First Step

1) Check your homeowner's policy. Does it cover renters? If not, you need to take out a special landlord policy.

The Telephone Interview

2) Prescreen a would-be renter by telephone. Do so rather than initially in person. This way you can eliminate those that are not a good match and those who are scammers. Although you should be  friendly you should also be focused and obtain such details as how many people would be living in the house, apartment or loft.

Caution: The Fair Housing Act makes it illegal to discriminate against a potential tenant based on race, religion, national origin, gender or family status.

However, you are allowed to turn down an interested party if you feel there are too many people for the property - like six guys in a studio! But you cannot turn away a couple because they are not married or gay.

3) Ask about pets. If you've just painted and put down new carpeting, you may not want pets. In fact, that should be stated in your ad. On the other hand, perhaps you love animals and are quite willing to rent to someone who comes with a dog or cat. If so, keep in mind that many landlords charge an extra monthly fee for pet-related wear and tear.

(Kitty is guaranteed to use the kitty litter box; Fido, on the other hand, needs to be taken out several times a day. So find out if the prospective renter works and therefore will hire a dog walker.)

Note: Certain pet liability insurance policies will not cover pit bulls and other "dangerous" animals.

On a personal note...For many years I took care of a friend's dog when he went on vacation. Andrew, a white terrier, was well along in age, so when we went downstairs and outside so he could pee, he would look at the front door (I live in a NYC apartment building), race forward (which wasn't too fast) and never quite make it to the street. Therefore, Andrew and I traveled with a roll of paper towels to clean up his small mess in the lobby. But he was such an enchanting dog, that everyone forgave his indiscretions!

4) Ask about money. Explain that you require, up front, the first month's rent, the last month's rent and a security deposit. This is a good time to inquire about the person's monthly take-home pay.

$TIP: A tenant should have a gross monthly income that is at least three times the rent. And, during this part of the conversation, let the prospective tenant know you will be running a credit check.

Evaluation

At this point, you should have a good (or a negative) feeling about the person. If he or she has not answered your questions or you simply are dubious, be forthright and say, "I don't think this is quite the right match" and end the conversation.

Meeting In Person

If you're pleased with your phone interview, set a date to show him or her the rental property.

5. Application. The prospective tenant must be willing to fill out your form which should include his Social Security number, names and contact information of previous landlords, employers and personal references.

The application should also note that the prospective tenant grants you the right to run a credit check, a criminal history check and to contact current and former employers regarding dates of employment and salary.

If you wish to rent to non-smokers, this should be included in the application.

TIP: You can get a free application from the National Association of Independent Landlords (NAIL) at: www.nail-usa.com. Click on "Free Rental Applications."

6. Do your own check. Call previous landlords, employers and personal references. Keep in mind, that in the case of previous landlords, an imposter may ask friends to play the role of landlord. To determine if this is the case, ask the previous "landlord" to verify a piece of inaccurate information - such as misstating the rent the applicant said he paid. If the "landlord" confirms the inaccuracy, this should send up a red flag.

TIP: If you prefer, NAIL will run a background for you. The fee is $29.95. For details, call: 800-352-3395.

7. Finally, don't rent to someone who...

• Wants to move in within one or two days. He or she may be what's known as a scammer and have absolutely no intention of paying the rent. Scammers realize that once they've moved in it's expensive and complicated for you to evict them. 
• Is argumentative or negative.
• Looks a mess or appears intoxicated or on drugs.
• Mentions that they are suing someone, or have sued someone. An exception would be someone suing for child support.