Most real estate investors buy properties, with the intent to rent them out to tenants over a long period of time. This type of real estate investing provides true passive income. But finding and choosing a tenant (known as Tenant Screening) can be a challenge if you don't know what to look for.

Finding Prospective Tenants - The first step of the tenant screening process is to find people interested in renting your property. This is done by advertising your property for rent. There are many different ways you can advertise your property for rent, but the most basic and affordable ways include advertising in your local newspaper or on the internet, putting a "For Rent" sign in the window or yard, and distributing flyers. Each advertisement should include basic information about the property (number of bedrooms, bathrooms, type of property, etc.), your name, and your phone number. If you don't have time to answer the phone all day, you can let people who are interested leave a message on your answering machine. It is important to return every call as soon as possible.

Arrange A Time to Meet - The next step in tenant screening involves meeting the prospective tenant at the property. When returning a prospective tenant's call, ask him or her if they would like to see the property, and what would be a good time for them. Arrive at the property 15 minutes for your scheduled meeting time, just in case he or she arrives early. Make sure to give the prospective tenant your cell phone number, just in case he or she becomes lost and needs directions. Sometimes prospective tenants arrive late, or they don't arrive at all! A general rule is to wait at least 30 to 45 minutes before leaving. If the tenant arrives, show him or her around the house while explaining the terms of the lease.

Perform A Credit Check - The next step in tenant screening involves obtaining a copy of the prospective tenant's credit report. There are a lot of companies that perform credit checks on tenants for a small fee (usually around $10 to $35.00). This fee should be paid by the prospective tenant, and should also be non-refundable, even if you don't choose to rent the property to that person. Usually these companies give you a application which the prospective tenant fills out. You then fax that application to the company, and they will fax you back a credit report, and deduct the fee out of your bank account or charge it to your credit or debit card. Credit scores of renters tend to be around 520 to 630. If you find a prospective tenant with a credit score greater than 700, jump up high in the air! These landlord service companies can also do background checks for an additional fee.

Contact Previous Landlords - Talk to landlords who have previously rented to the prospective tenant. Ask them if the tenant was ever late with his or her rent payments, and if he or she damaged the property in any way. Don't call current landlords. If the prospective tenant is currently renting a home, do not call the tenant's landlord. The prospective tenant could in reality be a problem, and his or her current landlord could lie to you, just to get rid of him or her.

Tenant screening is easy, and after screening a few tenants, it becomes very routine.