Up until this point, you’ve completed tenant pre-screening. You’ve created an effective rental listing and hosted a rental property showing.
If you didn’t notice any red flags up until now, you should move forward by asking applicants to complete a rental application. If your tenant fills out the application, you can be assured that he or she is interested in renting your property.
Here at Rentalutions, we believe online rental applications are the most effective. They’re easier for tenants to complete, which means you’ll receive the application faster. You can manage all of your applications in one place, so there’s no confusion or paper clutter. Online forms also allow tenants to upload documents, so you can easily verify income with a W-2 or an offer letter.
This chapter will go through the six important parts of the rental application:
- Tenant contact information
- The five core questions
- Rental history
- Employment history
- Co-signer information
- The rental application signature
Contact Information on a Rental Application
You’ll need basic information from your tenants, including name, email, and phone number. This allows you to identify the application and easily contact the prospective tenant if needed.
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You can use the contact information as a reference even once an applicant becomes a tenant. We recommend you hold onto rental applications, whether you reject or accept tenants. If you use Rentalutions to complete your tenant screening, then your applications are always available to you even once you’ve rented the unit. That way, you can easily access important tenant information that is gathered in the application. And if needed, you can verify why you rejected other tenants.
Five Questions to Ask Prospective Tenants in the Rental Application
The best way to gather information in your rental application is to ask questions. Our five core questions help you gather crucial information:
Our questions have “yes or no” answers, meaning they’re designed to be easy for your tenant to answer. This way, you can quickly scan the answers and spot red flags. A “yes” to any of our core questions should make you think twice. Here are our five core questions:
1. Have you ever declared bankruptcy?
A history of bankruptcy could indicate financial irresponsibility. If a tenant has filed bankruptcy, you can follow up with him or her to find out more information.
2. Have you ever been convicted of a felony?
A felony is a serious crime that typically involves jail time of at least one year. Felonies are typically violent crimes, which is why they should be taken very seriously.
3. Have you ever been evicted?
A prior eviction strongly indicates the tenant is not a responsible renter. It is likely he or she has not paid rent in the past or significantly damaged another landlord’s property.
4. Have you ever refused to pay rent?
You want to avoid tenants who have refused to pay rent in the past. There is a strong chance they will repeat the same behavior with you.
5. Do you smoke?
This is a question that you likely already asked during tenant pre-screening, especially if you’ve been reading our Complete Guide to Tenant Screening. This is an important question to ask because smokers can create a lot of problems for you. Smoke creates an odor problem. You risk burn or scorch marks, which is expensive to fix. It is also a fire hazard and a health hazard to other tenants. Most landlords don’t allow smoking in the unit, building, and in more strict cases, anywhere on the property. Some landlords set limits that they write into the lease. For example, tenants are allowed to smoke ten feet away from the rental property, or can smoke in a certain designated outdoor part of the property. Ultimately, it’s important to ask if a tenant smokes and to have rules in place.
In regards to a tenant’s answers to these questions, you may be skeptical if a tenant is being truthful. Keep in mind that bankruptcy, eviction, criminal history, and nonpayment of rent can all be verified by following up with tenant references and by requiring a tenant credit and background check.
These questions are designed to help you gauge whether a tenant will pay rent on time and take care of your property. For more information, check out these five important questions to ask potential tenants.
Employment History on a Rental Application
Gathering employment history is important for a few reasons. You want to verify a tenant’s current source of income to ensure he or she can afford rent. Steady employment also signifies a tenant is responsible.
Most importantly, we recommend you ask for a tenant’s current employer. You’ll want to collect the following information:
- Company name
- Position
- Salary
- Company address
- Reference information: name, email, and phone number
You need the contact information for an employer reference so you can verify a tenant’s employment.
At Rentalutions, we ask tenants to enter current employment and two previous work experiences. This allows you to see the trajectory of a tenant’s career. We ask for dates of employment so you can pay attention to work stability, i.e. how frequently a tenant switches jobs.
Income Verification
As a landlord, you need to know if a tenant can afford rent. Verifying income is the best way to do this. With an online rental application, tenants can upload documents to verify salary.
We recommend requiring one of the following documents:
- W-2
- Pay stub
- Offer letter with salary
Tenant Income Requirement
Typically, monthly income should be at least 3x the rent price. This ensures the tenant will have sufficient income to cover rent. However, there are a lot of situations where this rule may not be perfect. For instance, if a tenant has a responsible financial history (no outstanding payments, a history of paying rent on time, and a history of keeping jobs) then you may be comfortable renting to this person even if his or her income is only 2x the rent price.
Gauging a tenant’s likelihood of paying rent comes down to more than just income level. It’s important to also consider job stability, financial history, and listening to prior landlord references. With all of these factors, you have a more complete story to base your decision.
Ultimately, you should follow your best judgment when it comes to an income requirement.
How to Screen Co-signers
A co-signer is essentially another person on the rental agreement who is financially responsible for payments. If your tenant hasn’t had a chance to establish credit or his or her income is too low, then a co-signer is a great way for you to ensure payments will be made.
On the rental application, you should ask the applicant if he or she will have a co-signer. Then, you can follow up with the co-signer because he or she will need to go through the tenant screening process just like any other applicant. This includes the rental application, a tenant credit report, and a background check.
Make sure the co-signer is aware of the implications of co-signing. He or she will be responsible for the full rent amount if the tenant does not pay.
Screening co-signers is extra work, but it adds to your certainty that you will receive rent each month.
Rental History on a Rental Application
We recommend asking for at least five years of residence history. When a tenant is filling out rental history, ask for the following information:
- Property address
- Landlord name and contact information
- Dates lived in residence
- Reason for leaving
You’ll need the landlord contact information so you can reach out to the tenant’s prior landlords.
At Rentalutions, we require at least three years of residence history. The more complete the information, the better. An important indicator to look out for is the reason for leaving the prior residence. For one, it can let you know what the tenant is looking for. For example, if the tenant writes that he or she “desires more space” then you know why your property is desirable to this tenant. More importantly, it helps you learn if the tenant had to leave due to a problem. For instance, if the reason for leaving was an eviction or a problem with the landlord, then this is a red flag.
Check out this article for more important things to look out for on a rental application.
Ask for a Rental Application Signature
The rental application signature serves two important purposes.
- The signature verifies all information is true.
- The signature provides permission to contact tenant references.
Final Thoughts
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The rental application is an important tenant screening tool. On a basic level, it ensures the tenant is interested. After seeing the property at the showing, you can be assured the tenant is seriously interested if they complete the application. Second, the application allows you to verify income and ask important tenant screening questions.
This chapter went over how to review a rental application, what income level to require, and how to screen co-signers. After reviewing a tenant’s application, the next step is to reach out to the tenant’s references. You’ll need to reach out to a tenant’s employer and prior landlords.
Continue reading below to learn how to handle tenant employment references.
Originally published at Rentalutions.
