2. Get confirmation of your tenant's employment
A tenant who applies to live in one of your units might claim that he or she is gainfully employed, but you can't just take their word for it. Instead, request a copy of their most recent pay stubs so you can see what their income looks like. It also pays to contact your applicant's employer directly and confirm that he or she is an employee in good standing. Many companies won't divulge financial information about their employees, but you'll likely manage to verify whether your applicant works there.
3. Run a credit check
A tenant with a solid credit history is more likely to keep up with rent payments than someone whose credit history is shaky. That's why it pays to run a credit check on each applicant who crosses your path. You can do so by obtaining a copy of his or her credit report and reviewing it for red flags. Specifically, you'll want to look at that person's payment history to see whether he or she tends to pay bills on time. You should also look at that person's current debt -- the more your applicant has, the harder it may be for them to pay rent on schedule. Each credit bureau lets you run a credit check on a tenant applicant. You'll need the applicant’s full name, date of birth, and Social Security number. You'll also need their consent to check their credit, so be sure to include that on your application form. Now you can head to the credit bureaus:
You can pass these fees on to your applicant as part of the application fee (you could offer to refund them when they sign the lease if you'd like).
4. Run a background check
While a credit check gives you insight into an applicant's financial history, a background check gives you information on their criminal history. If he or she has any recent criminal events on record, you may want to pass for the safety of your other tenants (not to mention your own safety). Similarly, a background check may reveal ongoing lawsuits against your tenant. An applicant who's being sued for overdue payments, whether by a contractor, credit card company, or former spouse, is someone you may not want to rent to. As is the case with a credit check, you'll need an applicant's consent, as well as his or her full name, date of birth, and Social Security number. Then just choose a background check service, pay the fee, and enter your applicant's information. There are many background check services; you might use Background Report, Accurate Now, Verified Credentials, or any service that offers the features you're looking for.
5. Ask for references
One of the best ways to vet a new tenant is to speak to people who have rented to him or her before. To this end, it pays to ask your applicant to provide the names and contact details of former landlords and talk to those people about their experience. A landlord who tells you your applicant never missed a rent payment in two years might set your mind at ease.
If your applicant has never rented before, ask for personal references from non-family members who can speak to that person's character, habits, and level of responsibility. Though they may not carry as much weight as an endorsement from an actual landlord, they could be your next best bet.
Renting your property to a bad tenant could cause you a world of stress and financial issues after the fact. So don't take that chance. Instead, take steps to screen your tenants thoroughly before agreeing to rent to them.
If you're on the fence about a tenant's financial capabilities but are desperate to fill a vacant unit, ask for a higher security deposit. That should at least give you some protection when an applicant mostly qualifies to rent from you but you still have lingering doubts.