First rodeo screening a tenant - am I doing this right?

[Mr. Green]

We just bought a new house and are about to undertake the endeavor of renting the house we're vacating. I know that tenant screening is a big deal.

We have received our first application and the applicant seems pretty solid to my untrained eye. Income is well over 3x the rent. Solid job with the same employer for over 5 years. Credit history is probably what I'm the fuzziest on. Do you have any hard and fast rules of credit score or late payment thresholds that make an applicant unqualified?

I've already done the basics I can think of. Google them, look them up on social media, search the name in pending court cases, look them up in the county register of deeds to see if there's anything weird there. I don't see any red flags.

I have the person's contact information. Would it be inappropriate to ask if they'd let us drop by their apartment to see how they treat the place? Are there other things I should be considering but don't know about? This is my first rodeo for tenant screening so I'm fairly uneducated beyond the things one reads about in passing. Any tips or suggestions are appreciated!

[monarda]

We have a rough credit score cutoff of 700. By rough, I mean that we make exceptions when it's for example, student loan debt when they're being hosed by the lender. We have the tenant do the credit check on Experian Connect, cost to them $19.95, and then you can see why their score is what it is.

Sometimes one person in the couple has a glowing credit score, and the other not so much. Case in point, our most recent applicants. She 785; He 630, all student loan debt. We are accepting them. All glowing reviews.

One of the most important things is to talk to their current landlord.
We've never dropped by anyone's current place to check on them. I've heard of that, but we don't do that. Neatness isn't necessarily a reflection of anything.

[Freedomin5]

I wonder if Bigger Pockets might be a better forum for this question since it deals specifically with real estate investing. The folks there would be a lot more knowledgeable on this particular topic.

[Midwest_Handlebar]

I require over 680 credit score. Might want to call the employer and confirm they work there. I wouldn't bother stopping by their current place. Seems a bit invasive. Bad tenants usually give themselves away with having a brief chat with them. I've heard sob stories about their husband ruining their credit, needing to move ASAP, having a sketchy job history etc. Don't rent to these people and you'll avoid 95% of tenant drama.

[franklin4]

One of the most important things is to talk to their current landlord.

That needs to be done for sure but sometimes the current landlord will hold their tongue in the hope of getting rid of a bad tenant. What previous landlords have to say can be more illuminating.

[monarda]

Both here and on Bigger Pockets, there are countless "rent or sell" threads, where people's first question is: Will this rental pass the "1% rule"?

What's the value of the house and what's the rent that you're asking? For every $100,000 of house value, the rent should be $1000. That's not possible in some communities, but you should be over 0.5%.  What are you going to be cash flowing each month? Apologies if you've already covered this in a previous post somewhere. Maybe you're keeping it to rent for some other reason?

[Mr. Green]

@monarda the house doesn't meet the 1% rule. We're keeping it because we're emotionally invested and we're not 100% sure the move were making is where we'll end up. We're 95% sure but on the off chance that we want to move back, this property is near irreplaceable for the things we consider important.

In the case of my applicant, I'll be able to inquire with the current landlord, which is a big apartment complex, but before that the applicant owned their own house. The applicant no longer owns the home due to a divorce.

[clarkfan1979]

We just bought a new house and are about to undertake the endeavor of renting the house we're vacating. I know that tenant screening is a big deal.

We have received our first application and the applicant seems pretty solid to my untrained eye. Income is well over 3x the rent. Solid job with the same employer for over 5 years. Credit history is probably what I'm the fuzziest on. Do you have any hard and fast rules of credit score or late payment thresholds that make an applicant unqualified?

I've already done the basics I can think of. Google them, look them up on social media, search the name in pending court cases, look them up in the county register of deeds to see if there's anything weird there. I don't see any red flags.

I have the person's contact information. Would it be inappropriate to ask if they'd let us drop by their apartment to see how they treat the place? Are there other things I should be considering but don't know about? This is my first rodeo for tenant screening so I'm fairly uneducated beyond the things one reads about in passing. Any tips or suggestions are appreciated!

We end up getting a large amount of applicants with credit scores above 700, so there is no need for us to accept someone with a credit score below 700. Most of our tenants are 780-810. I think credit score is a proxy for character. I never really have any problems with tenants with a high credit score. Most of them are in the process of saving up to buy a house. 

If they have a history of foreclosure, late payments, default payments, it's an automatic "no". I'm sure some people have legitimate reasons for these things. However, we get too many applicants with zero red flags. As a result, it doesn't make sense to make an exception for someone with 2-3 red flags.

