Tenant screening is vital to the long-term survival of your business; it reduces risk, gives advance warning of danger, and increases your chances of having a successful rental property.
However, the success of it depends on the quality of the screening process and how well a rental property owner follows it. For owners in Vancouver, Washington this article offers a short outline of an effective tenant-screening process.
Before we get into the methods, there are laws that you should be aware of.
Protected Classes
Property owners cannot screen candidates based on the following: age, nationality, religion, gender identity, marital status, handicap, sexual orientation, political ideology, or veteran status.
Tenant Screening in Vancouver, Washington
Additional rules that apply in Vancouver include:
- Candidates for a vacant apartment must be treated on first-come-first-served basis.
- People with disabilities should be given priority.
- Apartment-owners may not require candidates to have a monthly income of more than 2.5X the rent (for less expensive units) and 2X the rent (for expensive units).
- Applications may not be denied based on a felony that is over 7 years prior or a misdemeanor that is over 3 years prior.
- An applicant's credit score is basis for denial only if the score is less than 500.
- There is no maximum for what you may charge as non-refundable application fee.
- Owners may ask for a security deposit and there is no limit to how much they can ask.
Stage One: Setting Minimum Requirements
The goal of screening is to filter out prospects who do not meet the owner's requirements. However, before you can determine if candidates meet your requirements, you must create them. These serve as the baseline for what you want in a tenant. Parameters may include:
- Must be able to afford rent.
- Have a stable job for the foreseeable future.
- Has an outstanding rental history.
Stage Two: Pre-Screening
The screening process starts when you create the listing advert. To make it easier, the ad should include the location (not address) of property, the lease price, and that a non-refundable fee will be charged (to cover the cost of credit/background check). This ensures that only prospective tenants who are comfortable with the terms will call.
In your first conversation with candidates, ask about their employment/income, current living situation, and if they are willing to supply references from employers/landlords. Also mention the security deposit and how much it is. This will force unqualified candidates to discontinue the process.
Follow this with an in-person evaluation at the showing. It is better to show candidates the property one at a time, versus using the open house method. With only one person to talk to, you will get a better feel of each prospective tenant.
Stage Three: Accepting and Reviewing Rental Applications
To go past the pre-screening phase, prospective tenants must agree to complete a rental application (plus the application fee) and give their written consent to allow you carry out checks on them. The completed renal application should contain:
- Candidate's contact information;
- 'Yes' or 'No' answers to questions about whether they have ever refused to pay rent or been evicted, ever had a bankruptcy or felony, and if they smoke;
- Employment history going back 3-5 years, along with employer's contact information;
- Documents to verify income;
- References of current and prior landlords;
- Information about co-signers;
- And the candidates' signature.
Stage Four: Employment and Income Verification
Contacting a tenant's references begins after you verify that the rental application was properly completed. Telephone is better for contacting employers since emails may be ignored. Additionally, note that employers have a right to withhold information about a person's income. Nevertheless, that information should be on the candidate's pay-stub or letter of employment letter.
Other than their income, you want to know if the employment dates supplied by an applicant are correct, their role in the company, and what kind of employee they are. If this is a previous employee, ask why the individual left the job.
Stage Five: Talking to Landlords - Prior & Current
Current landlord (unlike prior landlords) will sometimes give a positive report. The candidate may also provide a friend/relative's number as that of their current landlord. You can verify that you have the right person by asking about a vacant listing or mentioning the wrong amount for the tenant's rent, to see their response.
Information you should verify with a landlord are; the dates when the person lived in their property; how much they paid as rent; if they were timely with payments; how they cared for the property; their relationship with other tenants; why they left; and if the landlord would rent to them again.
Stage Six: Credit & Background Checks
The natural starting point when conducting credit check is the candidate's credit score. Nevertheless, even when the score is good, studying the rest of the report can help you gauge a person's overall financial position. Look at the number of open accounts, outstanding balances on accounts, delinquencies, mortgages, and financed purchases.
A criminal past may be uncovered by a background check. For all kinds of criminal records or misdemeanors, the more recent or severe the event, the more attention it deserves. The frequency of incidents also matters.
Stage Seven: Accept or Deny Application
Whether you accept or deny an application, you should notify the person by email or phone, preferably, by mail. That way there will be records, in case the person makes a complaint against you. If you accept a prospective tenant, your letter should include:
- The next step; review and sign lease agreement;
- Explanation of how you expect the rent/deposit to be paid;
- A request to know their move-in date;
- A closing date for your offer.
Reasons for denying an application should never violate the Fair Housing laws. Each applicant who was rejected must be properly informed. Simply state that the unit is no longer available, or it has been rented to another applicant. You are not obligated to inform candidates of the reason for a denial, unless they ask, or the denial is based on their credit report.
Finally, remember that screening is a filtering process that narrows-down to the perfect applicant. Moreover, the key to making it work is consistency in applying the rules at every stage of the process.