Qualifying a Rental Prospect
Qualifying a rental prospect begins at the first point of contact between the landlord and a potential tenant. That initial contact could be as soon as the posting of a rental listing advertising a vacancy.
When posting the notice of vacancy, a landlord hopes to create interest in his rental unit that can be soon converted to a tenant in residence. Rental prospect response to the listing provides pre-screening opportunity to gather information, assess risk, and qualify the prospect to minimum rental standards.
The prospect’s answers to a few crucial screening questions can help determine if the prospect could qualify to the landlord’s rental standards and that an application should be pursued. A few questions can be well worth the time spent to better protect the rental investment though risk assessment.
The prospect in turn may have questions to ask the potential landlord. The rental listing should have provided basic information about the rental unit – address, number of bedrooms and baths, monthly rental amount, and the required security deposit. During the conversation with the prospect, the landlord will have a chance to provide additional details on rental policies, qualification standards, rules and regulations, and expectations of every tenant.
Whether the initial contact is by phone or in person, it must not be used as a means to screen out prospects by asking leading questions or stereotyping prospects by language and speech patterns or by any other characteristic that is prohibited by federal, state, or local fair housing laws.
A landlord should have a standard set of questions to ask all prospective renters who contact them regarding a vacancy. Using a set of standardized questions will help avoid claims of discrimination.
What are some examples of questions? Some of the following questions may help determine the prospect’s rental situation. The answers can provide enough information for analysis and evaluation to advance a prospect.
“What questions do you have about the property?”
Allowing the prospect to go first with his questions provides a landlord an opportunity to listen to what the prospect feels is important, what needs clarification, or what requires confirmation.
“The anticipated move-in ready date for the unit is XXX. Does that fit your schedule?”
Typically a tenant is required to give a minimum of 30 days’ notice of move-out. If a prospect wants to move in immediately or within a very short time, it may signal a problem for any number of reasons. Responses that suggest poor planning on the prospect’s part, a pending eviction, past due rents or other lease violations at his current rental should be a red flag notice to the landlord. If the move-in date is greater than 90 days or indefinite, the prospect may not be a serious about moving and should usually not be considered as a candidate for tenancy.
“We offer a one year fixed-term lease. “How long do you plan to rent?”
Most landlords are looking for a stable, long-term tenancy, typically a one-year lease agreement. A response such as “it depends” may indicate a prospect isn’t committed to a firm decision for moving or has other issues that the prospect is unwilling to share with the landlord.
“Our standard application process is XXX. Will you have any problems completing the standard application process?”
The landlord should explain to interested prospects the landlord’s tenant screening process includes, as applicable, written application, credit report, background screening, and verifications for employment, rental housing history, and references.
If there is hesitation on the prospect’s part to agree to all or part of customary screenings, there could be any number of possible reasons including negative findings when screenings are conducted. If the prospect cannot agree to stated rental policies, the landlord may decline to go forward with the application process.
All adults living in the unit are expected to complete full tenant screenings and to sign the lease.
“Rent is XXX monthly. The security deposit is equal to one month’s rent. We collect first and last month rent plus the security deposit. The move-in funds total XXX, payable at lease signing. Would that be a problem?”
The prospect should be made aware that possession of the rental unit will not be given unless all applicable fees, deposits, and rents are paid per terms and conditions of the lease agreement. If the prospect counters with alternative arrangements, such as payment installments, the landlord should be prepared to answer according to applicable landlord-tenant statutes for his state, and his previously stated business policies and practices. It may signal a red flag to the landlord if the prospect is not prepared to pay required move-in funds at signing.
“Why are you moving?” How long have you lived at your current address?
Typical responses are to get more/less space, be closer to work or school, changing jobs, or family responsibilities. If the prospect is evasive or offers vague reasons, there may be a problem with his current landlord or neighbors. It can be a red flag and definitely something to consider if the prospect has a long list of complaints about his current landlord and neighbors.
Does the prospect have a history of moving frequently? What are the chances that the pattern will be repeated?
“How many people will be living in the rental property?”
Landlords set occupancy limits based on regulations and codes per local building, health, and safety standards as well as limitations set by property size and mechanical/system/utility constraints. A maximum number of occupants for square footage space may be specified by local ordinances. If the number of potential occupants exceeds recommended standards or the prospect indicates an uncertainty regarding the number of occupants (i.e., it varies), it could be a potential red flag for the landlord.
“Can you provide employment references and proof of income?”
A landlord must determine to the best of his ability that the prospect can prove a steady source of income sufficient for rent and living expenses. If a landlord requires an applicant to have a gross monthly income three times the monthly rental amount, a prospect needs to know that upfront.
“Can you provide previous landlord references?”
A landlord should require an applicant to provide rental housing history previous to his current landlord. Reference checking with previous landlords is an important part of tenant screening. The landlord will want to find out how well the former tenant paid his rent and generally performed according to the lease agreement.
If a prospect cannot supply satisfactory previous landlord references, it can signal problems. If a prospect asks this current landlord not be contacted, it could be for reasons such as lease violation warnings or notices.
“Have you ever had to break your lease?”
A landlord will want to know if a tenant sees a lease as a firm contract. A tenant who broke a lease because of job relocation is understandable. A tenant who broke a lease because they wanted a change of scenery is not.
Other Rental Policies
A landlord may want to provide information on other rental policies, such as pets, parking and vehicle registration. If the rental unit and property are smoke-free, a prospective tenant should be aware of such restrictions.
Last Question
After a landlord and prospect have discussed the rental terms and conditions, policies and practices, the landlord should ask the prospect if he has any other questions. A landlord wants a prospect to be satisfied as a tenant living in the rental unit. Although much information was already provided, the prospect may have thought of other issues that need clarification or should be discussed regarding his rental situation.
Pre-screening a rental prospect is a risk management practice that reduces the risk of installing a problematic tenant.