Hello, DIY landlords! In the challenging world of managing rental properties, tenant screening is a critical task that deserves your full attention and due diligence. Not screening well enough or not screening in a fair housing compliant way is a common and costly mistake made by too many landlords.
Before You Have Tenants to Screen
Remember, you're in the best position to find the best tenant when you have a pool of prospective tenants to choose from. How do you do this? Nail the marketing and pricing of your property from the start.
A great listing with professional photos and the right price allows you to find the best fit for your property and investment goals. It's essential to price your property in line with the market average, attracting a greater number of applicants and improving your options.
Another common strategy from landlords is to set the price to the high side of the market average. If this works, you get more rent but you may only have a 1-2 applicants to choose from leading to compromises in other areas like credit score or having an earlier lease start date.
The Importance of Thorough Tenant Screening
Once you have interested tenants, don't cut corners when it comes to screening. Prospective tenants should go through a thorough process that includes credit checks, employment verification, criminal history, and eviction records. While it may seem tedious and time-consuming, these steps provide a comprehensive picture of the applicant, significantly reducing potential risks down the line.
You might think that speaking to previous landlords is an excellent way to gather information. However, in our experience, they rarely disclose critical issues for fear of reprisal. It's still a good practice to reach out, but take their feedback with a grain of salt and rely on concrete data.
Balancing Landlord Goals with Tenant Preferences
As an owner, you can and should choose a tenant based on your goals while strictly following federal and local fair housing laws which we’ve written about in depth. Here are some factors to consider:
Credit score and Income verification: You'll encounter a wide variety of applicants. Some might have strong credit scores but lower income, and vice versa. Understand that there's no "one-size-fits-all" tenant profile. You need to decide what financial metrics are most crucial for you.
Background and eviction checks: It’s important to know who may be moving into your home and the risks they may pose related to previous criminal or eviction history.
Move-in Dates: Many applicants may wish to negotiate the move-in date. Flexibility on your end could potentially secure a reliable tenant but could result in extra vacancy.
Rent Prices: Some applicants may request a rent reduction, while others won't. Analyze if a slight decrease in rent could ensure a long-term, reliable tenant and be worth the compromise.
Lease Length: Longer leases can prevent the headache and financial instability of frequent vacancies.
Number of Occupants and Pets: Understand how many people or roommates will live on the property and their pet situation. Remember to stick to fair housing laws when considering these factors - specifically ensure that you are not using familial status as a screening criteria as that is a violation of fair housing laws.
Tenant Requests: Common tenant requests can range from painting rooms to installing fences or bringing in their appliances. Be prepared to negotiate and find a middle ground that benefits both parties.
When Nomad handles resident screening for you we work with all of these factors to find the best situation for you in a way that is fair housing compliant.
Navigating Fair Housing Laws
There are, of course, aspects you can't and shouldn't screen for, due to the Fair Housing Act and additional local laws. These factors include race, color, religion, sex, disability, familial status, and national origin. Remember, adhering to these laws isn't just a legal requirement; it's a commitment to ensuring equal housing opportunities.
At Nomad, we pride ourselves on strictly adhering to these principles. Our resident requirements, which you can find here, are crafted to respect these regulations while protecting our landlords' investments.
There Are Some Things That Cannot Be Screened For
While all landlords probably want a tenant who is easy to get along with, is very reasonable with requests, and takes great care of the property it’s simply not possible for a landlord or Nomad to screen for or predict all these things. At the end of the day, anyone who screens tenants is doing their best with limited information.
Remember, tenant screening isn't about finding the perfect tenant—it's about finding the right tenant for your property and investment goals. By conducting thorough screenings and maintaining a fair, law-abiding process, you can foster a positive relationship with your tenants and protect your investment.
(Please note this blog post is not a source of legal advice. For specific queries or concerns about tenant screening and fair housing laws, always consult with a legal professional.)