Not all landlords do tenant screening properly however it is incredibly important and requires a real investment of thought and resources. The quality of tenant that you have in your property will be the key to having a positive rental experience or something less positive. Keep in mind that damages, vacancy, and overall ROI are all impacted by having quality tenants. You need to screen your tenants well to make sure that you know who is moving into your investment property.
Creating and adhering to a standardized screening process is very important for a number of reasons. Checking for criminal, credit, and civil histories are all necessary. Each of these screens reveals different information and helps create a profile of the person you are considering. With the screening process there is also a fair housing liability, there are pieces of information that you can consider when screening a tenant and some that you cannot use in the decision making process. Using a standardized process that has been vetted to ensure fair housing compliance will help avoid any potential issues.
As we have said earlier all components of a background check are important and need to be interpreted as a full set of data. That being said when looking at criminal background the types of items in a background check, the frequency of issues, and the amount of time since the last issue are all factors that matter. The number of unique circumstances that come up are too great to discuss in the forum but it does require some real thought to analyze the process. Some points to consider are if the crimes are of a nature that they may put other tenants, neighbors, or your staff at risk. Those might be more consequential in the decision making process. Also a number of less severe crimes may indicate a different type of problem.
Pull a full credit profile report and examine the applicant’s credit history. You can choose a credit score that’s required before an application is approved, however we recommend not having a hard minimum credit score, the full credit history is most important. Ontime payment history is the biggest and most important factor. Past behavior is the greatest indicator of future results. Prior evictions, debts and outstanding payments to former landlords or property managers, and a record of late or unpaid utility bills are red flags that need careful consideration.
Taking a few minutes to call and verify information on the application can tell you if the person that you are reviewing is trying to deceive you from the start. Calling the previous landlord is of relatively low value. If the tenant is not paying the previous landlord has incentive to lie so that their tenant can get a new home and move out. If you have information from a prior landlord (one before their current landlord) that will provide a more reliable report on the tenant. You can call the employer listed to confirm that they are still currently employed. Employers will typically not share any more information that the current employment status but in some cases they will give you more information and that can be helpful.
Having a consistent and well thought out screening plan will aid in selecting better tenants and increase the likelihood of a more positive rental experience. We are always here to discuss your portfolio and specific situations as they come up. You can reach us through the contact page of our website, www.RealtyNowPM.com.