If you’re planning to be a landlord, you’re probably wondering how to make sure that your future tenants will pay rents on time and take good care of your property. Or instead, you’ve had bad tenants and want to learn how to make sure you never experience a bad tenant again. Either way, your tenants will make or break your experience as a landlord, but the problem is that it’s actually pretty tough to judge prospective tenants. It’s pretty simple for a potential tenant to put her best foot forward when submitting an application, but things can quickly change once the lease is signed. 

There are two methods that you can take to find your next tenant. The first option is to hire a property management company, which will take a fee for finding the right tenants, maintaining your property, and all other landlord duties. This method typically costs you, the owner, lots of money but can be very rewarding – especially if you’re growing a portfolio and would like to focus on other parts of your career. However, if property management isn’t in your budget at the moment, then keep reading to learn how to source and screen prospective tenants on your own. 

1. Rental Application:

   After listing your property for rent, which can be done on Trulia, Redfin, Zillow, or even Craigslist, you then want to make sure that you have a rental application ready –  here’s a template that you can use to get started. The application covers everything that you’ll need to judge the applicants: their financial history, employment history, and personal history. Between these three elements, you’ll be able to thoroughly understand the tenant to determine if they’re a good fit for your rental. Some of the elements to be collected in a rental form:

• Current and previous employers: What is the career choice of the tenant? Is it stable enough to pay the rents? Has he or she switched jobs multiple times in the last few years? If so, why? 
• Current income level – Does the tenant’s income cover the rent plus normal living expenses? It’s extremely important to make sure that the tenant can pay for rent on top of living expenses – oftentimes, people underestimate the costs of living. 
• Financial information (bank account balances, monthly credit card payments, outstanding debt, etc.) to provide a financial “picture” for a prospective tenant and offer insights into his or her ability to pay the rent each month. 
• Contact information for previous landlords: These will be listed with previous addresses, amounts of rent paid, and reasons for leaving. They’ll also include the contact information for you to call and make sure they’re telling the truth. 
• Lifestyle Information: Number and size of pets, number of occupants, whether or not they use a waterbed, and more are included to make sure that the lifestyle inside the home aligns with what your guidelines.
• Personal References: These will include names, length of acquaintance, and phone numbers for you to contact and make sure things check out.

2. Credit Check:

   You’re going to run a credit check on the prospective tenant to ensure that they’re financially fit. This can be done at Equifax. Typically, you’d like for your renter to have a score of 690+. What you’re looking for here is:

• Credit History: Look for a history of late payments, collection accounts, charged off credit card accounts or major issues such as bankruptcy. 
• Current Debt: If the tenant has maxed out credit cards, carried hefty loans, or has several unpaid balances, there’s a good chance that the tenant may struggle to keep up with the rent payment.

3. Background Check:

   Next, you’re going to want to run a criminal background check to get a better understanding of the tenant’s eviction history, criminal background, and public legal history. You can conduct the background checks on Starpoint Tenant Screening or Screening Works. Here, you’re looking for the tenants:

• Eviction History: If your application has been evicted recently, it’s probably not the best idea to accept him or her as a tenant – however, things may have changed. Make sure you bring it up with the tenant and ask if they can explain why they were evicted and how things might be different now.
• Criminal Records: You may want to pass on a tenant that has a thorough criminal record, as they could be a threat to you or the neighbors. 
• Public Records: Here, you’re looking for whether or not the tenant has any personal legal cases to battle and whether or not he or she has been sued in the past. If any of the legal battles were tied to real estate, that should be a red flag.

4. Speak with Previous Landlords

   If steps 1-3 are turning out to be positive, the very next step is to contact the tenant’s past landlords. Here are some key questions to ask the landlord:

• Did the tenant pay rent consistently on time? 
• Was there a history of late payments?
• Were there complaints from the tenant’s neighbors or any major issues with the tenant?
• Did the tenant damage the property?
• Did the tenant take good care of the landscaping?
• Would you rent to this tenant again?

5. Speak with the Employer

At the end of the day, the most important thing for a landlord is to ensure that their tenant will pay rent on time every single month. In order to ensure that, it’s critical that you verify that the tenant has sufficient income. To do this, simply call the employer that the tenant put on file, and explain that their employee has applied to rent your property. Then, cross-reference the information that the tenant put into the application and have the employer confirm. If the tenant lied about any of his or her employment information, then that’s a red flag. 

As a landlord, it’s your job to screen potential tenants thoroughly, because there’s too much at risk if you make a mistake and rent to the wrong tenant. Simply collect the tenant’s information, and cross-check it with the various data points (i.e. background check, employment verification, criminal history, past landlord interview, etc.) to make sure that they are telling the truth. If things check out, then the tenant is probably the right fit for your property.