Last Updated: December 2023
Tenant screening is an extremely important component of rental real estate. Proper screening ensures that a landlord is getting the right type of tenant for their risk tolerance, and mutually beneficial relationships for both parties. Poor screening can result in poor relationships for both landlord and tenants. Below we take a look at what rental property tenant screening is, what to look for when screening, and the different types of screening methods available to landlords.
9 Types of Tenant Screening Reports
What are on tenant screening reports? Nowadays, tenant screening reports cover much more than just credit checked with major credit bureaus such as Experian, Equifax, or TransUnion. Below is a list of the most common types of reports that may be included in an overall tenant screening process.
Residential Tenant Screening Process (3 Steps)
The residential rental property tenant screening process would be used during the leasing of an apartment or a single family rental (SFR). Residential leases are usually under the name of the individual person and possibly a cosigner if applicable. Creditworthiness will be checked for all people who will be on the lease agreement. The residential tenant screening process normally flows as follows:
How to Perform Residential Tenant Screening
- Application Submission
Applicant completes and returns a a completed application form along with any proof of income information such as pay stubs and other relevant information.
- Review and Screening Reports
Landlord or Property Manager reviews application, checks credit and verifies provided information such as employment, current landlord references, and personal references.
- Decision (Yes or No)
Landlord or Property Manager notifies the applicant with either a Yes or No if they will offer the unit.
Top 15 Tenant Screening Services
Tenant Screening services are third-party providers of background data such as screening reports on tenant applicants. Due to the sensitive data they gather, they are classified as a Consumer Reporting Agency (C.R.A.) and regulated by the Fair Credit Reporting Act (FCRA). Landlords and property managers have many choices when it comes to selecting a tenant screening service, so we’ve included a few of the top online tenant screening services.
Commercial Tenant Screening Process (5 Steps)
The commercial rental property tenant screening process would be used in the process of leasing commercial spaces such as a retail property, office space, or industrial warehouse. Commercial leases are usually under the name of the business, however, Landlords sometimes may require a personal guarantee if in their opinion, business financials are lacking or the company is relatively new. The commercial tenant screening process is a little different from residential and normally flows as follows:
How to Perform Commercial Tenant Screening
- Letter of Intent (LOI)
Most larger or broker-represented commercial tenants start the leasing process off by submitting an LOI. The LOI is a non-binding document that provides proposed lease terms and preliminary information about the tenant for ownership or property management to consider.
- Application Submission
Applicant or their representative (i.e. commercial real estate broker) completes and returns completed application, along with any business tax returns, business financial statements, and other relevant company information.
- Review and Screening Reports
Landlord or Property Manager reviews and verifies provided information such as current landlord references, business trade lines, and may perform a credit check if personal guaranty is applicable.
In commercial real estate, there may be several rounds of negotiation back-and-forth on various deal points of the lease agreement. Throughout this process, draft lease agreements are marked up and sent back and forth, with requested language modifications from both parties until they both agree upon final language to be in the lease agreement.
- Lease Agreement
Once both parties agree on all lease language, the final commercial lease agreement is drafted and ready for singing.
The #1 Rental Property Newsletter
Rental Property Tenant Screening FAQ
What is Tenant Screening?
Tenant screening is the act of evaluating prospective rental tenants based on a series of quantitative and qualitative factors. Screening is performed to assess the likelihood of a potential tenant to fulfill the terms of the lease agreement. The screening process culminates in an ultimate “Yes” or “No” decision to fully approve an applicant, approve the applicant conditionally (such as requiring an increased security deposit or cosigner), or deny tenancy.
What is the Best Tenant Screening Service?
The best tenant screening services ultimately depend on many different variables such as type of residential property (e.g. single family rentals vs commercial real estate), management (self manage vs professional property manager), and other things. The right software can act as an essential tool for rental property business, whereas the wrong choice could result in unnecessary expenses for unused features. Below is our overall top pick:
How Long Does the Tenant Screening Process Take?
The duration of the tenant screening process can vary depending on the depth of the screening. Typically, it takes anywhere from 1 to 5 business days to complete. Basic screenings, such as credit and criminal background checks, may be faster, while more comprehensive screenings involving rental history, employment verification, and reference checks might take longer. The key is to balance the thoroughness of the screening with the need to fill the rental quickly, ensuring you make informed decisions about potential tenants while minimizing vacancy periods.