Why Landlords Should Conduct Thorough Tenant Screenings

Renting out your property will always come with some degree of risk. One of the best ways to mitigate that risk is to select high-quality tenants through tenant screenings. Good tenants are aware of their responsibilities and meet them with minimal effort from landlords — but how can landlords easily find good tenants and why is it important to do so?

Why finding good tenants is critical for landlords

As a rental property owner, you already know that managing investment properties can be rewarding, but also challenging. It requires hard work, patience, and resilience to deal with the plethora of issues — whether there are structural problems, broken appliances, or unsuitable tenants. To set yourself up for long-term success, it’s essential to find the right property — but just as crucial is finding high-quality tenants each and every time.

Reliable tenants consistently pay rent on time and reduce turnover

A tenant that moves in and doesn’t pay rent on time is a landlord’s worst nightmare. Finding and keeping reliable tenants may take a little extra time and effort up front, but it’s worth it. According to TransUnion, 84% of landlords indicated that payment problems were one of their top concerns about new tenants. To reduce churn and turnover costs and to avoid tenant non-payment and unit vacancies, take tenant screening seriously. One steady tenant who rents your unit for three years is more profitable and will cause far fewer headaches than having to find new ones every year. 

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Bad tenants may decrease your property value

The success of a rental property depends on how well you maintain it, but also how your tenants treat it. Tenants who do not respect the property may cause damage and rack up a bill for unexpected maintenance costs. Reliable tenants will flag small maintenance issues like a leaky faucet before they turn into major repairs that eat into your margins. With adequate maintenance, a property can retain its value — and the right tenants will respect the property and make maintenance easier for you, helping you avoid high repair costs. 

Tenant screening protects other tenants

Beyond giving you peace of mind, tenant screening helps you filter out bad tenants so you can keep your rental community safe. As a landlord, it is your responsibility to keep an eye on what happens on your property. You can be held legally responsible for your tenants’ bad or unsafe behavior and may bear liability if something goes wrong.

By screening tenants, you can take reasonable measures to prevent illegal activities on your premises, safety hazards, theft, or other destruction. If a landlord had prior knowledge of a tenants’ illegal activities and overlooked their responsibility, they may get fined, face criminal penalties, or be given a citation. To keep your other renters safe and reduce your liability, prevention is key and tenant screenings are a must. 

6 tenant screening tips for landlords

1. Develop and document clearly defined criteria for tenants

Before starting your tenant search, create a system for how you will judge tenant applicants. This criteria can include policies on pets, smoking, income, and history of evictions and late payments.

As a landlord, you have the right to turn down an applicant. However, if you reject an applicant for any reason, be prepared to present them with a set of criteria that complies with the Fair Housing Act in case they accuse you of housing discrimination.  

2. Ensure that renter income sources are genuine and verifiable 

Years ago, it wasn’t easy to create a fake pay stub. But today, with so many ways to forge one, potential renters can easily present a fraudulent look-alike. To minimize your risk of being conned, request at least three months of bank statements. As an extra precautionary step, consider asking for another proof of income such as an official W-2 form, tax returns, brokerage statements, or additional records. 

3. Check multiple references from previous landlords

Don’t be fooled by landlord references — current landlords may speak highly about the tenant in an attempt to get them to pack up and leave. Remember, landlords have every incentive to give you a glowing reference if the tenant you are inquiring about doesn’t pay rent on time, complains a lot, or trashes the property. To safeguard yourself, contact at least two prior landlords for a less biased view. 

4. Run individual background checks for each adult tenant

During your tenant screening process, do a background check on each applicant. This diligence will help ensure you find quality tenants. According to SmartMove, criminal backgrounds are more common than you think; in fact, 28% of applicants have at least one hit on their record. It is your responsibility to select tenants who will contribute to your community and not put anyone at risk. 

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5. Only accept fully completed and signed rental applications

When a potential tenant submits an incomplete application, it is reason to be skeptical — they could be forgetful, or may even be hiding something. Without all the proper documentation, you may put yourself and your other tenants at risk, especially if you need to conduct an eviction later on. 

6. Be aware of fair housing laws before accepting or denying a tenant

Fair Housing laws dictate that landlords are not allowed to deny an applicant based on discriminatory factors — whether it be familial status, disability, color, religion, race, sex, or national origin. In addition, while you cannot use an applicant’s criminal history to reject them, you can deny them if they pose a reasonable risk to you or your tenant community based on other screening criteria. Legally, you can reject a tenant if they are a smoker, fail to comply with a background check, have a history of drug use, cannot prove sufficient income, or for numerous other legitimate reasons. 

How Azibo can help landlords easily screen tenants

With Azibo, accepting tenant applications and running background checks is a simple, streamlined process built into the same platform that you use to collect rent and manage expenses for your rental properties. Azibo allows landlords to create an application for a rental unit, choose whether to require a background check, and view the results of the tenant screening — all free of hassle, or unnecessary expenses. 

If you would like to learn how Azibo can help you find reliable tenants, sign up for our free landlord financial platform today.