You can make or break your success as a landlord depending on the quality of your tenants.
If you don't have quality tenants in your Detroit Metro properties, you put your business and your rental homes at-risk. Allowing bad tenants in your homes is an expensive mistake.
How do you find good tenants and avoid the bad ones? There is a balance between "thorough" and "invasive" during the screening process.
While you don’t want to take on a bad tenant, you also don’t want to cross a line that gets you into legal trouble.
Tenant screening allows you to find out about a potential tenant’s rental and criminal history, but how do you know when you’ve gone too far? Here’s what landlords need to know about tenant screening.
What Can Landlords Legally Check?
Landlords are legally allowed to determine a tenant's eligibility to rent your property based on these criteria:
- Criminal Record (with caution)—We'll touch on this more in a minute. It's important to know who is living in your property and about any criminal convictions. However, you cannot use this information to discriminate against criminals in your rental property.
- Credit History—This information lets you know if a potential tenant has a history of bankruptcy, bad credit, or defaulting on payments. This is critical info when it comes to choosing a tenant who will need to pay their rent on time every month.
- Rental History—Talk to previous landlords. Confirm the applicant lived at prior addresses and left on good terms. Past behavior can be a strong indicator of how this tenant would behave if allowed to live in your property.
- Verifiable Income—Confirm that the tenant is employed and can afford the security deposit and monthly rent. If a tenant isn't employed, check that they have a source of income or funds to cover the cost of living in your property.
This information gives you the basis to understand the situation of a potential tenant.
Approach Criminal History With Caution
When it comes to an applicant's criminal history, proceed with caution. Fair housing laws don't allow blanket discrimination based on criminal history.
As a landlord, you can't make a blanket rule to deny anyone who has any kind of criminal record. This is illegal and considered discrimination.
Protect yourself by using good judgment when weighing criminal history against your decision to rent to a potential tenant:
- Was there a conviction? An arrest doesn't imply guilt or a conviction.
- What was the seriousness of the offense? How recent was it? A minor traffic violation and arrest ten years ago shouldn't influence your decision as much as a recent felony conviction.
- Will the conviction hurt your tenant's ability to pay the rent? If they can't get a job because of their record, they won't be able to meet the financial requirements to live in your property.
- Are they a potential danger to you, other tenants, or the property?
Don't make a hasty or biased decision when it comes to an applicant's criminal history. Talk to them about your concerns. Be flexible, but make sure you protect yourself, your property, and other tenants.
How Can I Use Background Information?
Criminal history isn't the only area to use good judgment when processing a tenant's application.
You cannot screen for or turn down a potential tenant based on gender or race. It's also critical to avoid decisions based on these characteristics:
- Family status
- Ethnic origin
- Disability status
- Marital status
- Sexual orientation
If a potential tenant claims a disability, avoid asking for proof or details. Asking for proof is often seen as a discriminatory practice.
Keep up with state landlord-tenant laws for your Detroit Metro property. You'll also need to stay up-to-date on federal Fair Housing laws. These laws can change at any time.
Use the same criteria for all applicants. Apply the information from screening reports to make an informed decision about the right tenants for your properties—not to exclude tenants based on personal preference.
When checking these areas for a potential tenant, use an FCRA certified company.
As a landlord, you are responsible for protecting the privacy of the information uncovered for each tenant. Make sure you partner with a company that knows how to report and how to handle private information.
When in Doubt, Less is More
No screening process is perfect. However, when your screening process is thorough, and your decision process is based on set criteria, you'll safely choose the best tenants for your property.
Consult with a Detroit Area property management company to make sure you're not making an illegal, costly mistake. Don't ask more potentially illegal questions of your tenant—ask us.
JMZ Property Management has a fair and efficient process to make sure each tenant is screen equally, every time.
Start with a FREE Rental Analysis to make sure your property is priced correctly for the type of tenants you hope to find for your property. Then, let us handle your screening process—legal, effective, efficient. We offer a Guaranteed Rent in 59 days, or your leasing fee is on us. Click the link below to learn more.