Renting out your property isn’t a job to be taken lightly, especially when it comes to choosing tenants. As a landlord, you’ve got the responsibility of protecting your rental property, neighbors, and yourself, which means you can’t afford to choose the wrong tenant.
Maintaining a rental property is equivalent to running a small business. There are numerous renter factors to consider — like trustworthiness, ability to make rent, and turnover rate — to ensure that your rental income is secure. According to SmartMove research, landlords' top concerns are non-payment and eviction. This isn’t surprising, considering the average eviction costs $3,500 and can take weeks to complete. With this in mind, it’s no wonder landlords feel it’s necessary to meet their tenant prior to signing a lease agreement.
While meeting a tenant can be beneficial, it may not be an option for everyone. For example, if you own a house in San Diego, but have decided to start renting it out because you’re moving to Denver, then you may have to consider signing a lease without meeting your prospective tenant prior. Vice versa, maybe you have a prospective tenant who is relocating from out of state and isn’t able to meet with you in person before signing the lease. Regardless, landlords should have the freedom to rent to who they want with the confidence that they’re making a good leasing decision.
In general, there are important steps that all property managers should consider before accepting tenants without meeting them in person. It’s also important to note that just because you’ve met a potential tenant in person, it doesn’t ensure that they will be a good match for your property. In this post,
we’ll cover how to choose tenants without meeting them first to ensure you find a trustworthy and reliable tenant to call your property home.
Before you read all of our steps, here’s our one golden rule: screen every applicant thoroughly with a service like SmartMove.
- Step-By-Step Guide to Choosing Tenants Without Meeting Them First
- Choosing the Right Tenants with SmartMove
Step-By-Step Guide to Choosing Tenants Without Meeting Them First
Vacancies can be extremely stressful and expensive for landlords, and finding great tenants that will respect your property is a priority. However, in the age of social distancing, in-person meetings are the exception, not the rule.
Choosing tenants without meeting them first can be daunting, as you don’t want to put your property or rental income at risk. Fortunately, there are plenty of ways you can vet prospective tenants before meeting them in person.
Step 1: Understand the Risks
Before you post your rental application online and begin accepting applications, it’s important to understand the risks that come with renting out your property, especially if you anticipate receiving applications from individuals you won’t be able to greet face-to-face. While meeting potential tenants in person is ideal, it’s not always a feasible option, which is the case for many landlords in populated areas that attract transplants.
As a landlord, renting out any type of property comes with its own set of risks, including non-payment of rent, property damage, noise complaints, and in worst-case scenarios, eviction. However, it’s important to remember that the tenant often carries risk as well when unable to meet their prospective landlord face-to-face. If they’re moving in sight unseen, they risk being unhappy with the property and failing to get a real sense of the neighborhood or unit itself.
In order for both landlord and tenant to feel safe and protected throughout the leasing process, it’s essential that you follow a streamlined tenant background check process that protects both your interests and theirs.
Step 2: Check Their Credit
According to TransUnion data, 84% of landlords state that payment problems are their top concern with tenants. Late payments or missing payments can disrupt your cash flow and hurt your bottom line. To avoid chasing payments, making endless phone calls, and sending late notices, one of your first tasks should be checking a potential tenant’s credit. This small step can help you ascertain the financial stability of your tenant, and help you better assess the risk of renting to a given applicant.
Running a credit check can be highly beneficial if you’re renting to a tenant you’ve never met before. A tenant may report that they have a perfect credit score and a history of on-time payments; however, only a credit check can truly verify this crucial information.
By running a credit check, you can understand a tenant’s financial behavior by gleaning insights into their:
- Credit score
- Late payments
- Derogatory marks
- Delinquent accounts in rental history
- Payment gaps
While there’s no set number that marks a good credit score, the higher the number typically means a more responsible borrower. But a credit score alone doesn’t provide a holistic view of a tenant’s financial history.
That’s where SmartMove’s ResidentScore® comes in. ResidentScore is a powerful tool that landlords can leverage during the screening process to evaluate a tenant’s financial behavior. By analyzing almost 1,000 different credit variables, ResidentScore will give you a leasing recommendation† based on a tenant’s risk level.
Step 3: Check Their Eviction History
A tenant’s credit history isn’t the only factor to consider when deciding whether to approve them or not. Eviction history is another important consideration you should look into when choosing a tenant without meeting them first. TransUnion SmartMove research found that total eviction-related expenses for property managers average around $3,500, and the eviction process can take up to 3-4 weeks to complete. As you can tell, evictions can eat up a lot of time and money, which is why taking preventative measures, such as checking a tenant’s eviction history, can help.
