High-risk tenants can present a potential threat. When tenants refuse to abide by the lease rules and behave irresponsibly, they can create a stressful situation for landlords or property managers. Thus, it becomes significant to have a comprehensive resident screening process to address high-risk tenants and ensure that you are handing the keys of your property over to responsible hands.
It is important to remember that it is a much easier task to screen out a risky or difficult tenant than it is to evict one. This 5 step guide for tenant screening will help you to ensure that your prospective tenant qualifies for your property.
1) The First Conversation
In most cases, rental candidates will contact you via phone or email for more information about your listing. This is a great opportunity and the first step to pre-screen your tenants as a part of creating your own tenant screening service. Ask questions such as:
- When do they need to move in?
- How many occupants will be moving in?
- Do they have pets?
- Do they smoke?
- How long are they looking to rent?
Identifying the tenants that do not match with your requirements will help to save you time. Use your best judgment to confirm the truth of their answers and try to do a follow-up with the help of a tenant screening service to confirm what you have been told.
2) Rental application:
A rental application is an important element of the tenant screening service process. Ensure that the application you use covers every basic information that you need to know about the prospective tenant. Make sure that you know as much as you can about your potential tenants before they move in.
For a thorough resident screening, make sure that the rental application includes the information such as financial information, personal information, and employment information. Also, make sure that your tenant application clearly states that, if required, you have the authority to order a resident screening check, background check, credit check, or any other background screening you think is necessary to get important information regarding the tenant.
What to look for on a rental application :
Employment history: Get information about the names of the current and previous employers and how long the tenant has been with their current employer to establish their stability.
Income level: A useful rule of thumb is that the tenant’s income should be three times the rent amount to cover the rent. This will help you judge whether the tenant can afford your unit.
Financial information: Any debt or huge monetary obligation can affect the tenant’s credibility. Getting information about the bank accounts, minimum monthly payments, and credit card history will help judge their financial competence.
Previous rental information: As a part of comprehensive tenant screening service, it is critical to find information about the names and addresses of previous landlords, the amount of the rent, and the reason for leaving. If any information is missing, it could be a red flag that the tenant is trying to misguide you.
Personal References: Get at least three names of references with their phone numbers, the tenant’s relationship with them, and the length of acquaintance.
Also, ask for any information that you think is necessary to help you choose the right candidate.
3) Property inspection
When you are showing your rental unit to the prospective tenants, you can take this opportunity to find more about them as well as their lifestyle. Ask them relevant questions and observe their overall attitude to help you be the better judge about their merit as your future tenant.
However, it is prudent to remember that you follow fair and equal housing laws and use ethical judgment during the resident screening process to follow the Fair Housing Act as it stipulates that the landlords cannot discriminate based upon family status, national origin, disability, color, family status, sex, race or religion.
4) Credit check
A credit check can help you to learn the details about the tenant’s previous credit history. With tenant screening services, you can order a credit check and get correct information about any financial issues in the past.
The credit report will provide you with information about late payments, if any, or if the tenant has maxed their credit cards, or any details about the unpaid balance, or serious bankruptcy issues. Determining the credit score on the basis of the information accessed through a credit report will help to determine the overall creditworthiness of the prospective tenant.
5) Background check
A background check performed with the help of resident screening services will help you to validate all the important details listed in the tenant’s rental application. It helps you delve deeper into the risk factors of renting your property to tenants, and lets you judge the potential of the prospective tenant as a suitable candidate.
A background check can include the following information:
Evictions: It provides information about eviction history collected from courts or any judgments passed for eviction.
Criminal Records: Resident screening helps to ensure that the candidate does not hold any criminal records on a statewide or nationwide basis.
Sex Offenders: Will help you find if the tenant is convicted of any sexual offense across the entire nationwide database so you can reconsider your decision if you find any negative information.
Serious offenses: Tenant screening services help you search the nationwide database to collect information if the future tenant is an offender to crimes such as murder, kidnapping, white collar offense, and more.
Fraudulent identity: With increasing cases of terrorism and criminal activity, tenant screening services can help you verify potential fraudulent identities.
While tenant screening service or resident screening can take a considerable amount of time and energy, it must be remembered that it is a sound investment that is well worth in the end, as the net return on your property depends heavily upon the tenants you have as residents.