Learn How a Prospective Tenant Becomes an Actual Tenant
From Phone Call to Moving In
Definition of Prospective Tenant:
A prospective tenant is an individual who could possibly move into a vacancy at your rental property. He or she has already begun the initial steps of the tenant screening process. He or she may have called about your property, may have come to view your property, or may have even filled out an application to rent your property and undergone a credit check.
There are, however, several more steps involved before a prospective tenant becomes an actual tenant. The individual must go through your complete screening process, must sign a lease agreement, and must pay their first month’s rent and security deposit before they are considered an actual tenant. Until that point, they are still referred to as prospective, or potential, tenants.
Differences Between Prospective Tenant and Actual Tenant
- Called About the Property
- Viewed the Property
- Filled Out an Application to Rent the Property
- Is Undergoing Your Tenant Screening Process
- Has Been Approved Through Your Tenant Screening Process
- Has Signed a Lease or Rental Agreement
- Has Paid Security Deposit and Rent
- Is Currently Residing in Your Rental Property
Example of a Prospective Tenant:
Mike is a landlord with a vacancy at his rental property. He places an ad for the vacancy online. Shelia sees the ad and calls to inquire about the property. She sets up a viewing to see the property on Saturday. Shelia would be considered a prospective tenant.
8 Steps to Becoming an Actual Tenant
1. Inquire About Viewing the Property
The potential tenant will contact the landlord about the vacancy at the property. The landlord may pre-screen the tenant over the phone to determine if the individual will continue to the next step of the process. Here are 10 Questions to Ask Prospective Tenants.
At every point in the screening process, the landlord must treat all prospective tenants equally. This can be done by having the same qualifying standards for all potential tenants. In addition, you must follow the Fair Housing Act. This act prevents you from discriminating against tenants based on factors such as race, religion or five other classes.
2. View the Property
The next step is for the prospective tenant to schedule an appointment and actually view the property. This can be done in coordination with a real estate agent or property manager.
3. Fill Out Rental Application
If the tenant likes what he or she sees during the viewing of the rental, he or she can fill out a rental application. This application will include basic information about the tenant, such as:
- Full Name
- Yearly Income
- Employment History
- Number of People That Will Be Living in the Apartment
- Current and Previous Addresses Including Landlord Contact Info
4. Consent to Background and Credit Check
The rental application will often include an area where the tenant agrees to having a background or credit check conducted. This will often require more personal information including Social Security numbers and dates of birth.
5. Pass Background and Credit Check
The information on the tenant's rental application will be verified. If any red flags are discovered during this screening process, the landlord can discuss the issues with the applicant. Examples of issues that could come up are poor credit score, a history of evictions or a criminal record.
6. Sign Lease Agreement With Landlord
If everything checks out to the landlord's satisfaction, then the tenant has the option of signing a lease to rent the property. The lease term can vary from a weekly lease, a monthly lease, or a yearly lease and will be agreed on by both landlord and tenant. A signed copy of the lease must be executed for both parties.
7. Pay Security Deposit and First Month's Rent
Before moving into the rental, the tenant must pay the security deposit, as well as the first month's rent. The maximum amount of the security deposit may be set by a statewide limit. Typically security deposits are one month's rent, but may range from half of a month to two months or more depending on local regulations and circumstances—for example an additional security deposit amount may be required if there will be pets.
8. Move Into Rental
Finally, the applicant can move into the rental. The individual goes from being a prospective tenant to being an actual tenant. Make sure that any damage related to moving in is covered in the signed lease agreement.