Here at last we approach the six-letter “s” word…
My goal today is to shed light on the importance of tenant screening – but more than that, I want to offer a way out of this tangled web. Believe it or not, there is an easy and effective way to screen your tenants!
Vacant property is bad enough, but owning property with a non-paying tenant is even more of a nightmare because you’ll have to shell out a significant sum to evict them. By screening, you significantly reduce the risk of that outcome.
A good background check will help you ensure that what your applicant says on his/her application is true.
It’s not out of the question that you’d choose to rent to someone who has committed a crime. A DUI thirty years ago, for example, may have just been teenage rebellion. The issue comes when a tenant has a criminal history. You should decide ahead of time which offenses equal an automatic “no” for you. This category will most likely include registered sex offenders or those with a background in terrorist activity.
Background checks are important for your safety as well as that of the neighbors. In some cases, landlords can be held responsible for the crimes of their tenants. This is especially true when the offense involved selling drugs out of the property. It’s best to avoid this risk altogether by getting all the information upfront.
The problem with background checks is that they can often come up with wrong information if the person you’re checking has a common name. With OnTAP’s system, a tenant pulls and pays for their own reports. This helps you in two ways. First, tenants with criminal records aren’t going to pay for their background check, which weeds them out instantly, and second, the prospect has a chance to see the background check and make sure that the information is actually theirs.
Past Residence History/Eviction Report
Once you have a list of the prospect’s past residences, you can call prior landlords to get an idea of what this person is like as a tenant. Be wary of the landlord they’re with now, however, because he/she may say good things just to get the tenant out of their property. It’s best to talk to landlords an address or two back in the tenant’s history.
OnTAP’s criminal and eviction reports match a person’s name with their past addresses, making it almost impossible for false hits to appear.
Now we arrive at the motherlode of all confusion…the credit report. These oft-hated but extremely useful tools can give you an idea of how trustworthy a tenant is when it comes to paying on time. While a credit score under 600 used to mean an automatic refusal, these days you can be a bit more lenient because of recent economic ups and downs. One foreclosure or medical bill that your prospect struggled to pay probably doesn’t reflect on their ability to pay your rent. A history of late payments is what you should be worried about.
OnTAP, which is certified by all three major credit bureaus, kinda changes the whole face of the credit report situation. Our credit reports are laid out in an easy-to-understand, quick-to-send format that you can actually make use of. You don’t want to spend years trying to understand a credit report, after all. It’s important to screen in a timely manner or all the good tenants will have moved on.
Remember that according to the fair housing laws, it’s illegal to discriminate against a tenant for “race, color, national origin, religion, sex, familial status, or handicap.” You decrease your risk of being accused of this by using screening reports, because your decisions will be based on solid evidence instead of just intuition. This is perhaps the most important reason for all landlords to utilize background, eviction, and credit reports.
When you have tenants you can trust, you’ll be able to focus on other aspects of your business knowing that your property is well taken care of. On the opposite hand, not screening can leave you with a situation such as this one, which made national news on Monday:
Be smart and screen!