Tenant Screening 101: How to Mitigate Risk in 5 Simple Steps


Today’s economy has altered the way commercial property managers conduct business in more ways than one. Where once a background and credit check, a security deposit, and a few good references could qualify a tenant for a commercial space, today’s tenant screening process has had to evolve with the times.

Those who are new to the tenant screening process and those that need a refresher for today’s marketplace can take the following five steps to mitigate their losses with a strong tenant screening process.

  1. Complete the tenant application, in full. This must be more than a quick, watered-down application that one might encounter for a credit card, and it should be filled out completely. Any blank spaces or incomplete sections of the tenant application should be addressed early in the tenant screening process.
  2. Photocopy identification cards, social security cards, financial documents, and other essential documentation. A good time to pay attention to your instincts about a tenant is at the point when essential documentation is requested. If a tenant seems hesitant or offers questionable excuses for not providing documentation, you may want to proceed with caution.  
  3. Run a background check, credit check, and other “checks” to begin verifying information contained in the application. It is here, at this critical step, where faulty and even fraudulent data can go undetected without the right tools. Managers using a reliable tool like (RE)meter’s TIL Score can access real-time, government-certified data to streamline this process.
  4. Check references from previous owners or landlords. Finding out about a tenant from previous landlords can reveal much about how the tenant will fit into your commercial space and portfolio. If the business is a startup, then request personal references from previous employers, community stakeholders, or other credible sources.
  5. Research the tenant’s industry. The volatility of today’s economy almost demands that this step not be missed, yet many managers do not know where to start. For some, it becomes too difficult and time-consuming to research current industry trends for every prospective tenant. The good news is that (RE)meter’s Industry (RE)port does the work for you. The Industry (RE)port evaluates trends of employment, establishments, rents, and key financial ratios for over 1,000 industries and 800 markets granular to zip code levels.  

Preparation, perseverance, and the right tools are a commercial property manager’s best friend when it’s time to screen a tenant for lease underwriting. Risk can creep in early during the tenant screening process and wreak havoc on an owner’s portfolio within months of signing a lease with a bad tenant. Stick to the basics but make sure the basics are based on a reliable and complete system to ensure you place the right tenant in the right space with the right lease.