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Conducting an Effective Tenant Evaluation
Friday, Aug 7, 2020 @ 04:22 PM

Find out how to screen for your next tenant and what to look for in a thorough tenant evaluation.

You’ve marketed your rental property and a potential renter has reached out to you. What do you look for in order to determine whether or not this is someone whom you should trust with your property? Of course, you want to minimize carrying costs and the number of days you’re waiting for a tenant, but in order to take care of the property you represent and minimize headaches down the road, you’ll need to conduct a proper tenant evaluation.

The tenant evaluation process involves looking at a variety of factors, including your potential tenant’s rental history, financial situation, and even looking at the possibility of past criminal behavior. While you may be used to “going with your gut” when meeting with a new tenant, it’s important to get a good overview of their reputation and history.

In addition, a properly conducted tenant evaluation protects you from charges of unfair practices and violations of Fair Housing laws. It’s important to treat every potential tenant equally -- asking the same questions and requiring the same information. A clearly delineated tenant evaluation can ensure that you check all of the same boxes for every individual applicant.

What should you ask for in order to conduct your tenant evaluation?

You’ll want to look at a number of factors and ask for some documentation in order to ensure that the information you get is correct. Here are some of the things to think about:

Financial Information

According to the Fair Credit Reporting Act (FCRA), you must require the same documentation and financial information from all of your potential renters. Here are some of the items you will want to evaluate:

  • Credit reporting
  • Judgments including liens, civil judgments, foreclosures, and bankruptcies
  • Employment history and income, which may include self-employment income, alimony and child support, retirement income, court-ordered awards, and investment income

In addition to financial information, you will no doubt require some deposits and fees, including an application fee, damage deposit, pet deposit, and other items.

Criminal Background

You will want to conduct a criminal background check in order to learn more about your potential tenant’s history and behavior. Remember, you are not allowed to make decisions based on an arrest, but only on convictions.

If you find that the applicant was convicted of a crime, take into account how old the conviction is and what the offense was. While you want to take the information seriously, a one-time conviction on a minor charge decades ago may have very little bearing on the applicant’s current lifestyle and behavior.

Rental History

In many ways, this may be the most important part of your tenant evaluation. A positive report from prior landlords may help to offset other factors, like a low credit score or a non-violent criminal conviction. You’ll want to find out whether the applicant has a history of late rent payments, evictions, complaints, or breaking the terms of the lease agreement.

Don’t forget, you will need to conduct a tenant evaluation for every applicant who will be living in and paying rent for the rental property. This includes more than just spouses or significant others -- it also includes adult children and roommates if they will be living in the home.

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