Join Jeff Pearson and Stephen White as they help Mike Simmons of “Just Start Real Estate” as he evaluates the applications for three prospective tenants. In this episode, these three experts will share strategies on how to analyze a tenant screening report and tips on how to select the best applicant.
This was a really interesting podcast, enjoyed it as I work my way through the archives.
I ran these applicants through my screening process, just for kicks. I didn’t have answers for all of the things I look at, but think I had enough to make a go of it.
Applicants B and C made it through my prescreening, applicant A did not. Applicant A lost points for not having a compelling reason for moving and lost points for showing indications that they would be fussy or full of drama. Six people in a 3 bedroom would not be an issue for me, I have set my occupancy standards for each property, normally at 2 bodies per bedroom. If I was not renting in the low income niche I would probably have a tighter standard though, and would/do advertise the maximum occupancy.
So I would run criminal and credit on applicants B and C. Applicant B ended up with more points after re-scoring with all the information. They have long term verifiable employment, a positive landlord reference, no issues on the credit report; they only lose points for moving from outside the area, not having the community ties (job transfer). Applicant C got points for a positive landlord reference and stable rental history (long time at same address), but lost points for the issues on the credit report, and for the unverifiable income (which maybe could be overcome, which would allow him to just barely qualify).
I would offer the unit to applicant B. But, in my world that would be for a 3 bedroom low income unit renting for $775. I agree with the advice that in this case I would keep looking for an applicant stronger than B, since I would have a higher threshold for a nicer unit like the one discussed.
Michele, I love that you applied Mike’s situation to your own screening standards! There’s no question that each applicant had something going on that made the decision just a little harder. And in my experience, taking another round of applicants to see if a stronger one emerges is never a bad idea. If nothing else it may confirm the original selection, but more often than not an obvious better-choice seems to show up.
Just curious – how much point value does moving from an outside area have? Is it more comparable to say having an eviction, or more like having a lower credit score?
Past evictions are an automatic deny for us. Applicants lose only 5 points for moving from more than 30 miles away, and gain only 5 points for having lived in our town for 5 years. More points are gained and lost by how frequently they move. The credit score (really a fitness score from our screener) has a wider swing – they gain 20 for having a great score, no point change for average, lose 10 points for bad, and lose 20 points for terrible. And it just goes on and on, there are 37 lines/attributes I score on. I’m happy to share the spreadsheet.
Michele, I absolutely want to see the spreadsheet! It’s something we preach all the time but so many landlords are still not setting their criteria and look at every screening report on an individual basis. Not only is it dangerous from a liability standpoint, but the time wasted doing it this way is huge. I think you’d be doing a lot of landlords a giant service by sharing what has been working for you – if for nothing else it’s an example of how they too can create an effective system for vetting tenants.
Perhaps discussing your spreadsheet would be a good topic for our podcast 🙂