Screening tenants is one of the most important things you will do before renting out a home in Santa Rosa. California tenant protections require you to follow all state and federal fair housing laws when you’re screening, and as long as you’re in compliance with those, we encourage you to be as rigorous as possible when choosing a resident.
A good resident means consistent rental income, help maintaining your property, and a pleasant and profitable rental period.
We have spent a lot of time talking about what to look for when you’re choosing a tenant; you want good credit and verifiable income and a solid rental history. Today, let’s talk about what you don’t want to find when you’re screening tenants. These are some of the red flags that will almost always disqualify a tenant when we are screening as Santa Rosa property managers.
Money Owed to Former Landlords
The credit report and credit score can help you understand a potential tenant’s overall financial health. These should absolutely be part of your screening process. However, you want to do more than glance at the credit report and decide whether the credit score meets your standards. Setting a minimum credit score as part of your qualifying rental criteria is a good way to make a quick decision about who you’ll continue screening and who you won’t. But, you need to take a good look at the credit report and decide how seriously this applicant takes their housing-related bills.
- Landlord debt. Any money owed to former landlords or apartment communities could be problematic. If your applicant was willing to leave a former residence without a zero balance, it’s a huge red flag. Why would they owe back rent and not pay it? This could become a problem for you if your tenant falls behind on rent and cannot catch up, then moves out without paying what is owed.
- Utility Collections. When the credit report reveals that money is owed to the electric company or the gas company or that accounts are in collections or services have been turned off, this is definitely a red flag. You could be left with large utility bills after your tenant moves out if they cannot be relied upon to pay them.
- Evictions. An eviction is always going to be a red flag. In California, not all evictions will show up on a credit report, especially if they did not go all the way to court and include the sheriff executing a Writ of Possession and physically removing the tenant from the property. So, if you do see evidence of an eviction, you know that it came to that. This is problematic. Look for evictions on the credit report but be sure to check the national eviction database as well.
Credit reports can give you a lot of information. You’ll see what kind of debt the tenant has, whether they manage to pay it, and how well they stay ahead of their regular bills. Make sure you’re looking for these three red flags as well before you approve a resident for your property.
Income that Cannot be Verified
Best practices in Santa Rosa property management say that you should look for a tenant who earns at least three times the amount of rent. This has become slightly more complicated over the last year, when rents have risen so dramatically. However, you want to set a standard and stick to it consistently when you’re screening. Maybe it’s three times the rent or maybe it’s two-and-a-half times the monthly rent.
Always verify the income that your applicant says they earn. If they cannot manage to produce any income verification, that’s a major red flag. They cannot expect that you’ll simply take for granted that they’re telling the truth about what they earn.
There are a few ways to verify income:
- Ask for paystubs. This is the most common way to confirm that your applicant earns what they say they earn. If they can produce evidence of their weekly, monthly, or bimonthly paycheck, you can measure it against the amount of rent and determine whether they qualify. Ask for at least the last two paystubs so you can be sure the job is permanent and the earnings reliable.
- Ask for an employment contract. If you have a tenant moving into town and they haven’t earned a paycheck yet, but they want to document that they will be earning consistent income, you can accept an employment contract or an offer letter as a way to verify income.
- Collect Tax Forms. When you have a self-employed individual who wants to rent a home from you, they might need to provide tax forms in order to prove that they earn what they say they earn. A Form 1099 can show you what they earn as independent contractors or freelancers. Or, they can provide filing documents that reflect their annual income.
- Accept bank statements. Another good way to verify income that may be non-traditional is by accepting a bank statement. You can clearly see deposits that have been made at recurring and regular times, which indicate income that’s earned. This is helpful for retirement income, for example.
If the applicant you are screening cannot provide income verification in any of these ways, it’s likely that they don’t have any income at all. That’s a red flag.
Offering a Credit Report of Their Own
If your applicant is eager to provide their own credit report, this is a red flag. These printouts can be easy to forge, and if they’re worried about something you might find on the credit report you pull on your own, they’ll be anxious about it.
Do not accept a credit report from the tenant. You’ll want to do your own screening, and that will include a full credit pull. If your applicant pushes back against this, you can be sure you’ve stumbled upon a pretty serious red flag.
Zero Landlord References
Not every landlord will take the time to check references when screening applicants. We think this is important, however. You want to gather some information from people who have rented to your prospective tenant before. There is no more reliable information about the tenant’s rental experience. Always ask for the names and contact information for at least two current or former landlords. Then, get in touch with those landlords.
Not receiving any references is a red flag. If your applicant provides contact information but the landlords are impossible to reach, you might wonder why. If you do a little research into who owns the properties that are on the application as being former residences, and you find that the contact information for references does not match the information in public records, this might also raise some alarms.
Maybe you will get in touch with references. Some of the things you don’t want to hear are:
- That the tenant was late with rent.
- That a Three Day Notice had to be served more than once.
- That lease violations were discovered and it was difficult to get the tenant to come into compliance.
- The proper notice was not given before the tenant moved out.
- That property damage was left behind.
- That pets misbehaved or made messes.
A positive landlord reference is always preferred, and struggling to get in touch with any landlords at all should be disconcerting. Be willing to have a conversation with applicants about the importance of getting this box checked on the application process in order to move forward with their approval.
Incomplete Rental History
While we’re on the topic of verifying rental history, let’s talk about another red flag: an incomplete or chaotic rental history. If there are gaps that remain unaccounted for or discrepancies in dates of residence, you might want to do a little extra digging. Sometimes, if a tenant has a bad experience with a landlord, they will be unwilling to admit that to a potential new landlord. They won’t want to tell you about conflicts and disputes, for example, especially if they were at fault. If they were nearly evicted or held accountable for lease violations or property damage, they likely won’t want you talking to those landlords.
Check the rental history that’s provided on the application against the addresses that pop up on a credit report. If they do not correspond in any way, follow up with your applicant. If there are gaps in the rental history where the tenant does not appear to have lived anywhere, ask for clarification.
As Santa Rosa property managers, we do a pretty thorough job of screening applicants, and we encourage you to put together a process of your own that is rigorous, fair, and consistent. Make sure you understand the fair housing laws that govern the screening process, and if you have doubts at all about your process or the people who are applying for your home, reach out to us at Prestige Real Estate & Property Management. We manage homes in Sonoma County, including Santa Rosa, Windsor, Sebastopol, Petaluma, and Rohnert Park.
