Why Tenant Screening and Selection Are Critical to Rental Owners

The appeal of investing in residential real estate is the income and potential appreciation it provides. When you’re the owner of a rental property, you receive income when it’s rented out and tenants are paying on time each month.

The profitability of your rental property depends on the attraction and retention of good tenants. It’s important to know how to find and choose the best prospective tenants. Here’s why tenant screening and selection are critical to rental owners.

On-time rental payments

One of the most frustrating things about owning rental property is late payments. When the rent is late, not only are you out of income, but it also can be a hassle to “chase” tenants for what is owed.

One of the most vital tasks of managing a rental property is examining a tenant prospect’s rental history. Within our local area, a Santa Clara property management company can check with current and former landlords as well as court records to determine if the rental applicant has had any past evictions. A history of on-time payments, and no evictions is the best indicator of whether future rental payments will consistently be on time.

Credit checks, too, give you an idea of a tenant prospect’s overall history of making payments. The fewer late payments there are, the better chances you’ll have of collecting rent by the due date each month.

Minimize wear and tear

Another thing rental owners want from their tenants is to take good care of the property. When tenants damage the rental unit they live in or cause excessive wear and tear, it costs the owner of the property money, reducing the return on your investment.

The federal Fair Housing Act prohibits landlords from refusing to rent to someone based on their race, ethnicity, gender, religion, age, sexual orientation, marital status, or source of income. Santa Clara County regulations further prohibit refusing to rent to someone based on the number of kids they have and does not allow a property manager to advertise a property and include preferred traits, such as “adults only”

Background Checks

While a Santa Clara property management company can do criminal background checks on rental applicants, there are only certain cases for which an applicant can be declined because of a criminal conviction. A landlord or property management company can not refuse to rent to a rental application simply because they have a criminal record. However, you can have standardized policies in place to deny rental applicants with certain convictions that are directly related to putting either your property or other tenants at risk. For further details on the legal requirements check the with California Dept of Fair Employment and Housing and specifically the FAQ page on this site –Fair Housing and Criminal History page.

Get along with others

Unfortunately, problem tenants aren’t just a problem for rental property owners. Often, they’re also a problem for the people who live nearby and possibly even for law enforcement. And once others are having problems with your tenants, you’re going to have even bigger problems.

If you own multi-family housing, it’s important to have a set of rules that all tenants are required to follow as part of the lease agreement. The last thing you want is for bad, troublesome tenants to drive out good ones. That’s how a profitable property can go downhill fast. You also don’t want a property that has a reputation for frequent visits by the local police.

The bottom line

Attracting and retaining top-notch tenants is the key to owning a profitable rental property. One of the most important functions in property management, therefore, is tenant screening and selection. Professional property management should include a clear-cut well defined process for screening and selecting tenants that has demonstrated effectiveness and complies with all federal, state, and local laws.

Valley Management Group provides trustworthy and affordable property management in Santa Clara, San Jose, and throughout Santa Clara County. Call today to get a free management quote with one free month of property management services.

Reviewed and Approved by Lloyd Kipp
Property Manager and Owner of Valley Management Group