It pays to use caution when renting out a residential property, as choosing the wrong tenant can cost you. At a minimum, you want to be sure they’ll pay the full rent amount on time. Beyond that, you also want to avoid the cost and hassle of eviction and avoid costly repairs from damage or neglect.
The tenant screening process actually begins when you post your rental listing, which should indicate when it’s available, whether pets or smoking are allowed, maximum occupancy, and other key terms. The more questions you can answer upfront, the more likely you are to screen out those tenants who might not be a good fit.
When prospective tenants contact you, have them fill out a Rental Application. Using information you have gathered in the application, you’ll be able to run a credit and criminal background check. You can also request a reference from a current or former landlord.
Here are a few critical questions you can ask prospective tenants to help you make the right decision.
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1. How long have you been in your current residence and why are you moving?
There are countless reasons why someone might need a new rental, but the prospective tenant’s answer can be revealing. For example, it’s not a good sign if a prospective tenant says, “I’m moving because I didn’t like my landlord.” Look for answers like, “I’m changing jobs” or “We need more space.”
If they’ve been in their current residence for a short time or there are other indications that they go from one rental to another frequently, it could be a sign that they’re problem tenants. However, you shouldn’t assume this and may need to consider other signs that would back this assertion. For instance, if they’re evasive about providing landlord references or vague about their reason for leaving, it could be considered a red flag.
2. Have you ever broken a rental agreement or been evicted?
Again, context is key. Unexpected life events, such as moving for a new job or to care for an elderly parent, are perfectly valid reasons for breaking a lease. If they answer in the affirmative and offer what sounds like a fair reason, you might want to follow up by asking how they severed the agreement. If you’re able to speak with the landlord whose rental agreement was broken, even better.
Whether a prospective tenant has been evicted is much more straightforward. If they say yes, then in most cases you may want to move on to the next applicant. But this shouldn’t always disqualify a potential tenant. They may have been hit with a financial emergency and were unable to pay the rent, for example. If they say no, they haven’t been evicted, just make sure you verify this when you run the background check.
3. Is your monthly income at least three times the rent?
One of the biggest concerns of landlords involves late payments and other rent-related problems. The rule of thumb is that a tenant’s income should generally be three times the amount of rent, which may not always be realistic in certain high-priced rental markets (such as San Francisco or New York). If they show proof (i.e., pay stubs) that they have a steady monthly income that’s at least triple the rent, then they should be able to pay you in full each month.
You should run a credit report as part of your background check, but asking them for consent to a credit check upfront could also be revealing (especially if they decline or are evasive).
4. Do you have animals?
If you don’t allow pets, you should still be prepared for applicants who have “the world’s sweetest kitten” or a pet fish that they think should be exempt. Even if they make a solid argument that their pet wouldn’t be a problem, making special exceptions could cause resentment among other tenants, set a bad precedent, or backfire in other ways. That harmless-looking fish tank, for example, could break and flood the unit.
If you do allow pets, make sure you have a clear and consistent pet policy and include it in a Pet Addendum to the lease. You also may ask prospective tenants to submit a Pet Application Form. Since pets may cause additional wear and tear to the rental or present other liabilities, you may decide to charge an additional pet deposit, making it clear what that deposit covers (damage, pet stains, etc.).
Keep in mind, however, that not all animals are pets, even if they’re dogs, cats, or hamsters. A prospective tenant may have an emotional support animal or a service animal. For instance, some dogs are trained to detect changes in blood chemistry and then alert their owner that they need to test their blood sugar levels. State housing laws may require landlords to allow service animals, so make sure you understand those laws before you start reviewing applications. Ask a lawyer if you are unsure.
5. How many occupants will be living with you?
Your Lease Agreement and your rental listing should both specify the occupancy limit of the unit. Aside from the extra cost of utilities (if you’re covering water, electricity, etc.) the extra wear and tear, and additional vehicles (especially if parking is limited), having more occupants than a unit is designed to house may violate legal limits.
Tenants have personal lives, too, so you should expect visitors from time to time, perhaps occasional overnight guests. However, for the same reasons you want to maintain a strict occupancy limit, you may want to prevent guests from overstaying their welcome.
In addition to occupancy limits, your lease should clearly state the guest policy, as well. Leases may indicate that guests who stay at the property for longer than two weeks within any six-month period, for example, are considered tenants and must submit a rental application and pay additional rent (if they’re approved). This not only protects you financially, but also can protect you from liability for the long-term guest’s actions. How strictly you enforce this policy is up to you, of course, but you want to apply it consistently.
Protect your financial and legal interests as a landlord
To protect your property and your rental income, it’s important to be clear, fair, and assertive when screening tenants. Also, keep in mind that asking these questions is just a first step. Make sure you actually run those background checks, call their references, verify paystubs, and get everything in writing with a Lease Agreement once you’ve settled on the right tenant. If you have additional questions about tenant screening or other legal matters relevant to rental property, check out Rocket Lawyer’s other online resources for landlords or ask a lawyer.