With a background check from SmartMove, you can get a complete history of a tenant’s eviction record. This way, you can assess your risk and determine whether a tenant is worth accepting. Another precautionary measure you can take during this process is looking at references from previous landlords. By taking the time to call a rental applicant’s previous landlords, you can learn important information about your tenant:
- How the tenant treated the property
- Whether the tenant paid rent on time
- Whether the tenant was disruptive to neighbors or other tenants
- How much of the deposit the tenant received after vacating the property
- Whether the applicant was clean and left on good terms
These are just some of the qualities of a tenant you can better understand when conducting a landlord reference check.
Step 4: Check Their Criminal Background
The third most relevant concern landlords have revolves around a tenant’s criminal background. TransUnion SmartMove data found that 45% of landlords are concerned about a tenant’s prior criminal history, and nearly 1 in 5 tenants screened through SmartMove had a criminal hit on their record. As a landlord, knowing a tenant’s criminal history is essential, as it can help protect yourself, your property, and your neighborhood.
Criminal background checks are a key component of a thorough background check, along with credit and eviction checks. When running a criminal background check, you can find answers to questions including:
- Is there a relevant criminal conviction on the person's record?
- Is the person on a sex offender list?
- Is there any evidence that the applicant has a previous relevant conviction that would jeopardize the building or neighborhood?
A criminal background check can also help you verify an applicant’s information, such as their name, date of birth, and previous addresses. Having this information on hand can give you peace of mind knowing the tenant you’re considering is who they say they are.
Step 5: Look for Red Flags
You can identify red flags even if you don’t have the chance to meet a tenant in person. Through a comprehensive tenant screening, you can uncover various warning signs that might put your property or others in danger. Keep an eye out for the following red flags when screening a tenant you haven’t met in person:
- Hits on their criminal report: If a tenant has a relevant alert on their criminal report, it’s important to keep yourself, your property, and other tenants or neighbors safe. A criminal background check can uncover these red flags to avoid putting your investment at risk.
- Multiple addresses in a short period of time: While a tenant might have to move from time to time, a history of multiple addresses in a short window can be a sign that they caused trouble with their previous landlords. To ensure this isn’t a red flag, make sure to conduct landlord reference checks to understand the tenant’s behavior.
- History of having roommates not on a lease: Having a roommate that's not on the lease can put your property at risk for several reasons. As you conduct landlord reference checks, make sure to inquire about whether the tenant brought on unoccupied renters, whether it be significant others or friends.
- Prior evictions: Evictions are costly and time-consuming. After examining records from nearly 200 properties, TransUnion found that evicted residents have twice as many previous rental-related collection records as non-evicted residents, and 21.7% of evicted tenants had a prior eviction. By doing your due diligence by screening your tenants, you can prevent yourself from dealing with an eviction.
- Late payments: Late payments can cause you to fall behind on your mortgage and property maintenance and even cause you to dig into your personal savings, which is why payment problems are landlords’ top concern, according to TransUnion. Running a credit check can help weed out tenants with a history of late payments and better protect your cash flow.
- Low credit score: Credit scores shouldn’t be used as a deciding factor when approving or denying tenants. However, a low credit score can be a sign a tenant is irresponsible with their money. After running a credit check, look into the factors that may be harming their credit score and determine whether they’ll prevent them from paying rent on time.
- Unstable income or work history: It’s normal for people to change careers over time. However, a long history of frequent job hopping may be a warning sign. If your tenant regularly loses their employment, they may find it difficult to handle rent payments, leaving you in the lurch.
- Significant debt load: A majority of Americans have debt, whether it be student loans, car loans, credit card debt, or personal loans. However, if a credit report shows a tenant has a significant debt load, it may be a red flag that they’re unable to pay rent on time or at all.
- Payment gaps: Everyone has a different financial story, and life events, such as unexpected medical bills, can cause your tenant to fall behind on payments - and one missed payment in their credit history doesn’t necessarily indicate a pattern of missing bills. However, if a tenant has a long history of payment gaps with their previous landlords, this may be patterned behavior.
These are just some of the red flags that might serve as a warning that a tenant might not be trustworthy. As always, taking preventative measures, such as screening your tenants, is your best course of action. Running a SmartMove background check is a great way to mitigate risk to keep you and your investment protected. Tenant screening is also an excellent way to expand your rental pool and attract tenants outside of your zip code. With more renters to choose from, your odds of finding a responsible and trustworthy tenant are higher.
Step 6: Meet Them Virtually
As you know, choosing tenants without meeting them first can be nerve-racking. This is especially true for tenants, too, as they’re unable to see the property in person. According to the U.S. Census 2020 CPS ASEC Geographic Mobility Report, 53.9% of Americans moved to another county or state when they decided to relocate, making it difficult for tenants to meet you and the property in person. Fortunately, the digital landscape we find ourselves in today makes it extremely easy to show your property virtually.
