How to find the best renter (what to look for when screening for income, references, and personal character).

TL:DR

The impact of having quality renters versus #literaltrash renters cannot be overstated. During my sentence as a property manager I witnessed renters who (true story) designated one of their bedrooms for their cats to use and pee directly on the carpet whenever they needed, didn’t report any repairs, and let mold start growing in one of the closets for months before we eventually caught it during a routine inspection. Can confirm, the smell in that bedroom was OUTRAGEOUS. I’ve also seen renters who take the initiative to make minor repairs themselves and report those that need further attention, deep clean the home regularly, and treat the yard as if the HOA were driving by every day to inspect it.

The spectrum of the quality of a renter is wide and it’s difficult to know how to select the best renter. How do you do it? By conducting a thorough screening process when a renter is applying to rent a home.

The screening process will give you a well-rounded data set to determine a renter’s responsibility and credit worthiness. Below is a list of items to seriously evaluate before signing the lease and handing over the keys:


Screening criteria:

A quick note before jumping into the screening process: make sure ALL screening criteria and qualifications are available for an applicant to view BEFORE they fill out any paperwork. It should be the first page of the application for renters to read through. This saves EVERYONE time. The renter can know what to expect, ask questions before doing the work to apply, and perhaps decide to move on if they know in advance they won’t meet the criteria.

Income:

Renter income should be reliable and can be in many forms such as employment, government assistance (think child support or social security), a trust fund, or significant savings. A general rule of thumb is that income should be 3 times the amount of the monthly rental rate so that rent is 30% (ish) of a renter’s monthly expenses. So if an apartment costs $1,000 per month, a qualified renter should be making at least $3,000 (after taxes) to reasonably afford it.


Although this is a ‘general rule’ there’s nothing to say you can’t set a higher or lower expectation for income. Some landlords allow tenants to only need income that’s double the rent per month. This is becoming more common as inflation and cost of housing sky rockets and it becoming increasingly difficult to find folks that meet the income requirements. It’s up to you to decide what’s best for your investment. It’s worth noting that the total combined income for financially responsible adults that will be on the lease should be the total amount considered for income when reviewing an application. For example, if there will be two financially responsible adults the lease who both make $4,000 per month after taxes, their income should be considered to be $8,000 per month.

Whatever the income type is you’ll absolutely want to VERIFY the funds are real and the renter is receiving them. For employment, review the last 2 months of pay stubs and confirm the date on the stubs. Also request on the application for the renter to include how long they’ve been at their current job. Anything 6 months or longer typically denotes a person will remain there and has established themselves. Anything less than 3 months can be wary and while not necessarily a red flag, it should be considered in context with other screening criteria.


For any government income such as child support or social security, request copies of the documents that stipulate what payments will be sent and when, and ask for bank statements to confirm they are receiving the funds. If the renter has a trust fund or substantial savings and plans to use those funds solely for paying rent, ensure the amount of funds equals AT LEAST the length of the lease agreement. For example, if the lease is going to be 1 year long at a rental rate of $1,000 per month, the renter must show a minimum of $12,000 in savings, proven by a recent bank statement.

In some odd cases when I was a property manager, we’d see folks who would claim they keep all their savings in cash at their home. I don’t recommend this but we saw it enough for it to be mentioned here. If this is the case and the applicant absolutely cannot or will not show you a bank statement verifying savings, ask them to pay the entire lease amount up front. Otherwise, there’s really no way to tell if they actually have the money hiding under their mattress.

References and previous rental history:

This is a MUST MUST MUST. Getting as many references as possible from the renter’s previous landlords or property managers is absolutely essential in knowing if a someone was a quality tenant or not. This reference should be a form with questions you send to the previous landlord to fill out. If you’re having difficulty getting the landlord to respond, you can also call and get a verbal rental reference over the phone while asking the same questions from your form.


The form should include questions such as if the renter paid rent on time, if there were any 3 day notices, any lease violations, how routine inspections went, if there were any pets and how many, etc. Be sure to not ask any discriminatory questions such as how many kids did they have or what ethnicity they are. The list can be long or short based on whatever you think is most vital, but this info will give you invaluable insight into how the renter behaved. I recommend getting as many rental references as possible or as far back as their renter history goes to acquire information. In some cases previous rental history might not be available.


For example, if the renter is young and renting for the first time, the previous landlord passed away, or the renter owned their own home for a lengthy amount of time before applying to rent. If this is the case, it’s a bummer deal but it just means you’ll have to rely more heavily on the other data you have: credit, background, and income.

If a renter is apprehensive or won’t give you previous landlord info, really consider if you want to rent to them. This information is truly key to determining whether or not they’ll be snazzy renters. Also make sure and ask the person filling out rental reference if they are related to the renter. References given by family members should not be held in the same regard as professional references.

Some landlords require personal references be included in the application process to help sway their decision on if a renter will be quality or not. While this can be beneficial in theory, it’s not as effective as receiving a reference from a previous landlord or property manager. The reason for this is that anyone can put a bestie, friend with benefits, parent, or even some rando they’ve paid off as a personal reference. While this may seem like opportunity to know more about the applicant, these references are often biased because they’re at least somewhat motivated to maintain a positive relationship with the applicant and are less likely to give an honest reference. Also, no one is going to list someone who would give them a bad reference which is the type of reference you’d mainly want to know about as it would heavily sway your decision to approve an application or not.

With a previous landlord or property manager, they have no incentive to give you anything but their honest experience with the renter. If they give a good or bad report, it’s usually more factual than asking a biased party.

Personal character during the application process:

While this is entirely subjective and cannot be solely used to approve or deny an applicant, it proved true 99% of the time when I was a property manager. How someone generally conducts themselves through the application process was a reliable indicator of how they would act as a tenant. Did they turn in documents on time? Have they been respectful and communicative through the application process? When you scheduled a tour of the property did they show up on time? Did they get defensive if you asked them about questionable responses on their application? In my experience, tenants who were respectful, helpful, and prompt usually turned out to be great tenants.


To contrast, renters who were argumentative, made excuses, and struggled to turn in paperwork proved to be not so great tenants. Again, it’s important to realize this evaluation of character is subjective and CANNOT be solely used to approve or deny someone’s application. Objective qualifiers such as credit, background, and income must be the main deciding factor. However, you can use a renter’s character to help shape your overall view of the renter. It’s a data point to consider, especially if someone’s credit or income is on the fence.

Also keep in mind that you do not want to be at risk of violating any fair housing rules (see rules here). Some of these factors include discriminating based on race, familial status, or sex. You cannot decline to rent to someone based on ‘bad vibes, bro’ but it’s important to notice how a person conducts themselves as you would in any business transaction. Lord knows any landlords that decline to rent to someone based on their racist or homophobic views are #literaltrash.

Overall there is a hot heap of criteria to examine when looking at a prospective tenant’s income, rental history and references, and personal character and this list is by no means exhaustive but is a solid start. Remember that conducting a thorough screening process helps you determine the quality of a renter up front before they move in. ALWAYS do your homework and evaluate as much as you can before approving or denying an applicant.

In tandem with this post is another one: How to find the best renter (what to look for when screening for credit, co-signers, and background). This brings the application process full circle and other items to consider when screening an application.

Best of luck in your search for a solid renter who will take care of your spicy investment property!