By John Nuzzolese
I always say that “95% of your tenant problems can be eliminated in the screening process.” If you’re like me, you probably find it difficult to relax when you have vacancies. So getting it rented is the main idea, right? Well, from now on, let’s say “getting it rented to a properly qualified tenant is the main idea.”
Below is what I call The 5 Steps of Screening Tenants.
First Contact is usually by telephone, so you need to ask the right qualifying questions in order to decide if you should proceed to step 2. Advise customers of your upfront rent and security deposit requirements and other important facts regarding the rental that may help disqualify the prospect.
I suggest you make a list or prospect card of questions to ask and have it handy while you conduct your first contact interview.
Here is what the card should contain:
Name, Phone, Reason for Moving,# of people, # of kids and ages, Date of the desired Occupancy, Pets (kind and size) Smoker or non-smoker, Credit, Past Landlord References, Employment Verification, etc.
Please note that anyone who has a problem answering your questions (as long as you ask them politely), probably will not qualify for your rental. Serious customers want to make a good impression on you and should be happy to answer your questions. This process can save you and customers a lot of time and trouble.
From landlords to real estate agents, we all have our own style in showing the rental. I think we all need to be aware of certain telltale signs to watch for while evaluating your prospective new tenants.
The first thing you need is a quality rental application. Let the applicant know that their application will be considered along with others, and you will notify the applicant once a decision is made. Advise the applicant(s) that it is very important to fill out the application as completely as possible. If you (and I recommend you do) run a credit report on the applicant, I suggest you be sure to collect a screening fee. This is a provision in the LPA™ application.
Inform your prospective tenant that the application must be returned as soon as possible to avoid the risk of losing the rental to a competing prospect.
Review and verify the application thoroughly and look for inconsistencies and “red flags”. When you are satisfied you will proceed to approve your new tenant in step 4.
Step 4: The Approval Process
This is usually a fun part, but keep in mind that you are still screening the applicant while preparing him or her for the next step. We like to congratulate the applicant on being approved and let them know they came in 1st place. Also, let them know if you made any special concessions just for them, such as overlooking minor credit infractions, etc.
This process is also an opportunity for you to make sure the applicant can and will deliver. Set the time, date and place for your lease signing. Instruct the applicant(s) to bring the proper amounts of monies, identification (if you don’t already have it), and how you prefer to be paid. (Check*, money order or cash)
* Be sure to tell your new tenants that possession or keys will be given only after checks have cleared.
It is very important that you have a quality residential lease. You’d be surprised at how many people would just sign a lease without reading it! And I don’t just mean tenants! I believe it is crucial to read the entire lease with the tenants at a lease signing. It is your agreement with them. Shouldn’t you both know what is really being agreed to? As you read the terms of the lease with the tenants, you will be able to conduct your 5th and final step of screening. Does the tenant argue on every item? Is the late charge an issue? And so on.
Of course, if you are unhappy with how your prospect responds to you and/or your lease, you must not rent to him. I believe: “It is better to have NO tenant than it is to have the wrong tenant.”
Published with permission from John Nuzzlenose.
President and founder of the Colorado Landlords Association, best-selling real estate author and attorney, landlord and real estate investor with 28 years' experience.