Source: This article was published with permission from AssetRover
Expert Insight from a Statewide Real Estate Instructor with 48 Years of Landlording Experience:
Judy Stevens is a Realtor with Skogman Realty who has been in the real estate industry since 1978 and has owned investment properties for even longer. She served for 6 years on the Iowa Real Estate Commission and has been an instructor for the Iowa Association of Realtors and for Skogman Realty. She also does independent teaching of insurance classes. On top of all of this, Judy and her husband have been landlords for about 48 years and have recently cashed out on their final investment property.
Judy is well aware of the importance of a rental application. We learned a great deal from her experiences and we are excited to share it all with you. Check out the video above to hear the full interview! Judy uses her teaching and instructing skills to deliver a compelling presentation, flash cards and all! If you’d prefer to keep reading, we will also outline all of the steps here. Learn what tenant screening questions to ask, what you should include on the rental application, and what kind of information you should collect from them.
1. Ask for a Real Name or Other Aliases
This sounds obvious at first, but many people have nicknames, aliases, and maiden names. They aren’t always for nefarious purposes and sometimes people just forget to supply the background information. Also, don’t neglect the fact that you need a rental application from every adult living on your property, unless they are related. “In fact, if you have two people who are going to live together and they are not married, you want to get a rental app from each one of them,” said Judy.
2. Get a Birth Date
Unless the tenant has an extremely unique name, chances are that a first and last name on record will not single out that individual. “For example, my name is Judy Stevens,” explained Judy. “I have a lot of interesting people who also are named Judy Stevens. You want to get the birth date and you don’t necessarily want to get the year because some people are a little hesitant about doing that. The only time you really want to get the year [is] if you see someone who’s quite young and you want to make sure that they’re 18 years of age so that they can sign the lease. If they’re any younger than that, that lease would be voidable…”
3. Ask for Present and Previous Addresses
Where is the potential tenant living now? What about others who want to live in the house too? Are they living together or living apart? You need to have this all in writing. “This is especially true when someone is first living together, that can be a volatile situation,” warned Judy.
Don’t just stop once you get their current address. “You want to go back at least five, seven, eight years and get all their previous addresses,” said Judy. One great way that you can fact-check a tenant is to go on to your county assessor’s site and see who owns the property. “Some people say, ‘well, I own that or my parents live there,’ or whatever, so you need to check it out and make sure, first of all, that there’s really that address,” continued Judy.
4. Who is the Applicant’s Current Employer and How Much Income Does He/She Make?
Make sure you get information on the potential tenant’s current employer and all sources of income. “You can set your boundaries as to how much you expect them to have as income over and above what the rent is,” said Judy. For example, you may want to screen for a gross income of 3 or 4 times the amount of rent. “People will tell you they’re very used to being poor. Well, if you only have $50 a month leftover after the rent, you’re not used to being that poor,” continued Judy.
5. Ask What Type of Vehicle He/She Drives and How Many Vehicles Will Park at the Property
This one is often overlooked, but “if you’ve got a single family dwelling especially and you don’t have a lot of parking, you need to know who’s there,” said Judy. Set rules on inoperable vehicles and maintenance that can or cannot be done on the property. If you own a multi-unit property, if a tenant has too many vehicles, it could prevent other tenants from being able to park at all.
6. Who Will Occupy the Property?
Sure, you asked for real names and applications for anyone staying in the property, but figuring out how many dependents (i.e. children) will live there is important. Judy expands on this and points out that most people forget to ask about children who may not live at the home year round. “People will have custody of children over the summer, which is fine, but you may not have enough bedrooms for them, so that’s what you need to ask also,” cautions Judy.
7. Has the Potential Tenant Ever Been Evicted or Asked to Move?
Evictions are a huge red flag when it comes to proof of an unreliable tenant. This can be checked via an online state or county courts database. Most countries (or entire states) have records online for public viewing. Since an eviction is a civil case, all civil cases are on the public record, unlike criminal convictions that sometimes can be expunged. An eviction should show up on a District Court case filing.
As Judy explains, in her home state of Iowa, a portal called Iowa Courts Online allows you to do these state-wide searches.
Since this is an area where a potential tenant may choose to lie, Judy recommends that “you definitely need to say, ‘Any falsification of this document will result in termination of your lease.'” If he/she lies on the tenant screening application and then you check the online court system and find an eviction, you have grounds to refuse renting to this individual.
8. Has the Potential Tenant Ever Broken a Rental Agreement?
If the applicant has broken a rental agreement before, make sure to find out the details on why it happened. This may be for legitimate reasons due to a new additional in the family, an unexpected layoff/change in job location, or family care emergencies. In some cases, a tenant will sublet the property or pay rent on the property until a new renter occupies the property. This eliminates vacancy gaps and sometimes works out even better for you as a landlord. Other times, breaking a lease could be due to being just plain irresponsible, so it’s important to know the true motives behind a lease break.
9. Has the Applicant Been Convicted of a Felony?
This can be checked out through your online court system while checking for evictions. Find out if they are on the National Sex Offender list–it takes a felony to get on the list.
10. Ask if He/She is Currently Using or Has Been Convicted of Using a Controlled Substance
“Those are good questions, especially since in Iowa, if you knowingly allow your tenant to use drugs on the property, they can confiscate your property,” said Judy. “Consequently, this then is an indication that you have tried to screen so that would not happen. This looks good in court for you.”
11. Run a Credit and Criminal Background Check
“At the bottom of your rental app along with the falsification of record, get their permission to run a credit check, to do a criminal background check, and to verify anything on these rental apps,” added Judy. Make sure you get permission from the applicant to run it!
We go into a lot more detail on this in Two Crucial Steps Every Landlord Must Take and we give you some examples of websites you can use to perform a credit and background check on your prospective tenants.
12. Who to Contact in an Emergency?
Make sure you have someone to contact if something were to happen to that individual inside of the property. “I had an investor who told me that he found a woman passed in his apartment, 28 years old. He said he had no idea how to get a hold of family,” recalled Judy. “Since then, he always asked who to contact because he said there is some mother who would rather have him call than have the highway patrol come find her.”
“That’s also kind of been funny because that’s a good screening question because I’ve had people say, ‘Well, if I put my mother down, when will you call her?’ In case of emergency. ‘Oh, well, like parties or something, will you call her?’ No, so that’s an indicator. That’s always been a good screener,” added Judy.
The Importance of a Rental Application
“Get a rental app and use it. It’s not discriminatory,” said Judy. “You have to just make sure that you use it with everybody, ask all the same questions.” Listen to Judy’s extensive real estate investing, real estate agent, landlord, and Realtor® experience and take heed of this “12 step program” using these excellent tenant screening questions! I’ll leave you with this truism from Judy, who suggests you take your time to rent intelligently.