Always call or email their previous landlords. It takes 5 minutes and can save you from major headaches. 

[Dicey]

In the '80's, a friend and I were getting a place together. She was living with a different friend, but needed to move and wanted to have a place where she could have her large dog, who was with living at her parent's house.

The prospective LL called and asked to see her current place. I happened to be there. We suggested the LL come over right away. The house was spotless, because her cleaners had been there that day. Of course we passed with flying colors. Happily, it turns out the dog was fine,
we were reasonably clean IRL, and we had good jobs. I ended up keeping the place for ten years, long after the first roommate moved out.

We proved to be excellent tenants despite the dog, but the successful home visit was just lucky timing.

BTW,  I date stamped this, because I'm not sure if it's even legal to ask this any more.

Some LL's swear by checking out the condition of their vehicle, inside and out.

Oh, and I once dodged a bad apple with a good credit score because I caught the words "Authorized User" on his credit report. Thanks to this forum, I knew to dig deeper and his carefully constructed house of cards fell apart.

Pay attention to the details and trust your gut.

[Mr. Green]

Mainly PTF to see how you landlords make rental decisions. I posted on here before that one reason I stayed with homeownership so long after FIREing was that I had a very hard time finding a landlord that would rent to a younger single unemployed FIREee who didn't have a high FIRE income. Renting now because the LL is also a early retiree so understood. Most don't get FIRE and even when showing them your financial.assets, high credit score and zero debt they still want a person to have a job income - or at least be old enough to tap into traditional retirement accounts.

The funny thing is you could show them that you are tapping in to your traditional retirement accounts with a Roth conversion pipeline and their eyes would just glaze over!

[Archipelago]

Hi all, this thread is timely because I am currently undergoing an apartment lease-up and wanted to chime in with my general process. I'm doing this remotely in terms of self-management.

1. Took pictures and a 5-minute walkthrough video tour of the apartment.
2. Posted the ad on Zillow, FB Marketplace, and Apartments.com
3. Waited for inquiries via text and email (I do not answer phone calls or call prospective tenants)
4. Sent a warm welcome message to whoever inquired.

Hi XXX,

Thanks for your interest in [address] in [city]!

Please use the link below to see pictures and a virtual tour of the apartment.
[Google Photos album]

If you'd like to apply, please do so using the Google Form below.
[Pre-screening rental application Google form]

We will be in touch with you after receiving your application. If we believe you are a good match for the apartment, you will receive an email requesting information for a background and credit check. This is done through Apartments.com and costs $30 per adult. There are no other application fees. When all of the above has been completed, we may schedule a time to meet and see the apartment in person.

Thank you and have a great day!

5. Wait for people to contact you again after more seriously wanting the place after the virtual tour (90% of people generally drop out this phase)
6. Wait for applications
7. I'll make the trip over to meet the tenant, show them around, verify they definitely want the place, and do basic tenant training i.e. where the water shutoffs are, where to find the electrical breaker, etc.
8. Give my own current or past tenant references to the prospective new tenant.
9. Draft lease and sign.

Haven't had issues with this process and has been a time saver (I live 2 hours each way from the property).

[Archipelago]

^^^The LL requiring an application before seeing the rental IRL has always caused me to immediately disqualify a place. I'd be very uncomfortable sending some unknown person all my financial info before seeing a place. I know it's common but there may be many others hesitant to do this too.

I understand. That's why I have a 5-minute video tour for people to see before asking for anything on an application. Likewise, I'm not exactly comfortable with meeting and letting random strangers into the house (I used to do this and meticulously coordinate with a whole bunch of people, then the majority of them didn't bother showing up).

It's also why I don't request an application fee, SSN, sensitive information, credit and background check until it's been mutually agreed to move forward in the process.

[Archipelago]

Most of the places I've seen who ask for an application before viewing or meeting the LL have asked for ALL the financial and personal  info such as SS#, bank and credit acct numbers, etc so it felt fairly invasive (and a little scammy)

Yeah, screw that. When my wife and I rented our place we saw that shadiness all over. Get 50 people to apply, charge $40 each, pick one person, and pocket the rest. Quick way to make $2k. This is abhorrent behavior and should be illegal.

[Mr. Green]

Why would landlords need SS numbers or bank account numbers? That sounds shady AF.

Zillow has been an interesting experience so far. Once the listing went live I had a couple inquiries asking about the property but someone else was interested enough that the first contact was their application. I followed up with a phone call, the came and toured the place, and I've sent over a lease for them to sign. Zillow had the ability to create a lease right on their site but I wasn't sure if I could include all the data I needed so I made a paper lease based on the template the management company uses for our other rental and some feedback from a cousin who runs a rental management company. Once the lease is signed it can still be uploaded to Zillow and we'll try to set up payments through the site to make that process easy.

