Every landlord has their own process for screening tenants. For some, it’s a simple credit check and nothing more. For others, they’ll conduct reference checks and call employers. You have to screen thoroughly when you want to find good tenants, but you also have to set reasonable expectations when you’re establishing rental criteria. We’ve talked to many rental property owners who are extremely choosy and only want tenants with perfect credit and a six-figure income.
That’s going to be a difficult tenant to find.
The purpose of screening tenants is to limit your risk and to ensure you’re renting to a responsible person who has a good history of paying rent on time, taking care of properties, and following lease terms. It’s a bonus if you can find someone who wants to stay in place for the long term and communicates well.
When you’re screening for the best tenants in San Diego, we recommend you pay close attention to these items.
Financial Security and Credit History
You have to set a few consistent standards when you’re screening tenants, and one of those standards may be a credit score. Perhaps you don’t want to rent to anyone with a FICO score that’s lower than 650. That’s fine, but remember that the full credit history can often tell you much more than a simple number.
If you see a history of on-time payments for the things that matter, such as phone and utility bills, but the applicant is behind on their student loan payments or have a lot of medical debt, it may be okay for the purposes of renting them your home.
When you’re reviewing an applicant’s credit report, take a look at what the overdue bills and missed payments reflect. Have they always kept up with their housing and utility payments? That’s a good sign. But, if there are overdue electric bills and collection activities from former landlords or apartment communities, you may not be looking at a very reliable tenant.
Verify Income and Employment
It’s also a good idea to set some income standards. The industry standard is typically to require that tenants earn at least three times the amount of your monthly rent. It’s a good starting point, and it ensures that your San Diego tenants are bringing in enough money to pay you on time every month. Verify the employment and income by asking for payroll forms, employment contracts, or tax filings.
Remember that you can have income standards, but in California, you are not legally permitted to accept or deny certain types of employment or income sources. This now extends to Section 8 tenants. If you have an applicant who receives Section 8 benefits, you cannot refuse to consider their application. Those benefits count as income, and you’ll have to screen them the way you’d screen any other tenant.
Search for Past Evictions
Conduct a nationwide eviction history check. We do not recommend renting to anyone who has an eviction on their record. Setting this standard for every application will keep you consistent and fair. You might want to adjust your own standards to say you won’t rent to anyone with an eviction in the last 10 years. Set whatever standard you are comfortable with. Just remember that past behavior often predicts future behavior, especially when it comes to rental performance.
These are just a few of the things to look at when you’re screening tenants for your rental property. Remember to follow all fair housing laws, because an infraction can be expensive.
We know it can be overwhelming if you don’t have the experience and the resources that professional San Diego property managers have. We’d be happy to help you find a well-qualified tenant. Contact us at Chase Pacific Property Management & Real Estate Services.
