Why Tenant Screening and Selection is Important for Rental Owners

Why is screening tenants so important?

When you buy a rental property, the only way to make money on your investment is to fill your property with renters. There are plenty of people looking to rent, but finding quality tenants can make a big difference in your return on investment. If you’re a landlord or rental property owner, a quality tenant is someone who consistently pays rent on time, causes minimal wear and tear to your property, and doesn’t create a negative experience for other tenants living at the property or nearby neighbors.

There are a variety of legal means by which you, as a landlord or rental property owner, can figure out which perspective tenants are a best fit for your property. Developing a specific screening process or working with an experienced property manager who follows one can help you easily avoid renters who are not ideal. Lloyd Kipp owner of Valley Management Group, a San Jose Property Management Company, says all their perspective tenants complete an application form which they use to complete a thorough screening process.

What are my legal options for screening tenants in Santa Clara County?

Fair Housing laws don’t allow landlords to refuse rentals to people based on their race, ethnicity, religion, gender, age, sexual orientation, marital status, or source of income. If you’re uncomfortable with someone in a general sense and not for these specific reasons, there is no law saying you can’t refuse them as tenants based on that feeling alone. Laws vary from state to state, county to county, and city to city, so it’s important to research and know the statutes in your area or work with a local property manager who does.

According to the Legal Aid Society of Santa Clara County, you cannot restrict tenants based on the number of children they have, and you cannot require certain tenants to pay a bigger security deposit (with the exception of tenants who have pets). You cannot claim a rental unit is not for rent when it in fact is. Advertising your property by stating tenant preferences, such as “adults only”, is also illegal.

Why should I always run a credit check?

Credit checks help you learn about a tenant’s financial history, if they pay their bills on time and give you the information you need to collect unpaid rent if the lease agreement goes sour. Data on a credit report will help you cross check information an applicant provides during the screening process. If you’re planning to rent to family or close friends, you still need to run a credit check to avoid discrimination claims. You also never know when a relationship might turn bad.

Why should I care about tenant background checks?

Tenant background checks are the best predictor of troublesome tenant behavior. Serious issues like violence, theft or other legal trouble can be easily avoided using a tenant screening process. Most landlords and property managers believe that doing background checks on prospective tenants is more important than credit checks. Also background checks are a safety measure for you and other tenants, while credit reports are a measure of financial responsibility. Both are extremely important which is why a background check should always be done. It’s also important to note that if you skip a tenant background check, you could be open to liability if they do something illegal at your property. Implementing a thorough screening process that includes tenant background checks is a critical part of managing a rental property.

Why should I avoid the practice of steering?

Steering, which is strictly illegal in Santa Clara County, is actively encouraging or discouraging a tenant from moving into a particular unit based on their needs or demographics. Experienced property managers believe the best way to match people with rentals is to provide all the information someone might need to make an informed decision. Giving tenants the power to make their own decision will end up best for everyone in the long run.

How can I find out about a tenant’s past rental history?

There are two good sources of information that can help in this area.  The first are former landlords, and the second is an agency that specifically checks for a history of evictions, which is something that does not always appear on a credit report. You should discount what a current landlord says about a current tenant.  They may be giving a glowing reference because they want the tenant to move out, or they may be giving them faint praise because they don’t want them to move.  The best source of information on a tenant is a previous landlord since they no longer have any interest in seeing the tenant stay or leave, and are more likely to be objective.

Valley Management Group is a San Jose Property Management company that has providing trustworthy and affordable property management services for over 35 years. They serve the needs of rental owners in San Jose and through out Santa Clara County and have high reviews from both rental owners and tenants. If you have a rental property and need property management services call 408 286-4200 for a free property management quote with one free month of services.

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