So it's not a done deal yet but I'm hoping we found our tenant. We're moving out of the house in two days so I'm expecting to have a signed lease within the next week.

[monarda]

A realtor once told me that if you get that much interest that quickly, you are probably way undercharging.

[Missy B]

Both here and on Bigger Pockets, there are countless "rent or sell" threads, where people's first question is: Will this rental pass the "1% rule"?

What's the value of the house and what's the rent that you're asking? For every $100,000 of house value, the rent should be $1000. That's not possible in some communities, but you should be over 0.5%.  What are you going to be cash flowing each month? Apologies if you've already covered this in a previous post somewhere. Maybe you're keeping it to rent for some other reason?

Yeah, not in any major Canadian market.

[franklin4]

Why would landlords need SS numbers or bank account numbers? That sounds shady AF.

If a tenant owes you money and you have their SSN you can send the debt to collections which will screw up their credit. Or you could threaten to do that. If you get a court judgement and have bank info that would make it easier to get money from their account. Nothing shady about wanting to be have options if tenant doesn't pay what they agreed to.

[Mr. Green]

Why would landlords need SS numbers or bank account numbers? That sounds shady AF.

If a tenant owes you money and you have their SSN you can send the debt to collections which will screw up their credit. Or you could threaten to do that. If you get a court judgement and have bank info that would make it easier to get money from their account. Nothing shady about wanting to be have options if tenant doesn't pay what they agreed to.

This would all come out in the eviction process, would it not?

[therethere]

Why would landlords need SS numbers or bank account numbers? That sounds shady AF.

If a tenant owes you money and you have their SSN you can send the debt to collections which will screw up their credit. Or you could threaten to do that. If you get a court judgement and have bank info that would make it easier to get money from their account. Nothing shady about wanting to be have options if tenant doesn't pay what they agreed to.

Nope, still sounds shady AF. There is no reason I would give out my SS or bank account to a landlord.

Personally, I think renters should be able to pull the landlord's credit report. To see if they're in financial trouble too. Nothing worse than a cheap landlord that can't pay their bills (and therefore will skimp or skip repairs) and is only renting out in order to prevent foreclosure. It's only fair that I get to know about your financial situation if you know about mine. Of course, I know this will never happen. Instead I thoroughly research the landlord online their social media, jobs, purchase date/price, etc.

[monarda]

I did read that there are ways to run credit and background/criminal checks without having an applicants SSN but it seems that it may depend on the state you are in.

We do that through Experian Connect. The tenant pays for their own credit check then shares it with us.

[Dicey]

Why would landlords need SS numbers or bank account numbers? That sounds shady AF.

If a tenant owes you money and you have their SSN you can send the debt to collections which will screw up their credit. Or you could threaten to do that. If you get a court judgement and have bank info that would make it easier to get money from their account. Nothing shady about wanting to be have options if tenant doesn't pay what they agreed to.

Nope, still sounds shady AF. There is no reason I would give out my SS or bank account to a landlord.

Personally, I think renters should be able to pull the landlord's credit report. To see if they're in financial trouble too. Nothing worse than a cheap landlord that can't pay their bills (and therefore will skimp or skip repairs) and is only renting out in order to prevent foreclosure. It's only fair that I get to know about your financial situation if you know about mine. Of course, I know this will never happen. Instead I thoroughly research the landlord online their social media, jobs, purchase date/price, etc.

Back in 2008, renters were getting screwed by LL's who pocketed payments on houses they knew they were going to lose. I used to call my elderly tenant every month and let him know I'd made the payment. He was a sweetheart and it was mostly an excuse to say hi, but I didn't want him to worry.

[uniwelder]

A realtor once told me that if you get that much interest that quickly, you are probably way undercharging.

It could also just be the area. We have rentals near a university and get 20-50 inquiries within the first day or two. There’s also a severe housing shortage, some places more drastic than others. Rent could be raised, but there is a limit.

[Mr. Green]

A realtor once told me that if you get that much interest that quickly, you are probably way undercharging.

It could also just be the area. We have rentals near a university and get 20-50 inquiries within the first day or two. There’s also a severe housing shortage, some places more drastic than others. Rent could be raised, but there is a limit.

