We have many owners that approach us and ask what our process is for properly screening tenants. The process is very simple. We suggest developing your process and sticking to it!
SCREENING TENANTS FOR SUCCESS
The first step to screening tenants is to have a good application and charge for it! Charging an application fee will weed out some of the bad applicants. You have get a good application from the Grand Rapids Rental Property Owners Association. This application will need to be signed by the tenant to run credit, check income, and other for other uses.
Look at other management companies and find out what their minimum credit score is for prospective tenants. Most have a minimum credit score of 500-650. When you receive the application from the tenant, make sure you run their credit to check the score.
It is very important to have a process and guideline for background on prospective tenants. HUD changed their rules on criminal records in 2016. Make sure you check HUDs rules and confirm your guidelines are legal. This is very important in your process of screening tenants. View them here!
Confirm the income of the tenant! We see many owners that take the tenant’s word for it. Check their check subs and/or call their work to confirm the income. A good run of thumb is 3X income compared to rent. If the rent is $1,000/MO, look for $3,000/MO in income.
Check the rental history of the tenant. You may need to go to two of the prior landlords to get proper verification. Many landlords do not do this step and it bites them in the end.
Create a check list that you can input the information and quickly decide if the tenant meets your criteria or not.
ADVERSE ACTION LETTER
If you deny a tenant, make sure you send that adverse action letter! The adverse action letter is a letter that explains why the tenant is denied.
If the tenant is eager to move in, sign a lease, give you deposit money, etc., then that can be a sign that the tenant won’t qualify for the rental. Screening a tenant isn’t necessarily hard, you just need to follow all of the rules so you don’t end up in court! If you have any questions, you can contact us today!