You're in the landlord business and you need to know how to screen tenants properly. When your home becomes vacant, and it will in this business, screening tenants up front will help you alleviate the future problems that it may cause when you put a non-qualified tenant in place. We all know that the vacancy is a painful time and that each day that it sits vacant, you lose dollars in rent, so it becomes tempting to just put someone in place when they can come up with enough money up front. The other side of the coin is vacancy presents an opportunity to make sure that your house is in good condition, that you can get top dollar for your rent and also you put a good tenant in place so that you can have the long-term win. Here at Frank Moore and Company, we have a set of criteria that we use that focuses on four key points.
One of them and one of the most important, is the credit score and I can't tell you or recommend how to set up your screening criteria, but we use a threshold where we've set a minimum credit score for each applicant when they're applying for a property. Then, there's the landlord reference. This is very important because you can get some insightful information from previous landlords on how the tenant paid rent, how their communication was, if they bounce checks, how they left the property condition when they moved out. The income verification is something you want to look at and you want to get some documentation to show you their pay stubs or letter from the employer on making sure the tenant makes enough money each month to cover the rent. Again, here at Frank Moore and Company, we use three times the monthly rent as the gross income multiplier to make sure that we're setting the tenant up for success and our clients up for success.
The criminal record search is something you want to do to make sure that the person moving in is of good character and of course you want to take into consideration if there has been an offense, how long ago has it been since the offense and what the weight of the offense is. Then, doing a search in your local court system of your county and your magistrate court will show you if there's any open dispossessories or very recent dispossessories that may have not shown up in the national criminal report you get. When you develop all of these areas, you want to go through and put them in writing and which will be your qualifying guidelines that you use each time you get an application, so that you can be consistent. It's going to make it a lot easier than having to reinvent the wheel each time and also it helps you be objective to each applicant coming in.
Then, of course, if you ever get a fair housing claim, you can turn around and hang your hat on these qualifying guidelines that you've got in writing. Speaking of in writing, when you turn away an applicant and they don't qualify, you want to give them an adverse action letter stating why you have denied their application and you also want to issue an adverse action letter if you're making the tenant pay more than one time the security deposit. Screening tenants isn't going to alleviate all the issues you may have, but it will help you solve many of them. Remember, you're in the landlord business.