I think the rent I listed the property at is about as high as we could go. You start bumping into rentals that are larger for only a few hundred more a month. Plus I would rather have some decently qualified applicants and charge a little less than to have a thin applicant pool and the place potentially sits empty. At market rate, a one month vacancy is the equivalent of just over $150 less in rent each month of the year. I never thought about it that way until our management company explained it like that. Makes sense.

As it turns out, our timing was just about perfect. We vacated on 1/28 and new tenants start their lease on 2/17. I needed every bit of that time between getting settled in our new place and getting the house ready for rent. The next turnover will be much faster because I won't have competing priorities.

[monarda]

A realtor once told me that if you get that much interest that quickly, you are probably way undercharging.

It could also just be the area. We have rentals near a university and get 20-50 inquiries within the first day or two. There’s also a severe housing shortage, some places more drastic than others. Rent could be raised, but there is a limit.

Exactly. She told me this years ago, before our area's current housing shortage. But absent of a shortage, it's what I keep in mind when trying to choose a price.

I think the rent I listed the property at is about as high as we could go. You start bumping into rentals that are larger for only a few hundred more a month. Plus I would rather have some decently qualified applicants and charge a little less than to have a thin applicant pool and the place potentially sits empty. At market rate, a one month vacancy is the equivalent of just over $150 less in rent each month of the year. I never thought about it that way until our management company explained it like that. Makes sense.

Good way to think about it. Yeah, we are a little under market rate for our units. Then the tenants are likely to stay and renew, as well.

[YttriumNitrate]

Would it be inappropriate to ask if they'd let us drop by their apartment to see how they treat the place?

The less invasive way to do this is, assuming they drive out to visit the rental, peak in their car and see how it looks. While not a perfect correlation, if their car is messy and poorly maintained, there's a higher chance they will treat your rental like that.

[Dicey]

This is good a place as any to share Johnny's latest post:

https://www.granolashotgun.com/

His chill response is wonderous, IMO.

[uniwelder]

This is good a place as any to share Johnny's latest post:

https://www.granolashotgun.com/

His chill response is wonderous, IMO.

did you mean to post this here?  Not sure what's got to do with screening tenants.

[geekette]

Oh, I get it.  I HATED being a landlord.  Our first tenants lied well enough to get through the "professional" screening (by using a sibling's name, IIRC), and then didn't pay, trashed the place, tearing down shelving and lights, leaving food rotting in the locked shed (but not leaving the key).  Then because the "professionals" didn't dot every i and cross every t, the former tenants sued us for messing with their credit (black marks put on by the "professionals").  That was fun, especially since we were in the process of refinancing at the time.

The second ones were there something like 17 years, but while it was very (very) dirty, it wasn't nearly as bad as this. My main problem with them was that they never let us know when things were in a state to need repair, just when they were beyond repair (and always a holiday weekend!)

[Dicey]

This is good a place as any to share Johnny's latest post:

https://www.granolashotgun.com/

His chill response is wonderous, IMO.

did you mean to post this here?  Not sure what's got to do with screening tenants.

Link works perfectly. The most recent post is dated 2/5/23.

[Dicey]

Just for comparison, here are a couple of "before" posts.

https://www.granolashotgun.com/granolashotguncom/jumping-through-hoops

https://granolashotgun.wordpress.com/2020/04/07/confessions-of-a-california-landlord/

I love this dude.

[uniwelder]

This is good a place as any to share Johnny's latest post:

https://www.granolashotgun.com/

His chill response is wonderous, IMO.

did you mean to post this here?  Not sure what's got to do with screening tenants.

Link works perfectly. The most recent post is dated 2/5/23.

Got it! Glad I never had to deal with anyone like that. Landlord kept his cool. I wonder if he had checked the interior of their car before leasing…

[Dicey]

This is good a place as any to share Johnny's latest post:

https://www.granolashotgun.com/

His chill response is wonderous, IMO.

did you mean to post this here?  Not sure what's got to do with screening tenants.

Link works perfectly. The most recent post is dated 2/5/23.

Got it! Glad I never had to deal with anyone like that. Landlord kept his cool. I wonder if he had checked the interior of their car before leasing…

Um, did you miss the part where they were friends of the neighbors and he wasn't traveling due to Covid?

[YttriumNitrate]

Got it! Glad I never had to deal with anyone like that. Landlord kept his cool. I wonder if he had checked the interior of their car before leasing…

Um, did you miss the part where they were friends of the neighbors and he wasn't traveling due to Covid?

Since we're apparently doing the passive aggressive snippy thing in this thread, I'll respond with:

"Did you miss the part where the landlord was screening for tenets in February 2020?"

