Practically every landlord here in Central Florida recognizes that respectful long-term tenants who pay their rent on time are an excellent outcome of your rental property efforts. Forming positive relationships with your tenants makes the experience feel less like work and more like a natural source of passive income. However, these positive renting experiences don't happen out of thin air! Instead, successful renting relationships are based on a highly-tuned process, which includes screening your tenants for potential issues.
The main issues to avoid are the potential for disruption and damage, and the inability to pay rent. It is essential to recognize that there are factors you can consider in the screening process, such as credit score, that have a direct bearing on the issues you wish to avoid. However, it is equally essential to ensure that your screening practices do not discriminate against protected groups of individuals since people from all backgrounds can potentially be excellent tenants. Avoiding discrimination also keeps you legally compliant here in Central Florida and ethically above-board in your business practices—which is vital for your reputation as a landlord.
Work with an FCRA Compliant Screening Service
When running checks on your applicants, it's crucial to find a screening service that abides by the regulations of the Fair Credit Reporting Act (FCRA). You want the information you receive to be both accurate and relevant to the decision at hand. These checks include:
- A credit check: extremely low credit can indicate a history of late or missing payments on debt or for other rental agreements. The credit check is enough to be worth investigating, but at times, applicants have extenuating circumstances, such as an error on their credit report or simply a lack of existing credit that mitigate this factor.
- Background/criminal check: Understanding if the tenant has participated in crime in the past (actual convictions, not allegations) can be pertinent to your choice of who to accept as a tenant. Ensure that you are not discriminating in your decision based on aspects of past criminal activity that have no bearing on the ability to rent your property.
- Previous rental history: Contacting past landlords can help determine whether there is a justifiable red flag on a particular tenant. If they have damaged recent properties or had a history of missing payments, this is worth considering in the choice of whether to accept an application.
Recognize and Avoid Discrimination
While certain aspects, like the past rental history, may seem like cut-and-dried red flags, there are other places in the screening process where implicit bias can creep in. Implicit bias can affect you in at least two ways:
- First, it can make you more prone to deny an application if you do not associate the person with successful rental relationships.
An extreme example would be, for instance, if a landlord had a bad experience and had to evict an individual with a particular hair color and then decided that no future people with that hair color could rent his or her property. While few people truly discriminate based on hair color, other aspects of identity are frequently conflated as a reason to discriminate, which is both illegal and unethical—it also reduces your pool of potential applicants, which you do not want to do.
- On the other hand, there are implicit biases that favor the tenants you most closely associate with, but which may blind you to a potential red flag.
If, for instance, an applicant grew up in your hometown, you may feel a connection to this person that makes you more susceptible to ignoring a lousy reference from a past landlord or a poor credit score due to previous missing payments. Cutting someone slack is often valuable, but ensure that you aren't accidentally giving more slack to some applicants than others: they may be able to manipulate you into starting a rental agreement that will ultimately benefit themselves and harm you and your property.
"How Do Property Managers Support My Investment?"
One of the best ways to learn to properly screen tenants here in the Central Florida area is through a long history of experience: you become better at identifying your own biases as well as noting the circumstances surrounding problem tenants that should have been red flags. Property managers provide this experience to their landlord clients to ensure that everyone—property manager, and landlord—can benefit from high-quality, reliable tenants.
At Verandah Property Management, we're well aware of the regulations and ethics surrounding discrimination in Central Florida and we document extensively to both avoid lawsuits in the first place and to win them if a disgruntled applicant ever decides to file. These strategies help new landlords get a handle on the best way to screen tenants, or, if they wish, allow them to opt out of the tenant screening process entirely. Regardless of where you are in your landlord journey, Verandah is here to make it your best step yet.