How to Process Rental Applications for Chesapeake Properties

Choosing the right residents for your investment property can be the difference between years of inner peace and passive income versus a living nightmare! Luckily, there are some tools available to property investors that can make the selection process a lot easier and less risky. 

For example, one of the critical ways property owners can screen potential residents and avoid future problems is with what's known as a rental application. The rental application is the first and most crucial step in finding and securing quality tenants for your investment property. A rental application can not only give a level of security to your decision-making, but it can also provide extra confidence and protection when sorting through the prospective tenants. 

In this blog, we'll dive into how a property owner can set up a rental application, how rental applications are generally structured, how to process them effectively, and what to do if you're concerned about this step in finding quality tenants. 

What Is a Rental Application?

Preparation and people management skills are two critical components of being a good property owner. Because of this, it's no surprise that almost all real estate investors will ask their pool of potential renters to complete a rental application. It should be a standard procedure, and renters expect this step in the application process. 

A rental application is a questionnaire-style form completed by potential renters to provide the property owner with pertinent information regarding the possible residents. It covers personal and financial information to determine if the applicants will be suitable for the property.  

These applications must be set up without violating Fair Housing or discriminatory laws while eliciting essential information based on your ideal tenant criteria. Property managers can tell you that it's your first safety net to help narrow down your field of potential residents and avoid troublesome tenants who may cause damage or create financial problems.

One way to achieve this is by starting with a template to cover the essential information you need to collect. Or many successful property owners work with an experienced Chesapeake property management company to ensure everything is above board.

What Should You Include In a Rental Application? 

Although rental applications may differ from property owner to property owner, many share the same features. A thorough residential rental application generally includes:

• Name of the applicant (or applicants)
• Social security number
• Address
• Authorization to conduct a background screening (including signatures of the consent) 
• Employment information
• Previous residence and rental history

In addition, rental property owners must avoid requesting any information that may lead to discriminatory practices. If you're not sure how to create a rental application that meets that requirement, a property manager can help! 

Topics to not put in your rental application include: 

• Religion
• National origin
• Race
• Color
• Sex (including gender identity or sexual orientation) 
• Family status
• Disability status

Any questions related to these characteristics will likely trigger a breach of the Federal Fair Housing Act. In addition to federal laws, make sure your rental application template meets state and local requirements for housing laws. 

How Do I Process Rental Applications? 

When you've received a completed application, it's crucial to process it legally and fairly. Property owners must process every application the same way, regardless of the information on the form. 

As a property owner, you can use the information from the application to:

• Run a credit and criminal background check: This information helps owners determine if an applicant meets the preset credit score criteria and has a history of paying bills on time. A credit check also gives insights into any prior bankruptcy or default issues. When reviewing criminal history, work with a property manager to avoid discriminatory practices when denying or approving tenants.
• Verify past rental history and speak to prior landlords: Reach out to past landlords and ask pertinent questions to learn if a tenant pays the rent on time, left the property in good condition, had any issues with neighbors or other tenants, or had any criminal or legal issues related to the occupancy.
• Verify employment history and income: Some common ways to do this is by asking for proof of income for at least three months prior (such as a bank statement) or a W-2 tax form that shows income for the previous tax period. Another option is to request an income verification letter.
• Speak to references: For character-based assessments, reach out to several referees. However, try not to rely on references from personal contacts such as family members or friends as they are more inclined to provide a positive review. Instead, opt for work colleagues or acquaintances to complete your background review. 

After the screening process, choose the best candidate based on your criteria and the information you receive from background credit reports. 

Make Sure Every Application Is Complete

The best property management companies recommend a 'no blank' policy when processing applications. This means an application will not be accepted if it contains blank spaces on the form. Incomplete information doesn't allow you to thoroughly review a prospective tenant with the same information you use for other applicants. 

When receiving an incomplete application, you can either request that they be filled out correctly or disregard the application entirely, as it may indicate bad faith or an attempt to conceal unfavorable past rental history.    

What About Data and Private Information? 

As a property owner (especially a first-time investor), requesting and managing strangers' sensitive data or private information can feel awkward or sometimes uncomfortable. Along with the federal Fair Housing Act, owners must also abide by the Fair Credit Reporting Act to protect their requested private data and maintain ongoing relations with their renters. 

If you're not sure how to process or safely store personal data, work with a Chesapeake property management company that knows and abides by FCRA regulations to avoid any breaches and give you peace of mind.

Now You're Ready to Start Processing Rental Applications!

Rental applications are a fundamental step and standard process in ensuring your future residents are the right fit for you and your investment property. Along with the right questions, it's integral that all rental application forms abide by state and federal regulations to ensure a fair, safe, and discriminatory-free process. 

If you're worried about finding the right residents for your investment property or are not sure you can manage the legal obligations of applications and tenant screening, reach out to Osprey Property Management today. We offer a full range of services, including tenant screening and selection, to help you place quality tenants in your rental properties.

Learn more about finding the right property manager when downloading our free resource, the "Guide to Finding the Best Property Manager in Hampton Roads!"