When you’re looking to invest in a rental property, having a steady flow of tenants is one of the most important factors you’ll consider. In an ever-changing rental market and with more renters than ever before, reliable tenants are essential if you want to keep your investment stable. To attract reliable tenants and protect your investment, you need to create a tenant screening criteria that will identify potential risks and liabilities, as well as any red flags that signal the possibility of future problems. That’s why it’s important to have an understanding of what signals could indicate trouble in the future, so you know who might not be the right fit for your property.

Understanding Tenant Screening

Before creating tenant screening criteria for your rental property, it’s important to understand what tenant screening is and why it’s an important part of your rental property strategy. If you’ve ever applied to be a tenant, you may have encountered the process of “tenant screening.” The goal of tenant screening is to identify risks and liabilities in order to protect your rental property and your financial investment. With this in mind, a landlord needs to be careful to find the right balance of criteria. If you are too critical, you property may sit vacant for months. If you aren’t critical enough, you may end up renting your unit to someone that isn’t qualified and struggles to pay rent each month. The best solution is to develop an objective set of criteria that provides you with the greatest pool of qualified tenants.

Primary Goal of Tenant Screening

The primary goal of the tenant screening process is determine whether or not a tenant is qualified to live in your rental property. You will want to identify potential risks and liabilities that put your rental property at risk. With this in mind, landlords will look for specific signals that might indicate future problems. In order to be successful, you’ll want to create a tenant screening criteria that focuses on identifying risks and risky tenants.

With this in mind, it’s important to consider the following primary components of a tenant screening model:

• Affordability
• Credit History
• Rental History

Conduct an Objective and Thorough Search

The tenant screening criteria you create will help to identify potential risks and liabilities in your rental property. With this in mind, it’s important that your tenant screening criteria is objective and thorough. An objective and thorough tenant screening will require you to establish defined criteria for use with all tenants. By removing subjectivity and opinion-based decision-making, you are also removing the risk of making false interpretations, judgments, and emotions. An objective set of benchmarks for qualifying will also allow you to provide transparency to tenants over their qualifications. This allows for you to ensure compliance with all local, state, and federal Fair Housing regulations.

Conclusion

If you want to attract reliable tenants to your rental property, you’ll need to create a tenant screening criteria that objectively evaluates the qualifications of prospective tenants in a consistent and transparent manner. Before establishing criteria for tenants, landlords are advised to learn more about the Fair Housing Act and to abstain from engaging in any discriminatory practices.