An extensive and detailed tenant screening process can limit the risk you take on when renting out Roanoke rental homes. The rental experience you have will largely depend on the tenant you place. Well-screened and well-qualified tenants will pay rent on time every month. They’ll take care of the property and let you know when maintenance is needed. They’ll communicate openly and honestly, follow the terms of the lease agreement, and renew that lease year after year.
Bad tenants, however, will deliver stress, frustration, additional expenses, and potential legal challenges. You might find yourself having to chase down late rent, evict your residents in court, and deal with excessive damage after they’ve moved out. Unqualified tenants can be a huge liability.
At Lawson Realty Group, we have a legal background that positions us to better evaluate potential tenants, identify red flags, and dig a little deeper when it comes to placing residents in your property.
We’ve put together some of the best practices we recommend when you’re screening Roanoke tenants. We’re confident in our screening criteria because it’s resulted in an eviction rate that’s less than one percent.
Familiarize Yourself with the Fair Housing Act
First things first: know the laws, particularly the Fair Housing Act. This prohibits discrimination against any tenants or applicants. As you may know, the law establishes seven protected classes. You cannot deny housing to anyone based on:
- Race
- Color
- National origin
- Sex
- Familial status
- Disability
- Religion
Unfortunately, it’s easy to make a mistake – even an unintentional mistake – when you’re navigating federal and state fair housing laws. Violating those laws can be costly.
If a tenant or a prospective tenant files a fair housing claim against you, there will be a lengthy investigation process and if you’re found to have violated the law, you could be fined several thousands of dollars. It’s hard to recover from that type of a mistake. So make sure your tenant screening process is compliant. We recommend that you document it in writing and follow it consistently every time you screen an application.
Include Qualifying Information in Your Listing
You can spend less time screening by limiting your tenant pool to those who are likely to qualify.
One way to thin the number of applications you receive and to ensure you’re compliant with fair housing laws during the screening process is to include qualifying criteria in your listing whenever you can.
For example, always include the rental amount in your listing. When you do that, you’ll only hear from people who can afford that amount. State whether pets are allowed, what type of income and credit standards you have, when tenants will be able to move in, and the length of the lease term you’re looking for. When you include as much information as possible in your listing, you know that only the qualified tenants will apply.
Screening Criteria for Roanoke Tenants: Income and Credit
Our specific screening criteria requires a credit score of at least 600. You always want to check credit before you approve a tenant, but some owners have unreasonably high standards for what they want to see. Others have no standards at all. You’re not going to get someone with perfect credit applying to rent your home. But, you still want to set a threshold and you want to review the credit report to look for any red flags or issues.
Some of those red flags may be:
- Money owed to former landlords, property managers, or apartment communities
- Delinquent housing-related accounts such as utilities, cable, etc.
- Prior evictions (these won’t always show up on a credit report, so check the national eviction database as well)
- A lengthy history of court judgments, unpaid debts, and collection accounts
We also require that an applicant’s debt cannot exceed 40 percent of their income.
For income, best practices say that you should look for someone who earns at least three times the rental amount. This means if you’re asking $1,200 in rent, you’re looking for monthly income from all adult tenants that exceeds $3,600. Make sure you have a way to verify that tenants earn what they say they earn. You can ask for proof of income through pay stubs, employment contracts, tax filings, and bank statements.
In our experience, having these financial standards in place establishes accountability and protects our owners against the risk of tenants who can’t or won’t pay rent.
Check Roanoke Criminal Backgrounds
A criminal background check is an important part of your screening process because it can tell you if a tenant could potentially put your property at risk – or your neighbors. You don’t want to rent to anyone with a history of violence, theft, or other dangerous criminal activities. Check national criminal records as well as local; you’ll want more than a local police report.
Some property owners wonder whether or not they should allow tenants who have a criminal record from many years ago. Sometimes, considerations will be made on a case-by-case basis. You can ask for full explanations in the application that might help explain a conviction. Make sure your criteria reflects what kinds of criminal past will lead to an automatic denial and what types of situations will warrant consideration.
The Value of Rental Reference Checks
Reference checks can be an important step in the screening process. A current or former landlord can give you a clear understanding of how your prospective tenant behaves in the property they rent.
On the application, ask for at least two landlord references. Verify the contact information so you aren’t calling the applicant’s friends or family members. If someone had a bad experience with landlords in the past, they won’t want you talking with them.
Once you get in touch, ask the former landlord to confirm the dates of residency and the amount of rent that was paid. Find out if the entire security deposit was returned and if proper notice was given before that tenant moved out. You’ll also want to know if rent was paid on time, and how quickly the tenant caught up if it was ever late.
If the tenant had pets, ask if there were any issues with those animals. Find out if there was property damage left behind when the tenant moved out. Then, ask if they’d be willing to rent to the tenant again. That one question and answer should tell you everything you need to know.
It can be time consuming to contact former landlords and ask these questions. However, you’ll get some good information on what you can expect from a particular tenant.
How You Know you’ve Found the Best Roanoke Tenants
The goal of any tenant screening process is to check an applicant’s background and ultimately place a qualified tenant who is excited about living in your rental home. This is easy to do when you have a good system in place or you’re working with experienced Roanoke property managers. We have heard about independent landlords getting into trouble. They don’t screen as carefully and tenants can easily deceive them. If you don’t know what you’re looking for and what you’re trying to avoid, you can have people moving into your home under false pretenses and then staying until the sheriff has to escort them out months later.
The screening process should be based on data and information, not emotions. With all of the technology available to us when we’re screening tenants, it should be easier to identify who is qualified and who is not. But, it’s also easier for enterprising tenants to be dishonest. Trust yourself and your process. If an applicant’s identification doesn’t match what’s on the application or in the credit report, you should do some extra digging. If the numbers are scratched out on the social security card or the landlord reference you call has never heard of the tenant, you know you may not be dealing with an honest person.
You know you have a great tenant when they’re forthcoming, quick to provide the required information, and open about discussing their income, finances, and rental history. A good screening process is worth your time and resources when you’re placing a tenant in your property. Look for credit that meets your standards, verifiable income sources, a good rental history, and zero red flags.
This is an overview of what we know about the application process and good tenant screening. With our experience in both property management and the law, we understand the importance of complying with fair housing laws and doing the necessary due diligence to ensure only a highly qualified individual is moving into your property.
If you have any questions at all, we’d be happy to answer them. Please contact us at Lawson Realty Group if you need help screening tenants or you’re looking for ways to put together a process. We manage properties in Southwest Virginia throughout the Roanoke Valley, including Salem, Cave Spring, Hollins, Vinton, Glenvar, and Southwest Roanoke County.
