This article shows you how to screen tenants for a rental property.
Getting a good tenant who is going to take care of your property, pay the rent, and not be a constant pain is one of the most critical responsibilities of property management companies. I’m going to share with you three ways my property management company will screen Oklahoma City tenants.
Better screening makes it easier to eliminate poor quality tenants, which increases occupancy and their profitability.
Once you have a prospective tenant raise their hand and say, “I want to rent this property” you need to have an application you can get into their hands. Our rental application focuses mostly on three things: rental history, their monthly income, and their court records.
Some OKC property management companies rely strongly on a credit report because it is a strong indicator of how they pay their bills (or not). Okc Home Realty pulls credit on all prospective tenants, even on low-end rentals. They sometimes may contain that extra information. It helps to make a good decision. However, the credit score doesn’t necessarily show how they will pay their rent. Some people will slow pay or no pay on just about anything other than their rent.
Rental application in OKC
A residential rental application is a document that a prospective applicant if interested in renting that home, completes and submits to a landlord or property manager.
How to Screen Tenants: The Best Potential Tenants Screening Process for Rental Property
1) Request a Tenant Application
Okc Home Realty has our rental application completely online. The advantage is that they can fill in the application at home and don’t have to come to our office. They can even pay their application tool for showings follow-ups with the prospective tenant. To requests, they must complete the application once they have viewed the property. To see the Okc Home Rental Applications Click This Link.
The rental applications also contain explicit language in which the tenant authorized us to obtain their credit information for the approval process. Without that permission, we could not legally obtain that information.
2) Perform a Credit Check?
A credit check provides a meaningful score as to the tenants’ willingness and ability to pay bills. It also shows a long track record of financial behavior, both good and bad.
One of the other benefits is that it can provide confirmation as to where a prospective tenant claims to have been living. Or, it can prove they did not live where they say they had been living.
If they have decent credit and pay their bills on time, there is better chance that they will also pay their rent on time.
What does a credit check tell you?
For more information about how credit checks can assist with tenant screening, check out this article:
How to Do Background Check on Tenants?
For the purpose of carrying out a credit check on a tenant, the application form should at least include:
- The Full Legal Name of The Resident
- Addresses for the past two years, at least
- Number for Social Security
- Birth Date
- The Current Boss.
- Contemporary Landlord
However, there are a few things you can review to help with your decision if you’re considering renting to someone with low credit.
Do you need some assistance with tenant screening? Click here to find out more
3) Verify the Prospective Tenant’s Income
A TransUnion study found that 84 percent of landlords classified rental payment concerns as their top issue, which is not shocking considering evictions can be costly.
Okc Home Realty requires that a Tenant’s take-home pay be at least three times the rent. They must provide proof of that income in the form of pay stubs or bank statements. We don’t budge on these requirements. However, there are exceptions. These include:
- Federal Housing Assistance in the form of section 8, in which some of the properties we lease are eligible.
- If a property is all bills paid, we will lower the income requirement because the tenant will not pay as much for utilities.
- If the Tenant pays for the lease upfront. Sometimes they may not have an income but have plenty in savings for some reasons.
4) What Is at Least the Last 12-months of Rental History? Gives You Trust Towards Tenants
We need to have a complete history (i.e., continuous) for the last year. We don’t want to see any evictions in the last five years. If we find them, we would require first and last month’s rent, in addition to possibly a higher security deposit or deny the applications.
We want to be convinced we’re actually talking to their landlord when we call their reference. But we don’t stop there when we screen Oklahoma City tenants.
If that’s not enough to sway you, remember that evictions cost $3,500 per unit on average and can take up to four weeks for the whole process to run its course.
5) Search Court Records
Landlords need to check the state records of applicants.
We always check the tenant’s name and social security number against the Oklahoma Supreme Court system on-line database. I’m looking at what their situation has been for the last five years or so.
Any evictions should show up. You’ll also see minor offenses like speeding. Red flags for us are evictions, drug convictions, or other felony offenses in the last five years.
If they’ve had a felony that was 5 years ago but nothing since we will take that into consideration.
The Fair Housing Act requires some measure of leniency with regard to the criminal record. It requests that tenants with criminal records be given a fair shake. In my mind, this is common sense as we never want to turn away prospective Tenants with the ability and willingness. To pay rent, even if they have a checked past.
6) Make a Decision
To make the decision less emotional and based strictly on credit, we use scoring system for every applicant. We create a numerical score based on the screening criteria, weighting the three factors that make the biggest difference( income, background report and landlord reference) the most. By using this system, we are far less likely to violate Fair Housing guidelines.
In a tenant screening, what are the most important things to consider?
Criminal Background and Eviction Checks
What makes a credit check fail?
Some of the most common reasons for a credit check failure could include:
no way your name and address could be verified
You may have failed a credit check, not due to any financial difficulties, but because the landlord was unable to confirm who you are and where you live
How long does a tenant screening process take?
Usually, the whole application process takes just a few days, ranging from 48 to 72 hours. It may take longer if the landlord is not responsive with the reference.
What is a reasonable credit score?
Ideally an applicant will be in the 700+ range. Somewhere between 600-700, is also acceptable. If it is 500-600, the other parts of the applications need to shine.