Don’t Screen Tenants Without Reading This First!

Posted in Blog  
  on Sep 01, 2016

Image courtesy of blog.smartbear.comAs a landlord, you are most likely aware that you should take ample time when choosing the right tenant to live in your rental property. After all, you spent enough time and money choosing and purchasing the property, and now, you most likely are left with large monthly repayments as an ongoing cost of this investment.

What you don’t want, is a tenant who can’t make rent payments on time, or at all. The ideal tenant pays regularly, as they are supposed to, and also respects your property. The problem is, people often seem good at first glance. Background checks can be a little ambiguous, and you may find yourself making the wrong decision. Faced with the prospect of handling an eviction can give even the most laid-back landlord a real headache.

This post aims to help you avoid that situation, by taking tenant screening a step further. We will share exactly what you should be looking for when you have the results from the various background checks in your hand. The hidden red flags and also the gems you might uncover so you have greater insight into exactly who you are renting to before you hand over the keys. These are the six questions to be asking when completing your background checks….

1. Can They Afford to Pay Rent Now?

The first thing you need to be absolutely clear on, is whether the potential tenant can afford to move into your property right now. In the event that everything ran smoothly, all of the checks were perfect and they had their bags packed and ready … are they able to afford the full deposit and first month’s rent?

  1. If not, why?
  2. If not now, when?

Go ahead and ask them these questions. This is the bottom line for potential tenants after all.

2. Can They Afford to Pay Rent for the Foreseeable Future?

We always recommend you let your potential tenants know upfront what your basic criteria are for screening. A good rule of thumb is that they must earn at least three times the rental amount. Be clear about your basic financial criteria and clearly communicate that from the start.

If the potential tenant is still interested, then proceed to contact their current employer. Our top tip here is to never use the contact number that the potential tenant provides. Use your good friend Google and search for the company, and find the employer that way.

By doing this, you can be sure the information that you are receiving is correct. Find out how long the potential tenant has been employed, what their salary is, and whether they are full or part time, and also if they are working on a contractual basis or employed permanently.

The answers that you receive will provide a good indication of whether the potential tenant will be able to continue paying rent for the foreseeable future.

Image courtesy of mbaskool.com/3. How Responsible Are They With Money?

The best way to determine how responsible a potential tenant will be with money is to take a look at their credit history and credit rating. LandlordStation can run this background check for you, sending you the report with minimal effort put forth on your part.

When you have the report, you want to look at how much debt the potential tenant has and also their track record with paying bills on time. You should have enough insight into their spending habits to make an informed decision about how they will prioritize rent payments. It may sound harsh, but this is your hard earned investment property that we are talking about, so the more financial history you know, the better!

4. Have They Treated Past Landlords and Properties With Respect?Image courtesy of rlmconsulting.be

Always call the potential tenant’s previous landlord, keeping in mind that you may have been given a false number. Think smart and use specific details from the application form to try to verify you’re speaking to the previous landlord, and then take the opportunity to ask numerous questions,

  • How long did they stay in your property?
  • Did they pay rent on time?
  • Did they violate the lease?
  • Did they cause any damage to the property?
  • Did you receive complaints from other tenants?
  • Why are they moving out?
  • Would you rent to them again?

The answers to these questions should be pretty illuminating. Remember, if you are ever called to provide a reference for another landlord completing background checks, it’s important to be as thorough as possible with your answers, too.

5. What Is Their Character Like?

Before you jump on me about political correctness, let me state, that it is vital that you do not discriminate against any potential tenant on the basis of any of the protected classes. This includes race, gender, sexuality and more. You can find the full list here.

That said, it is acceptable to judge a potential tenant based on their demeanor and attitude. You can pick up your first clues on the phone when you conduct an initial screening and again if you meet them in person at the property.

Ask questions such as:

  • Why are you looking for a property?
  • When do you need a place by?
  • Have you given notice on your current rental?
  • Are you currently employed?
  • What is your budget?
  • How many bedrooms do you require?
  • Do you have pets?
  • Who else will be living with you?

Consider their replies carefully, and also be aware of nonverbal clues. Keep an eye on their habits, hygiene, how they are dressed, what car theyImage courtesy of 4land.com.au drive and so on. These are not reasons to base your decision on whether you should rent, but they can give you insight into how they will respect your property and how they will conduct business with you.

When considering a potential tenant’s character, you should also conduct a complete criminal history check. LandlordStation offer this as part of our online tenant screening, and looks into convictions in the past seven years.

Personal references should always be followed up, despite the obvious bias, as they can offer useful insights. Ask how long they have known the potential tenant and whether they would recommend them as a tenant.

6. Are They Who They Say They Are?

The final main check is to confirm that the potential tenant is exactly who they say they are. Ask to see originals of their photographic identification documents, ideally passport or passport card, explained below.

There is no true national identity card in the United States of America, in the sense that there is no federal agency with nationwide jurisdiction that directly issues such cards to all American citizens for mandatory regular use.

Image courtesy of media.licdn.comAt present, the only national photo identity documents are the passport and passport card, which are issued to U.S. nationals only upon voluntary application. The driver's license, which is issued by each individual state, operates as the de facto national identity card due to the ubiquity of driving in the United States. [source]

Also, make use of social media and the internet to verify details you have been given, always remaining vigilant about breaching privacy laws.

Summary

If you’re looking out for these six areas, you should be able to make a sound decision on the potential tenants you are screening. Try to stay strong and not fall for emotional stories, or be swayed by charismatic individuals who may be conning you. No matter the results of the background checks, never be tempted to take less than the full deposit and first month’s rent up front. And, of course, don’t ever hand over the keys until everything is in place with the paperwork.

It’s vital that you really know who you are renting to, so don’t rush through the screening process. If it feels overwhelming, you can always try a third-party screening service who can handle the hard work for you. LandlordStation offers a complete online tenant screening service enabling you to remain hands off until the reports are ready and you can make your decisions.


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