[uniwelder]

Got it! Glad I never had to deal with anyone like that. Landlord kept his cool. I wonder if he had checked the interior of their car before leasing…

Um, did you miss the part where they were friends of the neighbors and he wasn't traveling due to Covid?

Since we're apparently doing the passive aggressive snippy thing in this thread, I'll respond with:

"Did you miss the part where the landlord was screening for tenets in February 2020?"

I’m a bit clueless here. Not really sure which responses are being made in jest or passive aggressive.

[clarkfan1979]

I think the rent I listed the property at is about as high as we could go. You start bumping into rentals that are larger for only a few hundred more a month. Plus I would rather have some decently qualified applicants and charge a little less than to have a thin applicant pool and the place potentially sits empty. At market rate, a one month vacancy is the equivalent of just over $150 less in rent each month of the year. I never thought about it that way until our management company explained it like that. Makes sense.

This has been my philosophy on charging rent over the last 15 years. I didn't have a management company explain it to me. I developed it on my own. I typically charge $100-$200/month less than market rent. The people who end up renting the house typically understand that they are getting a deal. They are motivated to be reasonable to keep the discount going. They can also sense that other people want it too. This prevents them from making unreasonable requests before signing the lease.

This is very subjective, but the one time I was at market rent, I don't think it went very well. The college students were constantly trying to get an additional roommate to help them pay the bills. They were very messy and felt like they were entitled to be messy because they were paying market rent. They pushed back a little on when I wanted to show the house to the next set of tenants. They considered it to be an inconvenience. They lost that battle because it specifically states in the lease on when I am allowed to show it to new tenants.

I think I turned the "mess and dirt" into a positive. I told the exiting tenants that they didn't need to clean the carpets if they gave me 8 days to install new flooring before they moved out. They agreed and I got new floors installed with 0% vacancy.   

[Midwest_Handlebar]

Agree, I charge a little below market to get the best qualified applicant. On renewal of the lease I send them the market value for the rent and offer to split the difference. This way I'm dealing with the best of the rental pool and they know that it's a win/win relationship. It's not worth it to squeeze another $100/month from someone who can easily do $10,000 worth of damage to your property.

I just want to interact with decent people and this method attracts decent people.

[Mr. Green]

Agree, I charge a little below market to get the best qualified applicant. On renewal of the lease I send them the market value for the rent and offer to split the difference. This way I'm dealing with the best of the rental pool and they know that it's a win/win relationship. It's not worth it to squeeze another $100/month from someone who can easily do $10,000 worth of damage to your property.

I just want to interact with decent people and this method attracts decent people.

This is what we're going to do the next time around. We got 2 applicants in the time it took the first to sign a lease, which was a couple weeks. It worked out well this time but I think the small number of applicants indicates we were asking top of market rent. If I was doing it again I think I'd go with $1900 instead of $2100 and see if the applicant pool is significantly larger. If possible we want to ensure we have some quality candidates to choose from, not just the one or two people who apply. Plus then if your couple applicants feel iffy then you could potentially play the mind game of renting it to get someone in and the cash flow going or waiting an undetermined amount of time for more applicants.

[Dicey]

We tend to do something different. We look to be as close to the market as possible when a place turns over. If the tenants are good, we go easy on the annual rent increases. Two of our properties have leases expiring. We're going to raise each house $200/month. If they were turning over, we could probably get $500 more per month. Why not jack them up? They're good tenants, and they're elderly, as these properties are in a Senior Community. Turnover will happen soon enough without our help. Until then, both are kept in immaculate condition, which is worth more than zero.

[Mr. Green]

We tend to do something different. We look to be as close to the market as possible when a place turns over. If the tenants are good, we go easy on the annual rent increases. Two of our properties have leases expiring. We're going to raise each house $200/month. If they were turning over, we could probably get $500 more per month. Why not jack them up? They're good tenants, and they're elderly, as these properties are in a Senior Community. Turnover will happen soon enough without our help. Until then, both are kept in immaculate condition, which is worth more than zero.

I'm going to do this too if my current tenant wants to stay and the experience goes as well as our initial interactions lead me to believe it will. Moving a whole family is tough, and I know his kids are going to love the neighborhood. Interest rates probably are not coming down by the end of his lease so buying a place here will be tougher. He'd basically be paying the same as his rent for a mortgage payment and to get it that low he'll need 25% down, which will be close to 100k. I'm hoping maybe he'll want to hang around several years. If he's handy and responsible, it would be well worth going easy on rent to know I have someone that's taking care of the place and isn't sweating the small stuff.