Ask any experienced landlords, and they’ll tell you that one of the secrets to success with rental properties is finding the right tenants.

The right occupants are a landlord’s dream-come-true. They’ll pay the rent on time—every time—and look after your property and treat it right. They’ll abide by the terms of the lease and won’t bother the neighbors.

But finding qualified tenants doesn’t happen by chance, and it’s not simply a case of going by gut feelings alone. Instead, sourcing the best occupants for your property is a deliberate and involved process, one that involves asking the correct questions, using the right screening criteria and then verifying the information that applicants give you. It can also be complex, requiring you to make sure you’re operating in compliance with anti-discrimination laws and ensuring that you screen all of your applicants fairly and equally.

But while tenant sourcing and screening can be time-consuming, it’s more than worth the time and effort that’s required. The right tenant will provide you with a steady passive income and a great return on your investment. And the wrong tenant? Well, let’s just say that bad experiences with tenants are one of the main reasons that landlords leave the industry.

While finding trustworthy renters is no simple feat, the good news is that it does get easier with experience. One of the best ways to create an effective and straightforward screening process is by taking the time to create solid screening procedures that outline your process—and to document everything in writing. It’s also important to ensure that your processes are in compliance with fair housing laws. This will help you to ensure that nothing’s forgotten, while also helping to keep you on the right side of the law.

With this in mind, let’s take a look at a few things you can do to secure excellent renters for your rental property.

Cast a Wide Visual Net When Advertising

One of the best ways to gather a decent pool of applicants to choose from is by casting a wide net when advertising. Start by creating an effective, straightforward ad for your property, including all of the basic information on your rental, as well as a couple of its very best features. Then, try to post your listing on as many websites as possible, like Realtor, Doorsteps, Oodle, Zillow and, of course, Craigslist.

Advertising online will give you a better response rate and a much larger pool of applicants to sort through, allowing you to choose the best of the best. It also allows you to post photos, so make sure you do, and post lots of them! Today, tenants want to know what they are looking at before they look at it. Good tenants will pass on listings with no, limited or bad photos.

Your listing is actually a form of tenant screening. By including plenty of information in your ad—price, location, number of bedrooms and bathrooms, hardwood floors versus carpet—you are encouraging only tenants who are suitable for the property to contact you.

Create a Tenant Screening Procedure

While creating a tenant screening procedure may seem excessive, it’s not. For any landlord today, having a solid screening procedure in writing not only allows you to ensure that you ask all of the questions to which you need answers, but it also allows you to prove that you’re committed to fair screening processes. This will help save you from potential discrimination accusations and will prove to be invaluable should you ever find yourself before a judge.

Ensure That Your Screening Procedure Complies With Fair Screening Standards

It’s important to ensure that your screening procedures are in compliance with the law. Landlords cannot discriminate against any protected classes, and it’s important to avoid asking questions about an applicant’s race, color, gender, national origin, family status, disabilities or religion. Many states also have laws that include other protected classes as well.

Additionally, recent guidelines issued by the U.S. Department of Housing and Urban Development (HUD) mean that landlords are advised not to implement screening policies that might disqualify potential tenants solely because of a criminal background.

Create a Rental Application Form

The rental application form is one the most important documents for a landlord to have. A solid application will ask for information including:

Name and contact information for applicant’s employer

Applicant’s income

Applicant’s current address

The names of everyone who will be occupying the unit

Name of applicant’s previous landlord, as well as friends and personal references

Applicant’s driver’s license number or other official government identification

Applicant’s next of kin and extended family members

Permission to run background and reference checks

When someone contacts you about your rental, asking them to fill out a rental application form is a great way to collect the information that you need to screen potential applicants and run reference and background checks.

Perform Reference Checks

We can’t overstate the importance of thorough reference checks. Don’t just assume that because an applicant lists someone’s name on the rental application that the individual will give them a good review—you’d be surprised. Instead, pick up the phone and call the previous landlord, as well as other references listed on the application. Be sure to contact the applicant’s employer to verify the information that’s given. Make sure it’s not a friend or family member posing as the employer.

