By Dr. Rhys Lewis
Have you heard the adage “An ounce of prevention is worth a pound of cure”? It is particularly true for real estate investors choosing tenants. Few decisions have as much impact on the success of your investment and level of stress in your life as whom you accept into your units. An ounce of tenantscreening can save a lot of money, time, and headaches.
As an assessment scientist specializing in screening tools, people often ask me how they can improve their tenant screening. Below are the 5 most important secrets that I have to offer. Each “secret” is supported by thousands of published scientific articles, yet few real estate investors seem to know about them.
1. Double the validity of your interviews by structuring them. Most landlords “interview” candidates by having a conversation with them while showing the unit. The most important take-home message from thousands of studies on screening programs is that you can double the predictive power of the interview simply by standardizing it. Ask the same questions to every candidate, in the same way, and in the same order. Then score their answers with a standardized scoring key. Read more about how to structure interviews HERE.
2. Use a framework. Your interview needs to cover all the behaviors you care about, otherwise it will be deficient. My own research suggests that there are at least 22 behaviors that most landlords care about. How many are covered by your current interview?
a. Paying rent in full
b. Paying rent on time
c. Respecting the property
d. Reporting problems needing attention before they escalate
e. Taking responsibility for damages
g. Being friendly with neighbours
h. Not bothering neighbours (e.g., with loud noises late at night)
i. Honesty with the landlord
j. Keeping expectations reasonable (e.g., not expecting upgrades)
k. Friendliness with the landlord
l. Cooperating with landlord requests
m. Avoiding angry outbursts
n. Keeping the unit clean
o. Conscientious use of utilities
p. Doing above-and-beyond behaviors (e.g., picking up garbage around the property)
q. Respecting the need for permission
r. Avoiding theft/fraud
s. Avoiding turnover (i.e., living in the unit a long time)
t. Leaving the unit clean upon vacating
u. Accepting eviction
v. Not taking revenge on the landlord
3. Verify information. People lie. You can catch the lies or live with the consequences of failing to do so. Credit reports help by verifying the candidate’s past addresses and their ability to afford rent payments. References help to verify current employment and verify how the person behaves as a tenant. Make sure to call at least two past landlords because the person’s current landlord may be trying to unload their problem tenant on you.
4. Attract a large applicant pool. The more choices you have, the more benefit you get from a valid screening program. Put simply, you make better decisions when you are able to select the best candidate, rather than settle for the only one that applied. You can see exactly how much benefit you can expect HERE.
5. Include a personality test. Adding a personality test can double the predictive power of your screening program. Although the benefit is large, it shouldn’t be surprising. After all, personality tests are nothing more than standardized questions, asked in a standardized way, covering all the key behaviors in a framework. A built in lie detector is used to verify information. In other words, a personality test helps you follow the first three tips outlined above. You can read more at HERE.
Disclaimer: I stand to financially profit from the last suggestion – to include personality tests. As an assessment scientist and landlord, I believed in the benefits of personality tests so much that I developed one for screening my tenants. I then started a business called Honest Renter, making it available to landlords. REIN Members get a 20% discount!
Dr. Rhys Lewis, Ph.D. is an assessment scientist. His doctorate in Industrial & Organizational Psychology focused on screening tools. After 8 years of helping employers leverage science to screen employees, and 7 years as a landlord & property manager, Rhys now combines those two passions. He founded Honest Renter, a tenant screening company with the mission of bringing science to property managers. By adapting the science of employee screening for use in tenant screening, Rhys hopes to introduce new tools that benefit both landlords and tenants.