In a competitive rental market, every lead is vital. After all, a high tenant turnover rate can wreak havoc on your annual profit, which is why placing tenants efficiently is so important. However, not every prospective applicant that wants to see your rental property will meet the qualifications. That said, placing a bad tenant causes even more problems than a vacant property. Landlords that do not perform proper tenant reference checks find themselves wasting time, and of course, money.
Thus, thoroughly screening all potential tenants is critical to a landlord’s success. Property owners must focus on pre-screening, income verification, creditworthiness, criminal background, and rental history reference checks. So, continue reading as we delve deeper into the reference check portion of tenant screening. Below you will learn the top things to ask a prospective tenant’s references to help you find the best fit for your rental property.
Should Landlords Pre-Screen Potential Renters?
Conducting tenant reference checks is a necessary step to finding a great tenant. However, before a landlord gets to that step, we highly recommend beginning with the practice of pre-screening prospects. This serves two main purposes: saving time in the long run and helping discern who is truly serious about applying. Therefore, the initial contact offers the ideal time to inform applicants of the basic qualifications and gauge their interest level. Check out some of these common pre-screening questions below but remember to follow Fair Housing Laws!
Questions to Pre-Screen Potential Applicants
- When do you plan on moving?
- How long have you been in your current home?
- Why have you decided to move?
- What are you looking for in your next home?
- How many occupants will be living in the unit?
- Do you have or plan on getting any pets?
- The property is non-smoking; are you able to comply?
- We require three times the monthly rent in income to qualify. Do you meet this?
- Will there be any issues discovered by running a background screening for all occupants over 18?
- Have you ever been evicted?
- Under what circumstances have you ever broken a rental agreement?
How to Conduct Tenant Reference Checks
There are a few steps landlords must remember before completing tenant reference checks. When you follow these three easy guidelines, you save time, money, and aggravation in the end. Preparation is the key to success, so follow along below.
- Research and Verify – It is not unheard of for applicants to give fake or incorrect information. Whether it is on purpose or an honest mistake, landlords must verify the details either way. In some cases, tenants enlist a friend or family member to answer the call and vouch for them. Therefore, always double-check names and verify the information for their previous landlord or property management company.
- Pick Up the Phone – Emailing is not the best option for conducting tenant reference checks. Instead, phone calls offer a chance to hear the tone of the landlord’s voice. Furthermore, any tech-savvy tenant could easily make a fake email account to give themselves a reference.
- Ask the Right Questions – Once you have someone on the phone, this is your chance to get the answers needed to make an informed decision. So, ask plenty of open-ended questions to get as much detail as possible. Yes, this takes time, but it is worth the effort to ensure a landlord selects the best fit for their rental property.
Who is an Acceptable Tenant Reference for Your Rental Property?
Just because a potential tenant seems great on paper does not mean they are the high-quality choice for your valuable rental investment property. Therefore, conducting tenant reference checks provide the much-needed insight to ensure you find the best fit. Ideally, professional references or former landlords are the most reliable and helpful with their information. Thus, this is not a step in the process you want to rush. So, join us below as we look at three categories of tenant reference checks to aid in your search.
Common Types Individuals Used as Tenant Reference Checks
- Previous Landlords
- Employer References
- Personal References
How to Speak with Previous Landlords for Tenant Reference Checks
Speaking with your prospective tenant’s previous landlords is one of the most important things you can do when placing a tenant in your rental. Also, if you only speak to the tenant’s current landlord, you may not get a true idea of what your tenant is like. Therefore, they could be a bad tenant that the current landlord just wants to get rid of. So, it is best to speak with references that no longer collect rent from your prospective tenant.
What to Ask Previous Landlords for Rental Reference Checks?
- Were rent payments made on time and in full? – Landlords rely on timely rental payments as part of a successful business. Therefore, inquiring about previous payment history will help you determine how responsible your prospective tenant is. Thus, finding a tenant that pays in full and on time means minimal hassle or risk of eviction proceedings.
- What was the monthly rental rate? – Understanding how much your tenant was paying previously compared to what you are asking helps gauge their financial situation.
- Describe how the tenant maintained the property? – This open-ended question is a critical one. After all, you do not want to place a careless tenant in your property that will poorly maintain things.
- How did the tenant communicate with you?– Excellent and respectful communication is a great quality to have in a prospective tenant. After all, you or your property management company will need to contact tenants for routine inspections, maintenance, and rent matters. So, dealing with occupants that refuse to discuss anything only adds unnecessary stress.
- Would you rent to this tenant again?– This is the big one when it comes to tenant reference checks. If a previous landlord hesitates to recommend a tenant to you, you may want to rethink their application.
Other important questions to consider asking include –
- Did the tenant have roommates that contributed to the monthly rent?
- Were they evicted from the property?
- Did they have any pets?
- Did neighboring tenants ever make complaints against the tenant?
- How long was the tenancy?
