A lot of problems you may run into while renting out your Phoenix home can be avoided with a solid tenant screening process. The tenant you choose will directly impact whether you have a stressful tenancy, a relaxed tenancy, an expensive tenancy, or a profitable tenancy.
You want to work with tenants who are responsible, careful with your rental home, and easy to communicate with. You are looking for residents who pay rent on time, follow the lease terms, and stay in place for at least a few years.
Where do you find these tenants?
Phoenix is full of well-qualified renters. You just have to know how to screen the applications in a way that delivers the tenants who pose the least risk to your investment.
Well-qualified tenants deliver predictability and profit; you’ll bring in reliable rental income each month, your property will grow in value, and your ROI will steadily increase throughout the tenancy. You won’t lose money on turnovers, property damage, and eviction.
A bad tenant, on the other hand, will only cost you time and money. You’ll find yourself chasing down late rent, arguing over lease responsibilities, and repairing damage that far exceeds the security deposit.
No one can see the future, and you won’t always be able to predict how a Phoenix tenant will perform.
However, you can take some important steps in protecting your investment with a smart tenant screening process. Tenant screening is so important that it should start even before the application is collected.
Take your time and put in the work that’s required to find the best tenant. If you are struggling with time or resources, hand the process over to a professional Phoenix property manager. Property managers can immediately identify the red flags that would make an applicant questionable.
We stand behind the tenants we place, and these are some of the best tips we can offer you for screening your applicants.
Educate Yourself on Fair Housing Laws in Phoenix
If you don’t allow pets in your property, you still have to accommodate tenants who need service animals and companion animals. Do you know the difference?
Even if you know the federal fair housing laws, remember that Phoenix has extra protections for people of different sexual orientations and gender identifications.
When you’re looking for the best tenants, you have to follow all state, local, and federal fair housing laws. Property owners may not intentionally discriminate, but it’s easy to make some big fair housing mistakes without realizing it. Think about this in the way you advertise and market your rental home. You cannot ask people if they’re married or if they have children. You cannot ask about religion or make assumptions about race and national origin.
Screening is an easy area to make a fair housing mistake. Consistency is important. You have to screen every single application the same way.
Establish Rental Criteria for Phoenix Applicants
A good way to avoid fair housing issues and to dissuade potentially unqualified tenants from applying to rent your home is by providing a set of standard rental criteria before anyone completes an application or pays an application fee.
Putting your rental criteria in writing will allow you to manage the expectations of a prospective tenant. When you show them exactly what you’re looking for in a tenant and they don’t have the income to meet those requirements, they’re going to understand why they were denied or they won’t bother applying at all. They won’t assume it’s for a discriminatory reason that they were denied.
A documented and fair screening process will demonstrate that everyone is held to the same standards and provided those standards before they even apply. It’s your best fair housing protection.
When someone asks to apply for your property, provide them with these standards. They can be written and printed or in digital form. The goal is to establish that those standards were shared before the application was submitted.
If you’re working with a Phoenix property management company, ask them what kind of standards they have for the tenants they’re screening. They should be able to show you their criteria and talk about why it’s important.
Pre-Screening Questions for Potential Phoenix Tenants
Start the screening process as soon as prospective tenants begin to contact you.
If you’ve done a good job marketing your property, the calls and messages will start rolling in as soon as the listing is live. Talk to the people who want more information. Discuss the rental amount, the security deposit amount, and whether pets are accepted. Ask questions such as:
- When do you plan to move?
- Why do you want to move?
- How many people will be living in the property?
- Do you own any pets?
- Do you have any previous evictions?
- What are you looking for in a rental home?
The answers to these questions will tell you whether your property is right for the person who wants to see it. There’s no sense in showing the home to someone who won’t be ready to move for three months.
Information and Signatures Needed on Phoenix Rental Applications
Every applicant who is 18 years of age or older must be required to complete an application. Don’t download any form you find on the internet. Use a rental application that’s approved by a Phoenix property manager or real estate attorney.
Most tenants will expect to fill out an application electronically. Make sure the application you’re providing asks for the following details:
- Full legal names
- Contact information
- Social security and driver’s license numbers
- Current and past addresses
- Employment information
- Landlord references
You’ll want tenants to be able to upload any supporting documentation such as pay stubs, bank records, and identification.
Perhaps the most important part of the application is the signature of the tenant. Your application must provide permission for you to conduct a background check and a credit check on your prospective tenant.
Tenant Credit Checks
We don’t recommend renting to tenants who have a history of evictions.
This should be one of the first things you check when you’re screening: nationwide eviction records.
You’ll also want to look at court records for any bankruptcies or judgments against the applicant. Situations where money is still owed to a former landlord or apartment complex are upsetting because if the tenant didn’t pay those landlords, you might find yourself trying to collect money from them as well.
Running a credit check is a standard part of any tenant screening process. As part of your rental criteria, you might require a credit score of 600 or 650. This can be a good way to set some standards for what you’ll accept and what you won’t, but don’t settle just for the credit score. Look at the entire credit report. That’s where you’ll find how the prospective tenant handles debts and bills.
Focus on how they’ve treated their housing-related bills. Medical debt is pretty common. Lots of credit reports will reflect student loans. You want to know if there are utility accounts in collections. This is more of a concern when you’re screening for a new tenant.
Income Must Cover the Rental Amount
You need to know your tenant can pay rent. That’s why you’re screening.
Verify income. Measure what’s earned against the amount of rent you’re collecting. You want to be sure your tenants can afford the rent you’re charging. Don’t set them up for failure by permitting someone who doesn’t earn enough to move into your property.
Best practices in Phoenix property management say that a tenant should earn at least three times the monthly rent in order to safely cover that expense and meet their other obligations. So, if you’re renting out a home for $2,000 a month, you’re looking for a minimum income of $6,000.
This income requirement should cover all of the tenants who are moving into the property. So, adult partners who earn their own salaries can combine that income to meet your requirements.
Ask for Phoenix Rental References
Make sure your rental application requests contact information for at least two landlord references. Once you get in touch, make sure you’re talking to the actual landlord or property manager. Ask them to confirm the dates of residency and the amount of rent that was paid. Find out if the entire security deposit was returned and if proper notice was given before that tenant moved out. You’ll also want to know if rent was paid on time, and how quickly the tenant caught up if it was ever late.
Always ask if there were pets, property damage, and if they’d be willing to rent to that tenant again.
Once you’ve exhausted all of these screening details, consider the entire application. You’ll want to run a criminal background check as well and maybe do a pet screening if there are pets moving in.
Then, you’ll have to issue an approval or a denial. Put everything in writing and make sure you document when and why the approval or denial notification went out.
It’s easy to make a mistake when you’re screening tenants, and those mistakes can often be costly. If you’d prefer to find and place a tenant with the help of expert Phoenix property managers, please don’t hesitate to contact us at TCT Property Management Services. We manage homes throughout the East Valley, including Mesa, Gilbert, Chandler, Scottsdale, and Phoenix. We’d be happy to help you find a well-qualified renter.