As a landlord in Richmond, Virginia, you’ll be called upon to do a lot of things in order to effectively lease, manage and maintain your rental property. While every task will often seem like the most important task, there’s one thing that stands out as essential: tenant screening.
The screening process is especially important because the tenant you ultimately place in your property will impact the type of rental experience you have. The tenant living in your home will even affect your profitability.
Good tenants lead to a more pleasant and profitable lease term. You’ll collect rent on time. You’ll have the peace of mind that your resident is helping you care for the property. You’ll know that they’re following the terms of the lease agreement, communicating effectively, and likely to renew their lease agreement. Bad tenants, on the other hand, can lead to a number of risks. Rent may be late. Rent may not come in at all and you’ll find yourself having to evict. There may be property damage and constant conflict. You’ll potentially spend more money than you earn when there’s an unqualified tenant in place.
One of your most critical responsibilities is finding the right tenant, but the screening process is not always easy for independent landlords. As Richmond property managers, we have tools, resources, and technology at our disposal to ensure that all applicants are screened thoroughly and consistently. There are also fair housing laws to be mindful of as you accept applications and check backgrounds.
To ensure you find responsible and reliable renters in a way that’s legally compliant, we recommend that you follow these tenant screening best practices.
Understand Fair Housing Laws and Establish Consistent Criteria
Before you begin the screening process, it's crucial to familiarize yourself with fair housing laws to avoid discrimination while you’re choosing a tenant. Ensure that your tenant screening process complies with the Fair Housing Act and that you treat all applicants equally. You cannot choose one tenant over another because you have a good feeling about them or because you want a female tenant and not a male tenant. You cannot choose a tenant who has no children simply because you don’t want kids in your property.
To protect yourself against the potential for unintentional discrimination, you’ll need to set some clear rental criteria and apply that criteria to every applicant who wants to live in your rental property. Establishing those standards will depend on you and what you’re looking for. Much of the criteria that’s set includes:
Minimum credit score
Minimum income
No prior evictions
Clean criminal record
Positive rental history
Clearly communicate these criteria before your potential tenants complete an application and pay an application fee. You’ll find that unqualified tenants might “self-screen” and decline to apply, knowing that they don’t meet your criteria. This will save you time and allow you to focus on the screening of tenants who are likely to be approved.
Use a Written Rental Application
When we say “written” we don’t actually suggest you hand over a paper. You can, but online rental applications are far more efficient. What we mean by a “written” rental application is that you want to document the tenant’s qualifications and you definitely want to obtain a signature from them, giving you permission to check their background, references, and credit.
Always use a standardized written application. This form should collect the necessary information to assess the tenant's qualifications, such as employment history, income, previous landlords, and references. Get an application from a Richmond property manager or an association that specializes in landlord and tenant laws. You don’t want to pull any template off the internet. Protect yourself by using an application that has been reviewed and approved by an expert in Virginia rental laws.
Collect an application from anyone who is 18 years of age or older and will live in the property. Make sure the entire application is complete; you don’t want to see any spaces left blank. You’ll want supporting documentation to be included with the application. For example, pay stubs or other types of paperwork that will verify income have to be uploaded with the completed application. An application fee for each person applying should also be collected.
Note: Virginia law does not allow you to collect more than $50 as an application fee.
What to Look for When Screening Richmond Tenants
Use your rental criteria to screen the applications that you collect. Some of the most important things to consider include:
Conduct Credit and Background Checks
Credit and background checks are indispensable tools in the tenant screening process. They provide insights into the applicant's financial stability and criminal history. Look for consistency in bill payments, any past evictions, and other potential problems that might indicate this tenant is too much of a risk. A national eviction report is essential because not all credit reports will reflect evictions. Look for money owed to former landlords or apartment communities as well. This is never a good sign.
Verify Income and Employment
You need to confirm that the potential tenant has a stable and recurring income that will allow them to pay the rent on time every month. Most landlords and property managers will request recent pay stubs, tax records, or bank statements to verify what is earned. Best practices say that you should look for a tenant who earns at least three times the amount of the monthly rent. You can also contact their employer to verify their employment status and salary, but not all employers will be willing to provide any information without prior permission, especially when we’re talking about income. That’s why you’ll want to ask for documentation from the tenant.
Contact Previous Landlords
Past landlords can provide valuable information about the tenant’s behavior, timeliness in paying rent, and any property care issues. Always follow up on the references provided to get an honest opinion of the tenant's track record. We suggest that you ask for at least two rental references. Do a bit of digging to ensure you’re talking to the actual property owner or property manager. A tenant with a terrible rental history will not want you talking to their former or current landlords; they’ll likely provide the names and contact info for friends and family members. Know how to dig to this out and confirm you’re getting an accurate and true reference.
Conduct a Bit of Pre-Screening
Thanks to self-showings and our online preferences, it’s possible to rent a home to a tenant without every meeting them in person. We recommend you at least have a phone call and if possible, an in-person showing so that you can do a little bit of prescreening before you offer an application or make any decisions. You’ll get a better sense of who the tenant is beyond their paperwork. Use this opportunity to address any concerns and gauge their honesty and communication skills. Ask why they’re moving, when they’re planning to move, and what they like and don’t like about their current home.
Be Consistent and Document Everything
As we said earlier, fair housing laws require you to apply the same screening criteria and standards to all applicants. Keep records of all documents and communications in case questions or issues arise after a tenant is placed. If you deny a tenant because of credit, there is specific language you’ll need to use in compliance with the Fair Credit Reporting Act.
If you are experiencing any uncertainty around your screening process, it’s important to talk with an attorney or a Richmond property manager. We have software and screening systems in place that ensure total objectivity when it comes to screening tenants. It’s very easy to make a mistake while you’re screening, and those mistakes can lead to financial and legal penalties that are expensive and burdensome.
While vacancy periods can be costly, rushing into a tenant agreement with insufficient screening can lead to more significant expenses down the line. Patiently go through each step thoroughly to give yourself the best chance of picking a great tenant.
Tenant screening may seem like an impossible task. We know there are a lot of landlords out there who are content to run a credit report and be done with it. We strongly recommend that you invest a bit more time and effort into choosing a tenant. The right resident will lead to a much better rental experience.
Protect your investment and ensure a harmonious landlord-tenant relationship by choosing a tenant who is well-qualified and prepared financially to rent your property. When you follow these best practices, you'll set yourself up for a successful and profitable experience as a landlord in Richmond.
If you’d like to talk about how we screen our tenants here, please contact us at PMI Presidential. We’d love to be your Richmond property management resource. Work hard to ensure that only the best, most qualified renters are placed into your rental property, and we’d be happy to share our process and talk about the unique needs of your property.
