Five Questions You Must Ask Your Potential New Tenants
June 29, 2013 by Laurence Jankelow
It’s well known by experienced landlords that bad tenants cause even worse problems. Virtually all of the problems a landlord faces with his/her tenants can be eliminated through a good screening process. If you don’t have consistent steps you follow each time you screen tenants, then keep reading. It’s important to stay consistent and treat all potential renters the same so that you’re not violating any fair housing laws. At the very least, you’ll want to make sure you have every tenant submit a rental application and authorize a credit report and criminal history check.
This article is the first in a 5 part series where we’ll discuss what a good screening process should look like and what the five recommended stages are to properly screen a tenant. In this part, we discuss using the first point of contact to pre-qualify tenants by asking tenants several important questions.
Five Stages to a Good Tenant Screening Process
Stage 1: First Contact – The prospective tenant calls you for more information about the property and the lease. Ask some pre-screening questions to make sure this prospective tenant isn’t going to waste your time.
Stage 2: The Showing – The prospective tenant has passed stage 1. Now, you’ve scheduled to show the apartment and will meet the prospective tenant(s) face-to-face for the first time. Watch out for these red flags.
Stage 3: The Application – Your prospective tenant is still interested and so are you. Have him or her fill out a rental application that includes references from prior landlords and employers. Run a credit report and criminal check.
Stage 4: Approval Process – This tenant seems like a good candidate. Accept him or her and gently decline all other applicants. Until you have a signed lease, though, you’re not done screening.
Stage 5: Lease Signing – You and your prospective tenant(s) are ready to sign a lease. Go through the lease with him or her carefully and make sure all the rules are completely understood. It’s not too late to rip up the lease if things aren’t going well, even at this point.
When should you start screening your tenant?
If you think the screening process starts when you receive a completed rental application, or worse, when you’re about to sign the lease, then you’ve put yourself at risk and missed out on easy ways to filter terrible tenants. For most landlords, it’s best to start thinking about screening at the first point of contact with the tenant, before you even meet her or show the property. This will typically occur when the tenant emails or calls to let you know she is interested in your rental. Pre-qualifying each tenant with some must-ask questions as early as possible avoids both you and your prospective renters from wasting valuable time. Simply, you want to have some quick back-and-forth dialog before meeting. What you’re really trying to find out by asking questions to your prospective tenant is whether she is serious about renting and if it’s worth both yours and her time to do an onsite showing. Our questions below are meant to help you determine if you should move forward with showing the property.
The Five Most Important Questions to Ask Your Tenants
Question One: Why are you moving?
At first, it may seem like this is none of your business. Listen to the answers, however, as these can surface some scary red flags. You want to watch out for tenants who are moving because of an eviction or a bad relationship with their prior landlord. Be wary of tenants who complain about their current living situation as bad tenants often bring their problems with them. Instead, you want to look for legitimate reasons like needing a larger place for a family or changing jobs.
Question Two: When Do You Plan on Moving in?
If a tenant says something like “tomorrow” or “next week”, it likely means they aren’t good planners. A responsible tenant starts her search well in advance and plans accordingly. In fact, most landlords require 30 days notice from their tenants if they plan on moving out. You don’t want to be their next landlord who only gets last minute notice and has to scramble to find a new tenant. A tenant who is looking 90+ days in advance is equally bad, however. If they’ve just started their search, they are likely to not be ready to commit since they haven’t seen enough places to make a decision. The timing may also not work out if your property will be available sooner. There’s no need to take the time to show your property if you know the timing won’t work.
Question Three: What is Your Monthly Income?
The standard here is to make sure that your tenant has income that is 2.5 to 3 times the asking rent amount. This is just basic math for you – you’re trying to make sure the tenant can afford the rent for your place. Although any monthly debt payments may affect the affordability as well, you’ll be able to validate this later with a credit report. For now, you can assume they’re telling the truth. You can follow this up by asking them if they’ll have the security deposit and first month’s rent available upon lease signing. Knowing this combined with their income gives a great indication of their financial health. Be wary of any tenant that asks to pay the security deposit monthly or installments. A “half now, half later” scenario is typically bad.
Question Four: Can I Ask for References from your Former Landlords and Employer?
With the exception of someone moving straight out of their parent’s house for the first time, if the tenant can’t provide references or makes excuses, you should move on. Always require references. Here’s a quick tip from rental experts. Ask for a former landlord as a reference rather than their current landlord. If the current landlord has issues with the tenant or is going through an eviction, he’ll be thrilled at the opportunity to get this tenant off his hands and say anything to do so. A former landlord, however, will likely remember a bad tenant and be happy to give you an honest answer. You should ask former landlords simple things like “Did they pay rent on time”, “Did they respect the property and neighbors” and “Why did they move out?”
Question Five: Will you submit a rental application and consent to a credit and background check?
The answer here is fairly straightforward. Disqualify anyone that refuses an application and credit check immediately. If they won’t consent, it typically means they have something to hide or they know their credit isn’t good enough. If you’re following your screening process, let them know this is a requirement of all applicants and that you treat all applicants equally. You can’t make exceptions. Plus, you’re just following fair housing laws by holding all applicants to the same set of standards. You should also consider asking them directly at this point if they’ve had any evictions. If you have to go through an eviction yourself, it’s a six to nine month nightmare. Their credit report will show whether they have credit issues and whether those were in the past or more recent.
Bonus Question: How Many People will be Living in the Apartment?
More people simply means more wear-and-tear. You’ll either want to adjust the rent, security deposit or restrict the number of people. In fact, in many states the law dictates that a residence cannot have a lease with more than 2 people per bedroom. Now is also a good time to find out if they have any pets that will be living in the apartment. If you have a “no pet” policy, you may mutually disqualify each other and won’t have to do a showing that was never going anywhere anyway.
How to Respond to Questions Regarding the Application Process
If you ask these questions via phone ahead of time, write down the answers and compare them to what the prospect actually puts in her rental application later. Often, discrepancies are quite revealing about whether they are suitable for your property.
Sometimes tenants will ask for you to be more lenient on them due to whatever special circumstances. This is not a good idea. It can be difficult standing your ground and therefore we’ve provided some language below that will help you explain all the requirements.
“You’ll need to submit a rental application and authorize a credit and background check. The application fee is $45. I’ll also need references from your prior landlords. You should also know that I will need to verify income and whoever is paying/living in the apartment will also need to be on the application and lease.”
Although sometimes you may hear responses that seem like pleas or sob stories, you should make sure to follow the same process with every applicant. Require a rental application, credit check, criminal check and references from each and every prospective tenant. It’s easy to get swayed by an emotional story or unfortunate situation a tenant is in, but you have to remember that your rental business is at stake. Here are the four things that professional property managers do that a do-it-yourself landlord often gets trapped by:
1.They never make a decision during the interview/meeting
2.They don’t make exceptions for sob stories
3.They don’t make decisions based on sob stories
4.They always ask for a credit report
You can learn a lot from just these five questions to ask your potential new tenants. After this article, hopefully you realize that a good screening process starts even at the point of first contact with a potential renter. By asking these questions and listening to their responses, you
can prequalify tenants and set their expectations and set requirements. You’ve then created a good starting foundation for screening your tenants that you can carry through when showing the property, requesting a rental application, going through your approval process and ultimately creating and signing the lease. If you still want to learn more about screening tenants, check out our full-length guide on Screening Tenants.
At Pittsburgh REIA, we have the resources to do tenant background checks instantly online, just to go the home page and select tenant reports.
(May 2014 Newsletter)