One of the most important decisions you'll make when renting your home is choosing the right tenant. While it's natural to rely on first impressions, a friendly conversation doesn't always predict a reliable renter. Instead, tenant selection should be based on objective criteria, including applications, references, and background screening.
Wondering how to find tenants and identify the best fit for your rental property? These seven tips can help.
1. Make Objective, Business-Based Decisions
Landlords must base the tenant selection process on the tenant's application and history of renting, paying, and maintaining rental property. They should use these criteria consistently, without adding extra requirements or leaving any out. Fair Housing Laws protect renters from discrimination, and denying applicants for anything other than data is unlawful.
That said, if you have a strong group of potential renters, you are legally free to choose among prospective tenants as long as your decisions are based on legal criteria. Avoid making decisions based on personal preferences or biases.
Legal Business Criteria for Tenant Screening
- Income-to-rent ratio
- Credit history
- Rental history
- Criminal background
- Occupancy standards
2. Know Fair Housing Laws
Landlords are required to abide by Fair Housing Laws. They protect renters from discrimination, and they specify the reasons you cannot deny an applicant.
For instance, you can't reject a potential tenant because of race, ethnicity, or any personal reason you feel is justified. While this is a summary of housing laws, landlords can become more familiar with them at hud.gov.
3. Verify Employment and Income
Determine the minimum monthly income your tenant must make to qualify, and then check your applicant’s earnings.
If you're sure how much money they need to make each month, a common property management guideline requires a potential tenant's income to be at least three times the monthly rent. Following this method, if you list your rental property for $1,000/month, the tenant should ideally have a monthly income of at least $3,000. This ratio helps confirm they can manage the rent while also affording other living expenses, which reduces potential risk for you as the landlord.
You can request a payment stub from their work or a Leave and Earning Statement (LES) for military applicants. Pay grades and Basic Housing Allowance (BAH) rates are available online. However, ask for a copy of a military member's orders to verify their BAH is active for the area.
While income is important, factors like credit history and employment stability should also be considered.
4. Conduct Tenant Screening
Professional tenant screening should include a background check for renters that covers credit and criminal history, payment history, and records of evictions. Wondering what red flags you should watch out for when screening tenants? If your applicant has a history of involvement in illegal activities, it’s advisable to consider other candidates.
Even in the absence of additional applicants, it’s better to maintain strict screening and incur the costs associated with an unoccupied property compared to facing the potential consequences of leasing to an irresponsible tenant.
5. Check Rental References
In addition to a background check for renters, it's advisable to contact references provided on the rental application before you rent your home. While you may have a positive impression of a potential tenant, you can't be certain without digging a little.
Questions to Ask Previous Landlords
- Did they pay rent on time each month?
- Did they take care of the property?
- What conflicts did they encounter with the applicant?
- Did they communicate?
You can also use this information to decline a prospective tenant if their references confirm they failed to pay rent on time or caused damage to the property.
6. Look for Stability
Consider tenants with a stable rental history and long-term employment, indicating reliability. Since the goal is to find a responsible tenant who doesn't put your property at risk, reliability is key.
Keep in mind, however, that active-duty military regularly receive PCS orders and move more often than their civilian counterparts.
7. Interview Candidates
Meet with applicants to gauge whether they’re a good fit for your property. This step can be done in person or virtually, if you're a long-distance landlord.
Pay attention to how applicants communicate and answer questions they have after reviewing your house rules and lease terms. The goal is to foster an open and honest environment where both parties feel comfortable moving forward with the commitment.
These steps can help you make informed, objective decisions and offer peace of mind that you've selected a quality tenant.
See our free property management guide below for even more information about becoming a landlord and managing military rentals.
