The tenant you put into your property will have a direct impact on the type of rental experience you have as a landlord. That’s why tenant screening is so important. If you don’t screen thoroughly, you could end up with a resident who doesn’t pay rent or who damages your property. You could find yourself with a bad tenant who refuses to follow the terms of the lease or engages in illegal or disruptive activity in your property.
The best tenants are responsible, consistent, and reliable. They pay rent when it’s due, they communicate when maintenance or repairs are needed, and they meet all of the expectations that are set forth in your lease agreement. They stay in place for a long time and they treat your property as if it is their own.
How do you find these tenants?
You establish a great tenant screening process. We’re talking about screening today.
Familiarize Yourself with the Fair Housing Act
As a landlord, you should be familiar with the federal fair housing laws. The Fair Housing Act mandates that we don’t discriminate against any tenants or applicants. As you may know, the law establishes seven protected classes. You cannot deny housing to anyone based on:
- National origin
- Familial status
State and local laws are sometimes even stronger than the federal fair housing laws, so make sure you get to know any additional requirements in your specific market. Violating fair housing laws is extremely costly. If a tenant or a prospective tenant files a fair housing claim against you, there will be a lengthy investigation process and if you’re found to have violated the law, you could be fined several thousands of dollars. It’s hard to recover from that type of a mistake. So make sure your tenant screening process is compliant. We recommend that you document it in writing and follow it consistently every time.
Digitizing and Automating the Tenant Screening Process
At Mynd Property Management, we take fair housing seriously, and we’ve implemented some processes that make it impossible to discriminate unintentionally. Our screening process is entirely digital. This is helpful and safe because it removes the human element and any biases that humans may have.
When tenants want to rent one of our properties, we ask for a current government-issued form of identification and two verifiable documents that prove income. We also ask for social security numbers so we can run our background and credit checks.
In many parts of the country, we get tenants who are foreign nationals. They often don’t have the necessary documentation but they do have employment letters or verifiable income that’s quite high. American companies often hire these individuals to work for them, and they’re paid very well. Thus, they meet the screening standards we have in place.
When we have the completed application and all the supporting documentation, we screen the applications and notify tenants of the results. This process completely avoids any bias and keeps our landlords safe from fair housing claims. When an application is submitted and screened, there is not a human interaction, so it’s difficult to discriminate. Your own bias, whatever that may be, cannot slip in and impact your decision-making process when it comes to choosing a tenant.
You’re really looking for someone who qualifies, and this process accomplishes that.
Accepting and Declining Tenants Based on Screening Results
Our system runs a credit and a criminal check through Transunion. It also does a nationwide eviction check. The results will prove whether the applicant meets our criteria, and we can let the applicant know that they are approved for the property they want or whether we have to decline them.
Sometimes, it’s very simple. But sometimes, there are varying degrees of results. An applicant’s results may fall somewhere between a tenant we’d accept and a tenant we’d decline. So, we have the option of making an offer that’s conditional. If there’s something on the applicant’s credit history that makes us nervous, we will ask for higher security deposit. They get a chance to live in the property they want, and our property owners are covered in case the tenant does not perform the way we expect.
There are often cases where a person simply does not fit into the cookie cutter situation where they can just hand over the required documents and the sign the application with a photo ID. Not every application is clear and easy to screen.
That’s where the human element has to come into play. At Mynd Property Management, we have a lot of people working in the leasing department, and we do a really great job of combining the digital element with the human element.
With our well-staffed and talented screening department, we can connect with prospects and work with them on anything that might be different in their situation. No matter what type of situation the prospective tenant is facing, we can help make things a little bit easier for us and for them. With our team, there are a lot of eyes who can look at information and analyze data to decide if someone will be a good resident.
Sometimes, we have to be creative about collecting the required information and documentation. It might require more paperwork and it may mean we have to make a few extra phone calls. But, it puts us in a position of being customer service oriented. We can provide a lot of value to both our tenants and our rental property owners. We don’t shy away from putting extra effort into the screening process. We know it’s critical and we won’t cut corners.
Cutting Down the Fraud Risk
Fraud and scams are growing more and more common when it comes to rental properties. We always hear about dishonest people advertising properties that aren’t theirs and then collecting money from unsuspecting potential tenants who will never get access to the property. We also hear about tenants deceiving landlords and moving into a home under false pretenses and then staying until the sheriff has to escort them out months later.
The automated process we use can also easily spot fraud because there are more eyes looking at the application. When you don’t have a person trying to charm you on the other end, fraud is actually really easy to spot. It’s a digital interaction, and there are no emotions or attachments involved. The process isn’t going to feel bad for someone with a story. There can be no long explanations about why the ID looks weird or why there’s a number scratched out on the social security card. Either something is accepted or it isn’t. A tenant who wants to get away with something will have a much harder time doing that with our digital presence.
If something doesn’t look right on the application or a blatant lie is uncovered, we move on. We don’t give potential tenants the opportunity to sweet-talk us into allowing incomplete or incorrect information to be considered. We focus on the data and we trust it.
Include Qualifying Information in Your Listing
One thing that will really help you spend less time and effort on screening is limiting your tenant pool to only those who are likely to qualify. Always include the rental amount in your listing, for example, because you want to make sure you’re only hearing from people who can afford the rent. State whether pets are allowed, what type of income and credit standards you have, when tenants will be able to move in, and the length of the lease term you’re looking for. When you include as much information as possible in your listing, you know that only the right tenants will apply.
Usually, the tenants who are interested in renting one of our properties won’t call us on the phone. They’ll text us or email us or send us some kind of message. Then, we allow them to go through the process of our checks and balances to ensure that we only place tenants who are well-qualified. This reduces our eviction rate dramatically and cuts down the amount of time we have to spend managing bad tenants.
Transunion is an extremely good resource for background checks and credit history, and self-managing landlords can easily get some help in evaluating the applications that come in during the leasing process. Once we have successfully screened a tenant, we’re happy to notify the tenant that the property is theirs. We welcome them into the Mynd family of tenants, and we begin to develop a respectful and positive professional relationship.
This is an overview of what we know about the application process and good tenant screening. Remember that legal compliance is absolutely critical, so no matter how you screen your tenants, be sure you’re following all applicable fair housing laws for your state and city.
If you need some help screening tenants or you’d like some assistance with other areas of property management, please contact us at Mynd Property Management. We look forward to working with you.