As a landlord, you should only want the best candidates to become your tenants. Great applicants become great tenants who pay rent on time, renew their leases, and become reliable members of your community.
However, you won't find these excellent renters without effective tenant screening, and traditionally, that takes time. For even a single applicant, it's a serious commitment to carefully comb through a rental application, read through a credit history, and run full criminal and eviction background checks.
Not to mention, there are fees associated with each screening check and critical legal requirements you must meet, such as obtaining the prospective tenant's signed consent to run such checks.
Fortunately, there's a modern solution: online screening services. With the right tools and technology, even something as complex as tenant screening can be mostly automated. All it takes is a willingness to learn the software, and you'll be screening tenants online in no time.
This article breaks down modern methods you can use to screen tenants online.
First Things First: Getting Started with Property Management Software
If you don't already use property management software, this is the first place to start with online screening.
Software is an easy and often cheap (or free!) way to manage your properties. It offers convenience, automation, and transparency to all your property management tasks, not just tenant screening. However, tenant screening is easily one of its best features.
If tenant screening is offered as a feature on your platform, it can easily take the information a renter provided on their rental application and auto-generate thorough screening reports for you to view at your convenience.
If you choose to accept an applicant, you can then easily set up your new renter with other features your software offers, like digital lease signing and online rent collection.
If you're ready to upgrade and automate your tenant screening process online, the first thing you should do is get set up with property management software.
Rental Applications
Now, onto the tenant screening process itself. Most landlords start with the rental application - a document that asks prospective renters some basic information about themselves, their wants and needs regarding the rental, and their income.
Creating a rental application online is as easy as uploading the application document you've been using to your property management software. You can also use a custom application builder to re-organize your rental application from the bottom up.
Ask the questions that matter most to you, include information about how the tenant will be screened, and get prospective renters' permission to run a criminal background check while you're at it.
Lastly, many software platforms allow you to embed your rental application on your website so that you can pull in renters to apply from all your marketing channels. You'll also be able to collect a credit card number to charge an application fee for your trouble if one is legal in your state.
Income Verification
You can also use the rental application tool on your software to request file uploads, such as for proof of income. Income verification is one of the most important parts of screening - you need to be able to verify that the renter will be able to afford your rent and has consistent, sufficient income.
With this online tool, you can easily ask that renters upload copies of one or two recent paystubs, as well as any other documents that serve as acceptable proof of income. You can also request the name and phone number of their employer so that you can verify that paystubs are real, not forged or exaggerated.
Credit Checks
Credit histories contain important indicators of a renter's past reliability with payments. When you use property management software to screen your tenants, you can get key insights into applicants' financial habits and current responsibilities, such as outstanding debt.
Your software will pull from one of the three major credit bureaus to prepare a full report of these indicators as well as an applicant's open accounts, credit history, inquiries, and other aspects. Generally, it's recommended to use a service that does soft pulls for credit checks so that applicants' credit scores won't be negatively affected.
Criminal Background Checks
Along with applicants' credit histories, your software will also perform a tenant background check. Most property management software platforms will pull from both state and national criminal records, as well as other databases such as the national sex offender registry and the Most Wanted database.
Having your software pull these records for you is much less time-consuming than performing these checks yourself.
Eviction Histories
Eviction histories are no longer bundled with credit checks, so landlords doing traditional screening would need to search for eviction records by hand. However, when you use property management software, your screening tool can tap into the largest national eviction databases and provide information about prior evictions without any extra work on your part.
Eviction reports typically include information about any prior unlawful detainer suits filed against the tenant as well as any judgments, writs, and eviction warrants. This information is vital to find if it's out there, as you'd rarely want to rent to a renter with prior evictions. When you use software, you can trust that you'll find any and all eviction records that exist.
A Note on Fair Screening Practices
Even though software makes tenant screening highly automated, this is not an excuse to get lazy with fair screening practices.
In fact, fair housing violations can lead to thousands of dollars worth of fines, penalties, and court costs. Most landlords are aware of the federal Fair Housing Act and its seven protected classes (race, color, religion, national origin, sex, disability, and familial status).
However, many aren't as familiar with other fair housing laws, such as state/local protections and laws regarding the use of credit and criminal histories. The Fair Credit Reporting Act (FCRA), for example, protects tenants' credit information and regulates how to use and store these results.
Additionally, the HUD regulates the use of criminal background checks during tenant screening. To avoid fair housing lawsuits, the HUD recommends that landlords avoid blanket policies for rejecting applicants based on the fact that they have a criminal record and assess applicants on a case-by-case basis instead.
Be sure you're aware of these laws (on the federal, state, and local levels) before making any tenant screening decisions.
Conclusion
Tenant screening is a crucial aspect of your rental business and one you can't afford to make mistakes on. That's why you should entrust it to a property management software platform you can count on to make the screening as simple and streamlined as possible. With the tools and capabilities it offers, you will find excellent tenants in no time at all.