As you begin receiving applicants for your rental listing, consider hosting virtual property tours for tenants who cannot meet in person. There are dozens of online tools you can take advantage of to show your property off through a computer screen. To start, it’s best to invest in a quality camera and lighting solution or to hire a professional photographer. Then, you’ll want to follow these tips to perfect your virtual tour:
- Plan your route in advance to ensure your walkthrough covers every area in the home
- Provide an introduction that includes the property’s address, price, move-in date, and other FAQs
- Optimize your lighting by turning every light on, opening all window treatments, and filming during the daytime
- Keep a steady shot by using a video stabilizer
- Perfect your pacing by walking through the property slow enough so tenants can view every detail
- Show off the neighborhood by including photos of local restaurants, shops, school, and other amenities
Then, you can finish by scheduling a virtual face-to-face meeting through free online resources like Skype® and Zoom®. Virtual property tours are an excellent way to learn more about prospective tenants and what they’re looking for in a home while gauging their suitability for your property.
Step 7: Ask the Right Questions
Another reason choosing tenants without meeting them first can be a challenge is because you won’t be able to converse in the same way you would in person. During the application process, it’s essential you take the time to think of all the information you’d like to gather from a tenant. Whether you provide these on the rental application or ask them in person, make sure to ask these ten essential questions:
- What is your personal information?
- When do you want to move in?
- Who will be living in the property?
- Have you ever been evicted?
- Are you employed?
- Do you have any pets?
- Do you smoke?
- Can you provide good references?
- Have you ever been convicted of any relevant crimes?
- Are you willing to authorize a full background check?
It’s important to remember you have to abide by laws put in place by the Fair Housing Act. This means every tenant applicant should receive the same rental application and be asked the same unbiased questions to ensure objectivity and compliance. Asking these questions also allows you to sort between good tenants and renters you have to deny.
Note that you should always consult with legal counsel to ensure that you are following all relevant laws. This blog does not include legal advice and should not be construed as such, nor is it represented to provide full or up-to-date material.
Step 8: Have Documentation in Order
Lastly, you’ll want to ensure you have the right documents on hand and neatly organized when choosing tenants you’re not meeting in person first. With the correct documents signed and filed away, you can streamline your approval and screening processes to help ensure you choose the perfect tenants, and better ensure a respectful landlord-tenant relationship down the line.
As a landlord, you should keep the following landlord forms and documents on file during the application process:
- Rental application
- Tenant screening documents
- Lease or rental agreement
- Pet policy
These documents are just a starting point, but the above should outline all of the important information about your rental property, including rules and regulations. They will also allow you to gather information about prospective tenants that are needed for tenant screening. Other important documents you should organize and store include:
- Welcome Letter
- Move-In Checklist
- Lease Renewal Paperwork
- Move-Out Letter
- Move-Out Checklist
- Communication with Tenants
Record-keeping is an essential responsibility of being a landlord. Not only does it help you keep track of your tenants, but organized documentation can help when filing taxes as a landlord, and serve as a safeguard in the event of litigation.
Choosing the Right Tenants with SmartMove
Whether you’ve met your applicant in person or not, your property and income are on the line when someone takes up residence in your rental unit. SmartMove makes it easier to approve rental applicants and sign a lease agreement.
With comprehensive screening reports directly from TransUnion, SmartMove gives landlords helpful insights about their prospective tenants through comprehensive, FCRA-compliant tenant screening reports. SmartMove offers crucial reports and insights that you need to make an informed leasing decision:
- Credit report: In-depth payment history information provides a closer look at your applicant’s debt levels and other financial marks so you can determine their ability to pay rent.
- ResidentScore: Proprietary to SmartMove, ResidentScore weighs an applicant’s rental performance and has been found to predict the likelihood of eviction 15% better than a typical credit score.
- Criminal report: SmartMove uses advanced filters and industry best practices to search millions of criminal records from state, national, and Most Wanted databases.
- Eviction report: With a SmartMove eviction report, you can learn if your prospective tenant has been evicted in the past so you can avoid these costs down the road.
- Income Insights: Verify that your applicant is making the income they reported and reduce the likelihood of facing renter payment problems.
SmartMove is designed for independent landlords to quickly run tenant screening background checks wherever, whenever. Sign up for a free account and begin screening today.
†The SmartMove recommendation service (a credit score based recommendation) may not be available in certain jurisdictions, and is subject to laws that may limit or otherwise prohibit your use in certain jurisdictions, including but not limited to Washington D.C.