The rental property’s walls are freshly painted, the new appliances have been installed, and now the only missing element is a new tenant. However, as experienced landlords know, reviewing a rental application is more of an art than a science. Although rental applications are filled with data, a good tenant is not simply the sum of their scores.
By understanding the nuances of the application that a landlord will be able to identify a great tenant. Most rental applications have six major components:
- The applicant’s credit score
- Previous landlord references
- Reason for leaving their previous residence
- Background check
- Current income
- Employment history
While credit scores may seem self-explanatory, there are additional factors to consider: a younger applicant, for example, may not have had time to build a meaningful credit profile. Likewise, an older applicant may have excellent financial habits overall but a personal event, such as a divorce, may have led to an anomalous period of untimely payments. Landlords should scrutinize the payment history and debt utilization ratio contained within the report and ask applicants to explain any gaps or unusual behavior.
Previous landlord references can help add context, even in situations where a tenant has an exceptional credit score. Consider an applicant with a perfect credit score but, according to their previous landlords, a penchant for property destruction: will this person be good for the property? Similarly, an applicant with a middling credit score but outstanding landlord references may be an excellent tenant. It’s also important to understand why an applicant is leaving their previous residence: good prospective tenants usually are seeking a larger property, while less ideal applicants are trying to evade bill collectors.
Background checks are also nuanced. A person with one eviction on their report should be given a chance to explain the circumstances; however, an applicant with a history of evictions will probably not make for an ideal tenant. Applicants with a criminal history also deserve an opportunity to explain their actions; however, certain crimes, such as sex offenses and making and distributing illegal drugs, may automatically disqualify a person from renting in certain St. Louis neighborhoods.
Current income, which should be verified in the form of recent pay stubs or a W2 tax statement, combined with employment history, are helpful indicators of whether a potential tenant will be able to maintain a 12-month or even longer term lease. Current monthly income should generally be about three times a property’s rental price; however, if a tenant has significant gaps in their employment history or changes jobs frequently, they may not be able to make consistent monthly payments. Landlords should always confirm an applicant’s employment by contacting the employer directly. While some employers are legally allowed to only verify employment, in some cases it is possible to ask about the employee’s performance. Are they reliable and trustworthy? How long have they been with the company? Answers to these questions can help landlords analyze their prospective tenant’s financial stability.
Ultimately, landlords should allow themselves ample time to thoroughly vet and consider each candidate. No single factor should unilaterally determine if the applicant is a good fit; rather, interpreting the rental application as a whole will enable property owners to choose the best possible tenant.