Rental rates in and around Denver have increased by 13.8% over the last four years. This presents a unique opportunity for real estate investors in the area. As demand increases and supply decreases, landlords face more applicants than ever.
A tenant screening process is necessary to help you choose the best applicant for your rental property.
Have a Process
Before you start screening tenants, have a process in place. Establish a set of forms that you will use with all applicants. Utilizing property management services can help with this.
You don't want to run afoul of tenant law. The Fair Housing Act states that you cannot discriminate based on race, color, religion, sex, national origin, familial status, or disability. Keep this in mind when creating your forms, application process, and minimum standards.
Sometimes discrimination is intentional and blatant. However, sometimes discrimination is more subtle. A property manager can guide you in creating a fair process for all applicants.
The tenant screening process isn't a quick or flippant one. A prescreening process helps you sort through tenant applications quickly. That way, you optimize your time to focus on those applicants that are the most qualified.
The prescreening process is the first step in narrowing down the applicant field. Look for applications you can quickly reject because they are obviously not a good fit. Perhaps they cannot afford the apartment or have pets you don't allow.
Credit and Background Check
Your next step is to pull a credit check and background reports. Doing these on your own can be cumbersome. However, there are services that you can use that can provide these for you.
The credit report will give you insight into the applicant's financial health. Look at the picture holistically to better understand the applicant's financial responsibility and ability to pay. For example, you may view student loan debt differently from high credit card debt.
The background check will show you the applicant's criminal and eviction records. A previous arrest doesn't automatically mean an application is disqualified. Determine a standard that you will accept and apply to all applicants.
Employment and Income
With Colorado rents being 54% higher than in 2020, income verification is more important than ever. Employment and income verification is crucial for determining if an applicant can afford the rent.
People will lie about their employment status and income. Verify that the employment contact information they provided you is correct. Speak with someone from the company to find out how long the applicant has worked there and their pay rate.
You can only do so much tenant screening with the application. At some point, you need to meet the individual behind the information and data on the page. Meeting the applicant in person is your chance to get a feel for the person.
Start Tenant Screening
Finding good tenants isn't a one-step process. A thorough tenant screening will help you find the most qualified and best-fitting applicant. Putting in the effort now will reduce the risk of dealing with an eviction or tenant leaving early.
Contact our team of experienced property managers and let us help you screen tenant applications.