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As a property management company in more than 50 markets across the nation, we hear one question again and again: “What do you do to screen a resident?”
Resident screening, the process owners and property managers use to evaluate and filter applicants, is one of the most valuable tools for finding ideal residents for a rental property. Basically, the method your property manager chooses for screening can make the difference between residents who are simply “okay” and those who treat the property with care, pay rent on time, and meet your expectations.
By establishing clear and effective screening criteria, we can not only attract the right individuals but also reduce risk to your investment.
In this article, we’ll walk through the four key areas we consider throughout our screening process: income, rental background checks, references, and compliance with federal Fair Housing laws.
Income
Establishing the Right Income Threshold
The first and most obvious criterion to screen potential residents for is their income. It’s crucial that your property manager evaluate the income level of your residents to ensure they can comfortably afford rent and associated expenses.
We’ve found that setting an income requirement of three times the monthly rent amount typically works best, and is generally standard practice among property managers. Owners and managers have some discretion when it comes to accepting the net or gross equivalent, but it generally should not be lower than 3x.
Anything below this threshold may lead to complications, while anything higher (3.5-4x) will generally yield better results.
Acceptable Sources of Income
Salary and Self-Employment
Property managers see various sources of income in a resident's application, and these details give them valuable insight into an applicant’s financial stability.
One of the most common sources of income is employment, but in today’s market, freelancers or self-employed individuals are becoming more prevalent. While some landlords and property managers prefer residents with a steady job and regular paychecks because of the reliability it extends, it's essential to be open to alternative sources of income as well, especially if they meet the required threshold.
For example, freelancers or self-employed individuals may not have a traditional employment arrangement, but they can still demonstrate a stable income through financial reports.
Government Assistance Programs
Government assistance programs can also be a valid source of income. Programs like Section 8 housing vouchers or disability benefits can provide a reliable source for residents to pay their rent. It's important that your property manager is very familiar with the specific requirements and regulations of these programs if you plan to rent to Section 8 residents.
Retirement Benefits
Property managers also consider retirement benefits as another potential source of income among applicants. Many retirees rely on pension plans, social security, or other retirement savings to cover their living expenses. These sources of income can be stable and predictable, making them a viable option for meeting the income requirement for a rental property.
Employment Verification
Verifying employment is a critical step in evaluating an applicant’s income. While pay stubs and bank statements provide useful documentation, directly contacting an applicant’s employer adds an extra layer of credibility. This step helps confirm not only that the applicant is currently employed but also that their position, length of employment, and salary match the information they’ve provided.
When speaking with an employer, we generally ask for confirmation of:
Job title and employment status (full-time, part-time, contract)
Start date and duration of employment
Current salary or hourly wage
The best property managers make a point to obtain written consent from the applicant before reaching out, and handle all information in compliance with privacy laws.
Rental Background Checks
Rental background checks are incredibly useful for property managers when screening potential residents. If you plan to self-manage your rental property, take advantage of a standalone rental background check service to assist you in this process. If you’re working with a professional property manager, they should be utilizing sophisticated software to conduct background checks.
Rental background checks should include information about an applicant’s credit, criminal, and eviction history. Each of these areas offers important insight into who a resident is and should be considered during this process.
The Importance of Credit Checks
Understanding a potential resident’s credit history provides valuable insight into their history of financial responsibility. By running a credit check on each resident, property managers like Evernest are able to identify a pattern of late or missed payments or a general lack of financial stability. However, it’s important to consider any extenuating circumstances that may have contributed to their negative credit history. For example, they may have experienced a job loss or a medical emergency that temporarily impacted their ability to make timely payments.
The Importance of Background Checks
At Evernest, we go a step further in evaluating potential residents by running a background check on each person who applies for one of our properties. We always recommend adding this extra step to your screening process because the security of your rental property and existing residents is incredibly important. We consider a good rule of thumb to be no violent felonies, no felonies less than 10 years old, and no history of multiple misdemeanors for our residents.
The Importance of Eviction Checks
Eviction records provide insight into an applicant’s rental history and the likelihood that you may experience an eviction as their landlord. While it can be a red flag, it is important to allow applicants to explain the circumstances of a previous eviction and if possible, speak with the previous landlord to hear both sides of the story.
It’s important to remember that conducting background checks is not about making snap judgments or discriminating against potential residents. It's about ensuring the safety and security of your property and existing residents. By approaching the process with fairness, open-mindedness, and a willingness to consider individual circumstances, you and your property manager can make informed decisions and create a positive living environment for everyone!
References
Gathering references is a crucial step in the screening process, offering insights into a potential resident’s behavior and character. We make a point to contact previous landlords and personal references whenever possible to gain a comprehensive view of an applicant.
