Screening to Ensure Successful Residents for Your Rental Property
Screening successful residents to lease your single-family rental home or apartment is a time-consuming task. There are several steps involved in the process, and many contingencies to consider along the way. In addition, you must comply with all local, state and federal housing laws and regulations. Making sure you’re legally compliant, and ensuring that your new residents can pay their rent on time each month are among the most important considerations.“
Everyone has an equal opportunity to lease our homes and apartments,” explains Kate Bond, director of leasing for Mynd Property Management. “We have a first come, first-served policy,” she says, adding that one of the most crucial parts of securing a lease as a resident is to have all of your financial paperwork ready to go.
But, before you even begin screening prospects, you’ll first want to establish minimum monthly income levels that your resident can pay. This critical step includes knowing what kind of rent you can achieve at your property. If you’re not aware of local market-rate rents in your property’s area, consult with a local property manager or broker for a complete rental analysis of your asset.
Here are the 10 steps to take when screening prospective residents for your property:
- Request that all occupants aged 18 years or older, complete a rental application. At Mynd, the one-time application fee is approximately $50.
- Ask prospects to provide proof of income. Income should meet minimum monthly income standards that you have already established up front.
- Verify your applicant’s identity by checking for a valid government-issued photo ID.
- Use a third-party credit agency, such as TransUnion, to process your applicant’s credit check, background check and eviction check.
- If the result from the screening process is returned “Denied,” based on information discovered from the financial screening process noted above, an Adverse Action Notice must be sent to all applicants within 24-hours of the denial. By law, you are required to provide the denied applicant with the name, phone number, and address of credit agency you used. The reason for denial must also be stated. The applicant also has a right to be provided with a copy of the credit report used in the decision.
- If the result from the screening process is returned as “Approved with Conditions,” the applicant may continue to rent the available property with an additional required security deposit. An Adverse Action Notice must be sent to all applicants within 24-hours of the conditional approval. The name, phone number, and address of credit agency used must be provided. Also, the reason for Approved with Conditions must be stated. If requested, the applicant must be provided with a copy of the credit report used in the decision.
- If the result from the screening process is returned as Approved or Approved with Conditions, the applicant may rent the available property with the required security deposit. Then, an Application Approval Notice must be sent to all applicants.
- Provide your approved applicant with instructions on paying the security deposit. Mynd, for instance, creates urgency by letting prospects know that whoever pays their deposit first, takes the property off the market. Most management companies keep approved applications active for 30 days.
- Verify desired move-in date, length of lease term, and all monthly recurring fees, such as rent, pet rent, pool service, etc.
- If you have created an online portal or digital system to process rent applications, provide instructions for all applicants to digitally sign the lease agreement within 24 hours of receiving the Approval Notice.
Guarantors and Housing Choice Vouchers
If you have an applicant who does not meet the minimum income requirement, the applicant can add a Guarantor to the lease agreement. “In college towns with a prevalence of student housing, student renters often use a parent or guardian as a Guarantor for their first rental unit, for instance,” explains Bond.
Negative credit or criminal history can impact a renter’s ability to secure a Guarantor, however. Consult with your local property manager for more information.Should the applicant be a participant in the Housing Choice Voucher Program formerly known as Section 8, you must present a valid housing voucher along with a completed rental application and verification of income documents, Bond notes
Partner with a Property Manager
Hiring a full-service property manager to screen prospective residents is a good idea if you’re an out-of-area owner, have limited time to manage your property or have minimal knowledge of local landlord/tenant laws and regulations.In general, Mynd Property Management’s screening criteria tends to yield higher-quality residents because the company is located in competitive rental markets with strong economic indicators, such as the Bay Area, Seattle, San Diego and Sacramento. All of these
West Coast metros feature high barriers to entry and a strong pool of qualified leasing applicants.“We tend to get higher-quality residents at Mynd-managed properties because folks that apply and provide documentation the fastest, tend to perform better in other ways,” Bond shares. “ If you’re ‘Johnny-on-the-Spot’ when it comes to paying rent and getting your income documents together, you’re probably very responsible when it comes to completing other tasks, including paperwork.”
Mynd’s digital leasing experience expedites the process by allowing applicants to fill out forms and other paperwork completely online.
Creating a portal for prospective residents to apply online or through a native app allows you to screen them even faster, saving you time and money.
Time Is of the Essence
Typically, the entire process to screen an applicant for a rental property takes two hours. And that’s if you have the process down to a science, and experts working for you who understand your local market, landlord/tenant regulations and fair housing laws. No matter which type of residential property you’re leasing, hiring a property manager or third-party to screen potential residents will expedite this multi-step process.
Why Should I Purchase a Rental Property in Harrisburg, NC
Thinking about investing in Harrisburg, NC? Learn why it is an attractive area for investors and how to accurately set your rent. Discover how a Harrisburg property manager can be an asset in your investment business.
Why Should I Purchase a Rental Property in Deltona, FL
Is Deltona, FL a good fit for your strategy as an investor? Learn what data to look at and how a Deltona property manager can help you make smart investment decisions.
Why Should I Purchase a Rental Property in Concord, NC
If you are considering investing in Concord, NC, first confirm that the demographics, home prices, and rental return fit your rental property investment plan. Learn how setting your rent rate correctly and finding an experienced Concord property manager can improve your success as an investor.