I was giving a presentation recently to other property managers on basic policies and procedures. A common question I got was: how do you screen your applicants? Screening is a complicated thing, and it’s up to you to determine what you need to know. When I talk to Murfreesboro landlords one-on-one, I find that they really don’t do a lot of screening at all. If you have watched any of our videos or read any of our blogs, you know that improper screening is the single largest mistake a landlord can make.
Identify what is important to you. You need to know what you need to know for your business. Then, identify a good screening provider. There are hundreds of them online. You can get a simple yes/no result from your parameters. There are others that let you access the data that’s collected. Sometimes, you have to jump through some hoops to access that data. In my opinion, it’s worth it. At the very least, you want to see a criminal, credit, legal, and address search.
When you’re screening, keep the federal Fair Housing Act in mind. If you’re unfamiliar with it, or it’s been a while since you looked into it, get some training because it’s updated frequently. The bottom line is that you want to treat everyone consistently. I like to say that I don’t care what planet you’re from, who you worship, or what color you are; either you’re qualified or you’re not.
Let’s look at the things you want to consider while screening for your Murfreesboro investment home.
Some people like to see a minimum credit score. I don’t find the score to be too important. The primary reason someone has a poor credit score is due to unpaid medical bills. If someone had an emergency appendectomy and couldn’t pay for it, that doesn’t make them a bad tenant. I like to see the details of the credit report. Look at whether they have paid their rent, mortgage, utility bills. I want to see the housing related bills. If paying the housing bills is not important to them, they are probably not the tenants you want.
Keep in mind that based on the new rules from HUD, you cannot have a one strike you’re out policy on criminal checks. You can review criminal records to evaluate whether someone will make a bad tenant. Look for things like consistent drug offenses or violent offenses. You’re looking at convictions, not arrest records. Remember that people are innocent until proven guilty.
The legal search will access public records throughout the country. They will let you know if there is a judgment against the prospective tenant. If there’s a judgement against an individual, there’s a good chance that’s a landlord. This search will also show any evictions. If you’ve had an eviction once, there’s a good chance you’ll be evicted again.
The address history will identify where the tenants have received mail over the last few years. I like to compare that address history to the history the tenants gave me on their application. If I see an inconsistency, that’s where I want a landlord reference. Sometimes I have identified a landlord the applicant was hiding and then received a bad reference.
My favorite part of the whole screening process is simple and costs nothing. This is the drive-by survey. Drive to the property the applicant currently lives in and knock on the door. Explain you’re processing their application, and you’d like to take a tour of their home. Overlook normal things like boxes, because they’re moving. The home won’t be spotless – you’re unexpected. Look for holes in the walls, stains in the carpet, junk in the yard. If they are a slob now, you probably don’t want them because they’ll live the same way in your house.
Remember – no amount of screening is foolproof. You cannot screen out every possibility. People lose jobs, get cancer, have a death in the family. But an effective screening process will mitigate your risk.
If I can help you manage your Murfreesboro investment property, please contact us at Reliant Property Management. We look forward to meeting your Murfreesboro property management needs. We proudly serve the greater Middle Tennessee area including Murfreesboro, Smyrna, La Vergne, Antioch, Nashville, and Lebanon.