Placing the right tenants is one of, if not the, most important ways you can protect yourself from losses at your property. Furthermore, developing a thorough application is a critical part of creating a rock-solid screening process.

The rental application performs in a very similar way as a resume. It includes basic information (name, address, phone) plus key clues to applicants’ ability to “do the job” as your tenant―their references and income. As such, gathering the appropriate amount of information and asking the right questions are equally important. A great application will lead your applicants to answer in such a way that you should get a good feel for how they will treat your property, how they will interact with their neighbors, and ultimately, if they will be responsible enough to pay you each month.


This is one of the easiest ways to narrow down your list of applicants. If rent isn’t affordable, it is inevitable that tenants will default. Emergencies that arise with cars and unforeseen medical expenses can wreak havoc on renters’ finances if they don’t have an emergency fund in place. If your tenants don’t have an ingrained responsibility for paying rent before all other expenses, you may be left out in the cold.

How Much Income Does an Applicant Need? // While the industry recommends that renters bring home at least three times the cost of rent, financial gurus like Dave Ramsey recommend that housing make up no more than 25 percent of a person’s take-home pay. In my household, we spend approximately 18 percent of our take-home pay on housing. Like many out there, we are paying on student loans. If you want to enjoy luxuries like Internet service, cable and cellphones, the prevailing 30 percent that most people spend on housing is simply too costly.

The tenant will also need to be able to sustain any increases in rent in the upcoming years. Your rent will need to increase as your own expenses for the property increase: taxes, insurance, utilities and maintenance costs, to name a few. In sum, the industry minimum may not be enough to guarantee you consistent rent. Give careful consideration to all a prospective tenant’s expenses.

Bear in mind that the rent is the requirement, not the family type or size. In other words, you can use criteria based on their money in the bank, but not on the number of mouths to feed in the house. You cannot charge more in rent to a family with children nor have a different set of criteria for renters without children. To do otherwise is to violate the Fair Housing Act.

How Useful Are Bank Statements? // Bank statements can reveal a lot about applicants’ spending habits. For example, it can show where they are spending their money (including on rent). Are they constantly living on the edge, or do they have a cushion in the bank for a rainy day? Remember, there are some who operate off cash budgets based on the advice of a financial adviser. These individuals may not keep much in their main account because they don’t generally use their debit card for spending. Obtaining a list of their expenses and comparing it to their income can help fill any blanks missed by the bank statement.

Can I Count Child Support as Income? // Counting child support as income can be a sticky wicket. This is simply because there are too many unanswered questions about the child support payer’s background. It is more difficult to prove that these funds will come in steadily. Unless the one paying the child support is willing to act as a co-signer and go through the standard background and credit checks, leave this portion out of their total income.

Should I Allow a Co-Signer? // If applicants can’t qualify by themselves, often due to lack of rental history or insufficient income, some landlords may allow a co-signer to guarantee payment of rent. Allowing a co-signer is a matter of personal choice, but if you do accept co-signers, be sure to screen the co-signers as thoroughly as the tenants. Also, be sure the co-signers own property in the same county as the rental property (so they can’t just disappear on you) and require a completed application and application fee from them as well. Whatever you do, don’t allow a good co-signer’s screening results to outweigh a questionable primary applicant’s. After all, it is not the co-signer who will be living in your property and taking care of it daily.

Is It a Risk to Rent to the Self-Employed? // If applicants are self-employed, you will need to adjust your criteria for determining their level of financial responsibility. You will want to be able to determine that they have a solid business and are not just doing a little work on the side. Legitimate business can be validated on paper. In addition to deposits and checks from clients, they will have a business checking account, a tax ID number and deposits that you can verify.


Your application will do you no good if you don’t verify the information provided. Do a thorough investigation to make sure that references check out. Any additional time you spend on this activity now will keep you from many headaches down the road. As the screening process does take time and effort, pre-screening via phone interviews and property showings can help you narrow in on the select few that you want to investigate closely.

Whom Do I Talk to When Verifying Employment? // You will likely need to send over a “release of information” statement to any former employers or other references. When you do speak with someone at an applicant’s company, be sure it is someone at a supervisor level (or above) or someone in human resources. Other employees may be willing to lie or stretch the truth on behalf of their friend.

Will Prior Landlords Be Honest with Me? // Ask them to fill in the dates of the tenancy. This can reveal if the person on the end of the line is a friend posing as a former landlord, or the actual landlord himself. You will, of course, also want to ask if the applicant followed the rental policies set forth in their lease, was in good standing with neighbors, kept the property in good condition and gave appropriate notice about moving. Some landlords may exaggerate how great a tenant was to get themselves out of a bad situation, so use your intuition and use your other research to see if their word matches other feedback you are getting about the tenant.

Are Personal References Reliable? // These may not be as valuable as the word of the applicant’s current employer or landlord, as personal references could show a bias. That stated, they can still be valuable for weeding out some bad apples. If even close friends or family members can’t give your applicant a good reference, who else will be able to?

What is the Best Application to Use? // Type in “rental application” into a good search engine, and you will get a plethora of options. Look for an application that asks key questions about late payments, legal and criminal history, and recurring problems with past and present landlords. You will also want to make sure that your application includes a thorough authorization statement.  This will allow you to obtain enough information about your applicant to do a proper evaluation. You don’t want your prospective tenant filling out a novel, but an application that is too short and easy for them to answer could leave information gaps that put you at risk. Lastly, whatever you choose to use, it’s always advisable to consult your legal counsel.

This article was originally published by Community Investor magazine. Reprinted with permission. ©2015