Calling Multiple Previous Landlords
When checking references, the best property managers don’t stop at the applicant’s most recent landlord – we reach out to at least two or three previous landlords if possible. This broader approach gives us a more complete picture of the applicant’s rental history and behavior over time.
Relying on just one landlord could give a limited or even misleading impression. For example, a current landlord might give a glowing reference just to encourage a difficult tenant to move out, or a one-off issue may not reflect the applicant’s usual behavior. By speaking with multiple past landlords, we can identify consistent patterns, whether positive or problematic, that help us make a more informed decision.
Conducting Personal Interviews
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Beyond checking references, conducting in-person or virtual interviews with potential residents can offer meaningful insights that a paper application simply can't provide. These conversations give your property manager a chance to assess the applicant’s communication style, demeanor, and overall compatibility with your property.
While this step doesn’t replace our formal screening criteria, it can help us gauge things like:
How respectful and responsive the applicant is
Whether their expectations align with the lease terms and property rules
Any red flags that might not appear in a credit report or rental history
An interview also gives applicants an opportunity to ask questions, which can lead to better mutual understanding and potentially longer, more successful tenancies.
Questions We Ask Previous Landlords and Personal References
When contacting previous landlords, we typically ask questions like:
What was their payment history? Were there any late payments or instances of non-payment?
Did the resident respect the property and its rules?
Were there any lease violations or complaints from neighbors?
Did the resident communicate effectively with you as their landlord when issues arose?
Were there significant maintenance or repair issues during their tenancy?
For personal references, we typically ask question ask questions like:
Are they trustworthy and responsible?
Do they demonstrate good judgment and decision-making skills?
Are they reliable communicators?
By combining thorough reference checks with personal interviews, property managers are better equipped to choose residents who are a great fit for your property.
Federal Fair Housing Laws
One of the most important aspects of the resident screening process is ensuring compliance with Federal Fair Housing Laws. These laws are designed to protect individuals from discrimination in housing based on race, color, national origin, religion, sex, familial status, or disability.
When you hire a property manager, it’s their responsibility to make sure your screening criteria and practices treat all applicants fairly and consistently.
The property management company you choose must avoid actions that could be considered discriminatory, including:
Refusing to rent or negotiate for housing
Making housing unavailable
Denying a dwelling
Setting different terms, conditions, or privileges for rental
Offering different housing services or facilities
Falsely claiming that housing is unavailable
Attempting to persuade owners to sell or rent based on protected characteristics (known as blockbusting)
Denying access to housing-related services such as a multiple listing service
Examples of Discrimination in Rental Practices
Some forms of housing discrimination are obvious, but others are much more subtle – which is why it’s critical to fully understand how Fair Housing regulations apply to your rental process.
Familial status is one area where unintentional discrimination can easily occur. Under the law, “family” includes not only traditional two-parent households, but also single parents, pregnant individuals, and those with legal custody of children. Property owners and managers cannot deny housing or impose different rental terms based on the presence of children.
Disability is another protected category that requires careful attention. Property managers must understand what qualifies as a reasonable accommodation or modification. This might include adjusting policies or procedures, or making physical modifications to the property, to ensure equal access and opportunity for individuals with disabilities.
Even well-meaning landlords and property managers can unintentionally violate Fair Housing laws. That’s why it’s essential to hire a manager that routinely reviews screening process for any unintentional biases and makes adjustments as needed. Staying compliant also means staying current - Fair Housing laws and guidance can evolve over time, so it’s important that your provider stays informed and up-to-date.
Enhance Your Screening Process
Watch Out for Scams and Fraud
With the rise in AI and various online services, there is an increased potential for applicants to provide fake documents or create false employment situations when applying for a rental property. This underscores the necessity of thorough verification and due diligence during the screening process. Utilizing legitimate, secure software providers such as FinDigs or TransUnion ResidentScore can help ensure your property management company of choice references real, unaltered information.
Collect Feedback to Make Data-Driven Decisions
After showings, some property managers might survey potential residents to gain insights into their perceptions of the property. This can help identify any concerns that might affect their interest. Tracking inquiries and showing data is equally important; it provides valuable insights into market trends and can inform decisions about pricing and property improvements.
Final Thoughts: “What Do You Do to Screen a Resident?”
Choosing a property management company with robust resident screening criteria and a solid screening process is essential for promoting fairness and ensuring you find the best residents possible. When a company incorporates income verification, comprehensive rental background checks, and reliable references, including personal interviews, you can be confident in their resident selections.
If you’re ready to rent your property and want expert guidance on your side, consider partnering with a property management company like Evernest. Whether you're seeking enhanced resident relations or a streamlined management process, our services can help you unlock the full potential of your investment.
