How do we evaluate the data we collect to arrive at a decision whether or not to rent to a prospective tenant? It is very important that our tenant selection process be sufficiently cautious but not overly so. Lack of caution in tenant screening results in high turnover, lost rent, and property damage. Overly-cautious tenant screening methods result in long-term vacancies and lost rents. It is important to look at a number of other factors…not just applicant’s credit score.
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1) Do they have the means to pay the rent?
How long has the prospect been employed in his/her current line of work? Is this a new career for her, or has she demonstrated a long-term commitment to her field of employment? This makes a difference. It indicates stability, or lack thereof. Income counts, too. Is the paycheck going to cover not only the rent, but the prospect’s other expenses? If not, something’s going to be sacrificed. As a landlord, we don’t want that sacrifice to be the timely payment of rent.
2) What does the former landlord have to say?
Better yet, what do the last two or three landlords have to say about your prospect? It’s not unusual for the current landlord to soften his evaluation of the prospective tenant. After all, he’s still the current landlord. The former landlord, however, generally feels far removed enough from your prospect that he’s apt to be frank and forthcoming with information. Do you take what a landlord says at face value? Of course not! Whether that information is positive or negative, it is subjective in nature. The landlords’ feedback is helpful, but should never be a stand-alone reason to accept or deny a prospect.
3) What about bounced checks and criminal history?
Are those items important? We think yes. Combined with the other factors we evaluate, these items help to provide a complete picture of the likelihood of the prospect living up to his/her end of the rental agreement terms.
The whole picture…
The greatest lesson we bring to the table, in terms of tenant screening, is the knowledge that no single factor in a tenant’s financial picture, residential history, or references stands alone. All facts, taken together, paint the picture of the prospective resident. Taken together, these facts and bits of information are going to lead us to a more accurate conclusion as to the likelihood our prospect will do the two things we require… pay the rent and take good care of the property.