 holding deposit. This deposit (which gets credited towards their security deposit) insures their place in line and holds the property for them while they make application. It also holds their feet to the fire and keeps them from backing out.
All of our applications are taken online. It goes back to resourcefulness. If a prospect does not have a computer we explain to them that libraries do, and they are free. We collect an application fee for each individual over the age of 18.
We have seen a rise in application fraud. Specifically, some applicants think that if they put their best friend down as their landlord and ask them to lie for them that everything will check out. We are savvy to such shenanigans and bust the applicants when we find this going on. We also have a clause in our holding deposit agreement that we will retain $200 if we find fraud. This has slowed down the number of fraud cases.
Most property management companies put a heavy emphasis on this phase. And while we won't minimize its importance, we feel that it is way over-sold.
We perform a credit, civil, and criminal screen on all our applicants. This screen can often reveal items not previously known and help us to get a better read on the applicant. It is one (important) tool in our toolbox. But it is not the end-all to end all as many would have you believe.
When we find "issues" we will mitigate them either through an increase in security deposit as described in our Tenant Screening Criteria, or deny the applicant all together. While we approve/deny applications through a conforming, legal, and consistent screening, each application is considered separately.
*** Verification of Rent ***
This final step is the other super-critical item in our tenant screening process. We call up current and previous landlords and seek the answers to two very important questions about the applicant:
- Did they pay their rent on time?
- Did they leave the place clean?
We ask other questions, for sure. But these two are the ones we are most interested in. If we have gotten this far in the application process, and the answers we receive are satsifactory, then the applicant is usually approved.
Approval may take one of two forms. Either the applicant may be fully approved or conditionally approved. If they are conditionally approved (or denied) then we send them a Notice of Adverse Action as required by law. The notice informs the applicant that there are conditions they must meet before we will sign a lease with them. The most common condition is an increase in the security deposit to mitigate issues with the file.
Once approved, our property manager will set up a time to meet with the new tenant, sign a lease, receive ALL of the required move-in funds, and conduct a move-in inspecton with the tenant. Keys will not be given out until all move-in monies are paid and cleared in advance.
Why We Won't Accept Third Party Monies at Move-in
Experience has shown that when a tenant is given their security deposit — either by a charitable organization or some other benefactor — and when they have no "skin" in the game, that they almost always leave the unit trashed. Most tenants receiving these subsidies doen't realize that if they spend a day or two cleaning up the place that they can earn that security deposit back.
We are pleased and proud of the rigorous approach to screening tenants that we have developed over 30 years of leasing property. It continually evolves and responds to changes in the marketplace.
For answers to many other questions, visit our page on frequently asked questions. Find out why owners around the country and world are turning to Full Service Property Management to manage and maintain their rental property assets.
Or for advice on a particular tenant situation you may have, feel free to send us an email or call us at (206) 922-6637.