This is the third and last part of the series on Landlord 101. We talked about how to analyze deals and market your property before and today’s piece is about what I consider as the most important part of property management–tenant screening.

Many people are scared of real estate investing because of the horror stories they’ve heard from others of how the tenants trashed the property or evictions. Bad things do happen I’m not going to lie, and you do have to roll w/ the punches. These problems can be avoided or dramatically lower the odds if tenants were properly screened. I would also advocate for not using a property manager if you just have one or two units, save that 6-8% fee, because good tenants rarely cause you problems.

1. Pre-Screen

From the first contact I’m already gathering clues to put together the whole picture about the tenant. How do they conduct themselves? Were they on time? In this day and age I might take a look online to see if their social media presence draws a red flag for me as well. Here are some good questions to assess if it’ll be a good fit as well:

  • Why are you moving?
  • When are you planning to move?
  • How many people will be living at the property?
  • Do you have any pets?
2. ask for an Application

You can get sample rental application from different real estate associations, for example California Association of Realtors has a standard form or you can use the one I use here. Here are the basic information you want to capture:

  • Personal information – Name, phone, address, SSN, driver’s license number
  • Employment info – contact info, current income level
  • Current and past landlord references
  • Credit and criminal history

Ultimately what you’re looking for is their ability to pay rent, willingness and track record of paying on time, long term job outlook and stability, and put it simply, how much stress might this person cause you. If there’s any inconsistencies it doesn’t mean an automatic no. There are usually ways to address it such as a cosigner etc.

3. Run a background/credit check

There are number of tools to run background and credit check on the tenant. I use SmartMove by TransUnion but I also have heard good things about Cozy or AppFolio. I’m not explicitly endorsing any of them; just sharing my experience here. I like SmartMove because it checks both credit and background report. They have a service that’s $25 and a premium version for $35. Doesn’t matter too much in my opinion. I usually have the tenant pay for that fee anyway.

4. Call Previous Landlords

Never skip this step. Repeat after me, NEVER SKIP THIS STEP. If I have any doubts about the applicant usually this seals it for me.  I once had an applicant that I was on the fence about, after talking to one of his previous landlords who said “well he’s not the worst tenant I’ve had but I definitely would not rent to him again” was all  I needed to hear to make up my mind. Here are some good questions to ask:

  • When did the tenant live there?
  • Did the tenant pay on-time?
  • Did you ever have to serve a legal notice?
  • Did the tenant have any pets?
  • Did you ever have any trouble or damage?
  • Did the tenant give you proper notice to vacate?
  • Did the tenant leave the unit clean?
  • Was the tenant asked to leave by you or your company?
  • Would you rent to this tenant again?
5. Verify Employment info

I’ll admit I don’t always do this because by the time I get here it’s pretty clear if it’s a good fit or not. However, for those looking for more assurance, contact the employer to verify the info provided. I have a hard time getting the companies to call me back sometimes and to expedite I usually ask for a copy of recent pay stubs instead.

  • How long has the individual been employed there?
  • How much does the individual earn?
  • Is this part time or full time?
  • Is this position temporary or expected to continue?

If everything looks good, congrats! If not, I would recommend respond to the applicant in writing the reason you’re rejecting their application. You’ll want to be careful not violate Fair Housing Act here to decline renting your place due to race, color, religion, sex, disability, familial status, or national origin. Follow the same process every time. A family friend of ours did in fact get in trouble because he had rejected an African American applicant first but that person had the spouse apply, who happens to be Caucasian, and he rented to