Screening tenants is a very important step when you are looking to rent your property. It should be handled diligently by landlords because a bad tenant can not only damage your property but negatively impact your cash flow. In addition, having to deal with evictions and legal services is frustrating, time-consuming and costly. Most evictions are filed because a tenant stops paying rent.
Sociologist Matthew Desmond estimates that 2.3 million evictions were filed in the U.S. in 2016 — a rate of four every minute. (Full article here)
In this post, we highlight the 3 common mistakes landlords make when screening tenants and how to fix them.
- Not running a full background check
- Calling previous landlords is a must!
- Not screening co-applicants
What is the tenant screening process and Why Does it Matter?
Tenant screening is a process used primarily by residential landlords and property managers to evaluate prospective tenants. The purpose is to assess the likelihood the tenant will fulfill the terms of the lease or rental agreement and will also take great care of the rental property in question. (Source: Wikipedia)
There are a few mistakes commonly made by landlords because they simply do not have the right tools or rush to get a tenant in their property. A bad tenant can become a costly headache, so it is important to avoid these mistakes.
1. Not Running a FULL Background Check
This step is critical however, most landlords run a basic credit report. The basic credit score is not sufficient, and landlords should always run a full background check including:
A. Income verification (two most recent pay stubs)
B. Employment history (in writing and verified from the employer via phone call)
C. Credit Score (Done by a pro service such as Experian)
D. Capturing Debt load
E. Lines of credit
F. Criminal history
G. Rental eviction history
H. SSN verification
I. Address verification
J. Landlord history (current and past) – phone calls made with screening questions
Better Team shared a list of the 2019 best tenant screening services with the fees. You can see the full list here.
2. Not Calling Past Landlords
Calling their current landlord is the common step however you should always call prior landlords as well. This extra step provides additional information about the potential tenants and here are 5 questions you should ask each landlord:
1. “Did the Tenant pay the rent on-time and in full?”
2. “Did they take good care of the property?”
3. “Was the tenant a courteous neighbor?”
4. “Was the property clean and in good order when the tenant left?”
5. “Would you rent to them again?”.
3. Not Screening Co-Applicants
Run a full background check on co-applicants. One of the applicants may have a record and maybe trying to hide it from you by putting them-self as a co-applicant.
A co-applicant is another tenant in the unit – he/she can live there and has equal rights with any other tenant to the unit. Should the other tenant leave, he/she has the right to stay if he can afford the entire rent. A Co-applicant (or co-tenant) is equally responsible and liable for the rent and all other obligations, with or without the default of the other tenant. He/she is first, as equally as any other tenant, for liability.
In the event that the tenant can no longer assume the rent, landlords and property managers have the right to charge the co-applicant for money.
You need to find solid, qualified tenants that will pay their on-time AND take care of your property. Owning a property is the largest investment most people will make in their life; Do not use your “gut feeling” or rush the process to find a good tenant. To perform at its bests, you can also seek help from a professional property manager. For a leasing fee, a professional property management company will handle the tenant screening & placement, lease signing, move-in & out process. It is worth every penny. You will continue to manage your property once the tenant moves in.
Blackstone Group Leasing and Management provides apartment leasing services and full property management services in Rhode Island and Southern Massachusetts.
If you are interested to maximize your revenue without the hassles of managing your rental properties day-to-day, please contact us.