- Why did the tenant choose to leave?
- Does the tenant smoke?
How Employers Can Help with Tenant Reference Checks
Do you want to ensure that your prospective tenant can pay the monthly rent on time? Another important aspect of tenant reference checks is speaking with their current employer. Additionally, questioning an employer may also help determine personality traits that aid you or your property management company in communicating with the tenant.
Moreover, it will help you verify the details of their application regarding employment. So, not sure what to ask? Below are some great questions to have on hand when contacting employers as part of your tenant reference checks.
- What was the tenant’s original date of hire?
- What is the tenant’s current salary or hourly rate?
- How many hours per week does the tenant work (if paid hourly)?
- Will the current employer continue to employ the tenant?
- How does the tenant get along with co-workers?
Another point of contact to reach out to is the HR department of the tenant’s employer. While you hope a supervisor would not embellish the truth for a “buddy,” it does happen. Therefore, your prospective tenant’s reference may not be entirely truthful regarding hours worked, personality, and even salary. However, speaking directly with those in charge of such matters can corroborate what your tenant has placed on their application.
What to Ask of a Tenant’s Personal References?
Talking to friends and family of a prospective tenant is another great way to get to know the kind of person your tenant is. Thus, those closest to the tenant can provide useful information despite the bias that may exist. So, with that in mind, below are some things to consider when using a personal contact in your tenant reference checks –
- How long have you known the tenant? – If the reference has known the tenant for years, they are apt to know a lot about the tenant’s overall character. Therefore, landlords can use this information to evaluate whether the tenant will pay rent on time, cause problems with neighbors, or damage your property.
- If you were a landlord, would you rent to this individual? – Although biased, this is still a great question. As part of the process of tenant reference checks, bias will always play a role. After all, the applicant is unlikely to list someone they know would not speak highly of them. However, seeing if the reference would accept the tenant if they were in your shoes does provide further insight to help make an ultimate determination.
Additional Tenant Lifestyle Questions
Keeping Fair Housing Laws in mind, inquire further to learn as much as you can about the aspects of a tenant that will affect your rental property. Here are a few examples below –
Does the tenant travel a lot?
- Are they known to have lots of parties?
- Do they smoke or use any illicit drugs?
- Does the tenant own or keep pets?
- Has the tenant ever been in dispute with neighbors?
Under What Circumstances Should You Deny a Tenant?
Once you have conducted tenant reference checks on the applicants you have, it is time to narrow the field. Speaking with former landlords can unveil undesirable or risky behavior not evident in other forms of tenant screening. Thus, there are several reasons why a tenant may not be a good fit for the property. Let’s review a few reasons below when denying a tenant is warranted.
Reasons to Deny a Rental Applicant
- Late or Non-payers – If history is a predictor of future behavior, then poor payment history is a major red flag. So, even if they were not previously evicted, tenants with a history of not paying rent, paying late, or not paying in full should be avoided.
- Eviction History – Eviction does not generally occur by mistake. Instead, this can indicate a history of non-payment. Therefore, there is a higher chance that tenants will continue having payment issues, and landlords may find themselves needing to file for eviction.
- Wrecking Balls – What did the previous landlords say about damage? If they indicated extensive damage, failure to report issues promptly, or excessive maintenance calls – take notice! When reported damage extends beyond wear and tear or tenants fail to report maintenance needs, this can drastically affect your property and bottom line. Therefore, landlords must deny any tenants with a trail of damages in their wake.
- Lease Breakers – A lease is a legal contract. That said, landlords do not want to enter into a lease with a tenant they are not confident will make it to the end of the term. So, if the tenant reference checks indicated the applicant has a history of ending leases early, this is not the best tenant for you. That said, life does happen, and it is one thing if a tenant breaks a lease early for a job. However, the pattern of multiple lease breaks raises red flags.
- References Do Not Check Out – If a landlord cannot reach individuals for the tenant reference checks, do not simply forget it and move them in. Remember, your property is on the line! So, explain they must have previous landlords reach out to you; otherwise, you will deny their application.
Although not entirely foolproof, tenant reference checks are an essential part of a thorough screening process. After all, placing a bad tenant in your property could mean lots of stress, missed rental payments, and a possible trip to the courtroom. Hence, requiring multiple references and actually looking into them is so helpful for avoiding problem tenants.
If you are looking for a solid way to place tenants in your Maryland rental property, look no further than Bay Property Management Group. Our tried-and-true screening methods allow us to boast a less than 1% eviction rate. Furthermore, we offer a 6 Month Tenant Guarantee! Proudly serving multiple Maryland and Pennsylvania counties, including York, Lancaster, Cumberland, and Dauphin.
Need help handling a problem tenant in your rental property? Rest assured that the quality real estate investment management services of Bay Property Management Group will swiftly and legally handle any tenant or property matters. Give us a call today to find out what full-service rental management can do for your investment.