We have all heard a tenant horror story or two. From skipping on the lease to completely damaging your property, thorough screening will help you weed out the bad tenants and keep you out of Fair Housing trouble.
Here is a brief overview how our property management company screens tenants for Austin TX, Orange County and Riverside CA.
1. Initial contact with applicant
Before we even take an application, we ask a few questions per our guidelines to weed out bad applicants right away such as:
- Have you ever been evicted?
- Do you have any violent felonies?
- Do you make "x" amount in net income?
We are upfront with our guidelines and do not want to waste our (or their) time however, there have been instances where applicants were not honest up front which we caught in the detailed screening.
2. The Application
We use the standard association of realtor's application for applicants to fill out and sign. This will provide all vital information you will need to process your application including:
- Date of birth
- Social security #
- Drivers license #
- Prior 2 years residency
- Criminal and credit background
We also provide them a copy of our screening guidelines to sign so they know up front if they will not pass. Some of the items on the guidelines include:
- They must make 3 time net rent
- There are certain breed of dogs we do not allow for liability reasons
- No evictions or excessive late payments
- No drug, violence, theft, fraud, capital or sex offender convections
- Breech of leases
- Falsification of application
- Damage to property
- Poor credit
3. Process a credit and criminal background check
We use a company that runs a credit and criminal check all in one report. Some of the items on the report include:
- Credit Report Analysis
- Detailed SSN search including fraud alert and death certificate
- Present employment verification
- Previous and present rental verification
- National Criminal Search
- Sex Offender Registry Search
- Eviction report
- Detailed Address History
- Present County Criminal Search
- Judgment search
4. Credit report – What to look for?
- Does social, drivers license and name match the credit report?
- What is their credit score and does it meet our guidelines?
- Tax Liens?
- Does their current and previous employment match their application?
5. Criminal report – What to look for?
- Any sex offender cases?
- Any state criminal cases?
- Any county criminal cases?
6. Landlord verification
We perform written landlord verifications for every one of our properties. Prior landlords are very forthcoming with information if they had a bad tenant. Some of the questions we ask are:
- Have there been any evictions or broken leases?
- Did tenant pay on time?
- Have you received any complaints?
- Did the tenant damage the property?
- Would PM/owner rent to the tenant again?
Generally we like to see residency at the same address for 2 or more years. You want to make sure the application, landlord verification address match credit report address. Also if landlord is the property owner, does county tax record show landlord as owner? If you have access to the MLS, check prior addresses to see if there is any activity (sales/rental) that contradicts application?
7. Employment verification
We require written employment verification. The employer complete the form which lists company name, hire date, gross salary, ect. This information is compared with the application and credit report to find any contradictory information. You want to obtain a copy or their pay stub to verify income as well.
8. Making the decision
This is where your qualification guidelines come into play. You will want to put together a comprehensive guideline document that addresses all of the above information. Make sure you are versed in Fair Housing laws and the guidelines do not infringe on any of the Fair Housing, State or County laws.
Having qualification guidelines will allow you to be more objective rather that subject when approving or denying.
Remember if you deny an application based upon their credit report you will need to send the applicant an adverse action notice per the Dodd-Frank Act.
We hope this helps you and please contact our office if you need any help navigating all the legal requirements or want a property manager to handle leasing for you!