Remember to abide by rental discrimination laws when performing your reference checks. The goal of a reference check is to uncover any discrepancies in a renter’s application; everything else is additional—and unnecessary—information when screening applicants.

Run a Background Check

You should also run official background checks from a verified tenant screening company. The tenant background checks, also known as “consumer reports,” will check a number of things, including criminal records. They can include running the name on the sex offender database, as well as rental and eviction history and credit score. Keep in mind that it’s important to use an approved consumer reporting agency to obtain a background check on a potential tenant. Check the Consumer Finance Protection Bureau for a list of approved CRAs for tenant screening.

Tenant background checks usually cost between $20 and $50, depending on how many items you screen. You can request that potential applicants pay an application fee that will cover the cost of the background and credit checks. In some states, though, there may be a limit on the amount that you can charge.

TIP: Take Care When Using Social Media to Screen an Applicant

While you may be tempted to take a look at the potential tenant’s Facebook page, avoid relying solely on online information when screening applicants. The information that you discover may be protected by discrimination statutes or privacy laws. Additionally, certain incorrect information in a person’s online presence may be more difficult to correct—in contrast to say, information in a credit report. Be sure to keep this in mind if you decide to check into an applicant’s profile online.

Meet Potential Applicants in Person

Finally, it’s important to always meet potential applicants in person—before handing them the keys to your rental. To save time, it’s a good idea to meet in person and show the property at the end of the tenant screening process. This will prevent you from wasting your time by showing the house to applicants who wouldn’t even qualify in the first place.

Consider Hiring an Experienced Property Management Company

Many landlords opt to hire a professional and experienced property management company to handle tenant sourcing and screening. Not only does this help save time, it can also help to ensure that you secure quality renters. A reputable property management company will know what questions to ask, in order to adequately screen tenants, as well as which questions not to ask, to avoid potentially damaging perceptions of discrimination.

At Renters Warehouse, we provide a free six- to 18-month Tenant Warranty™ on the tenants that we place. This means that should your renter default for any reason, we will provide additional tenant placement services for free. Checking with your property manager to see what type of screening guarantee it offers will give you an idea at how confident the company is in its screening process.

If you choose to source and screen your applicants on your own, it’s important to ensure that your tenant screening procedures are in compliance with the law. Consider consulting with an attorney who specializes in landlord-tenant law and working with them to create a screening procedure and rental application that comply with fair housing laws.

While these screening procedures may seem complex, the fact is that they can actually save you a world of time, money and hassle down the road. By taking the time to thoroughly and properly screen applicants at the start, and documenting your procedures in writing, you can weed out potentially problem tenants who could easily derail your investment strategy and end up eating into your profits.

There are tenants out there who will pay the rent on time and treat your property right; you just have to find them. With a solid tenant screening procedure, you can have complete control over who you allow into your rental—increasing your chances of sourcing excellent tenants and getting yourself off to a great start with your SFR investment.

Tags | Rentals
  • Kevin Ortner

    Kevin Ortner is the President and CEO of Renters Warehouse, America's leading real estate investment services company. Kevin joined the company in 2009 when he opened the first Renters Warehouse franchise in Phoenix, AZ. His franchise had been consistently awarded with best-in-class business and culture awards. After working in many capacities across the organization, in 2015 Kevin was named President and CEO, helping Renters Warehouse through monumental growth nationwide and a majority share private equity investment. Kevin is a two-time honoree of the American Stevie Business Awards, Executive of the Year award (2015 and 2016) and received an International Stevie Business Award for his achievements as CEO of Renters Warehouse. His leadership helped the company become an honoree of the prestigious Inc. 500|5000 list of fastest-growing privately held companies in America ten consecutive years in a row.

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