Tenant screening is the process of determining who qualifies to rent your property. It safeguards your investment by preventing issues like evictions, late payments, and other costs of doing business that could cost both time and money in the long run.
A thorough screening process should include credit and background checks, references, and eviction records. These are the best ways to detect potential problem tenants before they become an issue.
1. Credit Checks
Credit checks are an effective way to assess a prospective tenant’s financial stability and ability to pay their rent on time. They also give you an indication of how much debt they owe and allow you to calculate their debt-to-income ratio.
If you want to save yourself some hassle, ask your prospective tenant for their consent before running a credit check. Once they give it, the fee can either be deducted from their first month’s rent or added to their security deposit.
2. Background Checks
Landlords and property managers must conduct background checks on applicants before granting them the right to live in a rental unit. This helps safeguard their investment while keeping the community secure.
Landlords can conduct various background checks on potential tenants to help them identify the ideal renters. These screenings typically include a credit report, employment verification, criminal records check, and reference checks.
3. Reference Checks
One of the most essential steps a landlord can do during tenant screening is to check references for each applicant. Both personal and professional references provide insight into your potential tenants’ character traits. With this data, you will gain a better insight into their behavior as tenants.
A reliable reference can provide insight into an applicant’s job stability, character, and dependability. It may also assist in verifying their income and rental history.
Landlords should request references for various details, such as a tenant’s job title, salary, and employer details. Furthermore, speaking with their supervisor and HR department as well as other co-workers is beneficial.
4. Eviction Checks
One of the most crucial steps in tenant screening is checking a potential tenant’s eviction record. It can be easy to overlook this aspect, but it’s essential for avoiding issues later on down the line.
However, evictions are typically not included in these reports. In fact, some major cities and states are actively working to restrict the use of criminal and eviction records for tenant screening purposes.
5. Internet Research
Tenant screening is an integral part of the rental process. Landlords want to guarantee they are renting to a qualified and responsible tenant who won’t damage the property or cause issues with rent payments.
One way to effectively conduct internet research on an applicant is by conducting internet searches of their name and social media sites like Facebook or LinkedIn for any unsavory public behavior. A Google search of their name could yield useful results, while social media sites like Facebook or LinkedIn offer deeper dives into public behavior.
Internet research is another useful method for verifying an applicant’s employment history. If there are many negative comments on their work history, this may be a red flag that they could be trying to defraud you of rental money.
When you find and hire the right property management company, they will handle the tenant screening for you. This will make it much easier to get the right tenants for your rental properties.