Real Estate Marketing & Beyond
As the demand for rental properties skyrockets, landlords can be bombarded with applicants. With so many people vying for an apartment, how can landlords be sure they find the right tenants?
© Scott Maxwell - Fotolia.com
A landlord’s worst nightmare is an irresponsible and negligent tenant. Fortunately, comprehensive tenant screening can greatly reduce the chances of signing a bad renter. Here are a few tips when screening a tenant:
- Do Conduct a Comprehensive Background Check. Running a comprehensive background check on a potential tenant is one of the most important steps in finding a credible renter. Always use a report that includes credit, criminal and eviction screening at a minimum. The best reports also include a decision recommendation, income to rent analytics and credit payment history in an easy-to-read format.
- Do Make the Applicant Pay for the Report. Use a service that enables the applicant to pay for the background check directly. If the potential renter is interested in a property, has nothing to hide and has the funds to rent, he or she should be comfortable paying for the report. Having the applicant pay for the report saves the landlord the inconvenience of fronting the screening costs for multiple applicants.
- Do Take the Time to Read Tenants’ Background Reports Carefully. Be sure to take careful note of any collections flags. Applicants with collections actions are much more prone to skip payments or require eviction. Also, be sure to take the income to rent ratio into account. Tenants that make less than two times the rent amount are more likely to pay late or skip or stop paying altogether.. Tenants that make more than three times the rent amount are less likely to have payment issues. Also, be wary of tenants that only want to deal in cash. This can often be a sign of a much deeper problem.
- Don't Waste Time on the Phone Call to Prior Landlords. Calling a tenant’s prior landlord is often ineffective because some landlords provide no information as a policy to avoid any chance of defamation. Even worse, others may lie about the history of the tenant to expedite a troubled tenant’s move out of their property and into yours. Avoid the hassle of calling previous landlords, and stick to the facts from the background check.
- Don't Forget About Fair Housing. The Fair Housing Act protects the buyer or renter of a dwelling from seller or landlord discrimination. The act prohibits refusal to sell or rent a dwelling to any person because of race, color, religion, sex or national origin. To avoid potential issues, make sure to create objective standards for your decision and apply them to the data in the screening report.
Tenant screening doesn’t have to be overwhelming. Following these simple tips and taking the extra time to thoroughly screen applicants will be well worth signing honest, dependable tenants and will greatly reduce stress in the long run.
About the author: Joe Buzckowski is the CEO and Founder of LeaseRunner, a web-based application that processes property-leasing paperwork online. Drawing off his technical, legal and financial experience, Joe founded LeaseRunner in 2011 in order to create an easier way to manage property anytime, anywhere.
Amee, I can tell from your comment that you know the business very well. Not calling the landlord is an unorthodox but effective practice. If you have a screening procedure that produces great tenants, then definitely stick to it. However, many small landlords can save time and frustration by not calling the prior landlord.
Conducting an in depth screening is worth it. The previous owner and management co. of the property I work at refused to waste time(their words) on public records available on line for free. They only cared about your credit score to a certain extent, they'd ask for a co-signer when applicants income was so low that after paying set rent they'd be lucky to have $10 to their name. I worked in their office for a month and well they weren't happy with me and I was not happy with them. Sadly I understood that they only cared about getting people legally obligated to a lease and who cares if they really can afford the rent or not. They'd just jump to a co-signer or work out a pay out of the lease(not legal in WI as I understand). Upon them selling the property they cared even less, just get a warm body in there. Under the new owner we were able to do things differently(right) and that proved to give us some amazing tenants. So we had some great tenants and then there was the POS tenants that previous owner let in. I think it took us over a year or two to finally clean house completely. So screening applicants properly will make a positive difference in the long run.
I strongly disagree with not contacting their current landlord. Yes it's likely you will be lied to or will not get a reply but this does not happen very often. Over time you get familiar with other landlords and they get familiar with you. So over time you get to know which landlords will reply and/or tell you the truth even when it's not good. In my opinion not contacting the current landlord is a huge mistake.