Veteran landlords agree that long-term profitability requires high-quality tenants. Many landlords have borne the consequences of granting leniency to a suspect applicant against their better judgment or failing to spot warning signals that a bit of investigation would have revealed.
While good tenant screening software can help a lot, even the most unique systems cannot catch every red flag. Of course, background checks cannot forecast an applicant’s proclivity for future crimes or see offenses that haven’t yet been disclosed.
Tips for Tenant Screening
1. Make written qualifications.
Suppose an application accuses you of housing discrimination. You will have to turn down an applicant from time to time as a landlord. Under federal or state housing restrictions, that applicant may be a member of a protected class. In that case, you will want to be able to present them with a written set of race-neutral, gender-neutral, disability-neutral, and familial-status-neutral criteria.
You will also need to be able to demonstrate how the plaintiff failed to meet these entirely lawful tenant onboarding procedures.
2. Check income sources/employment references.
Making a false pay stub was extremely difficult a generation ago. It is much easier to counterfeit or alter a pay stub because everyone has a computer, a scanner, and photo editing software. Small company owners, contractors, and others who are routinely paid in cash—many of whom are valid applicants—can create their own pay stubs on a variety of websites.
However, anyone can quickly fabricate completely false pay stubs for the purpose of deception. Consider requesting three months of bank statements and looking into their fixed assets to limit the possibility of getting duped by a phony pay stub.
3. Ask previous landlords.
Remember that their existing landlord may talk well of them in order to eliminate their worst tenant. Suppose the tenant is trashing the premises, is a frequent late payer, or is causing problems. In that case, the present landlord has every motive to offer them a glowing recommendation merely to get them to pack their belongings and leave. If feasible, contact their prior landlord for a less biased reference.
4. Have a signed rental application.
Someone who does not complete an application in its entirety is frequently concealing something. You may use that application if you need to perform an eviction in the future to prove that the tenant lied. Allowing them to submit an incomplete application puts you and your other renters at risk, as well as causing you to lose essential documents in the event of an eviction.
5. Be careful with checks.
Turning up your rental keys to a prospective renter before validating finances or enabling a deposit check to clear has resulted in significant losses. There are understandable reasons for a new tenant to need to move in right away, but allowing possession without clear cash can be risky.
Begin by double-checking that the name and address on the check match those on the application. It could be a problem if the check has no imprinted name or if the name is typed or handwritten. Check your photo I.D. to make sure it matches the application and that the physical description is correct. Another critical point to remember is never to accept a check that has been postdated.
The check is suspicious if it is smooth on all sides (one side or the top should be perforated). The ABA transit number should match the bank and the location. The routing symbols of banks that are members of the Federal Reserve System can be found here. Temporary checks, out-of-state checks, and two-party checks are all possible indicators of an issue.
6. Be mindful of employment references.
In this uncertain economy, any present job can top a long history of work. However, because the applicant’s source of income adds to your security, it is still important to double-check the facts. Make sure you include the full firm name, address, and phone number. The identity of a supervisor, the length of employment, and the compensation rate are all critical details that must be verified.
If your application claims to be self-employed, an independent contractor, a business partner, or an owner, he must offer proof. At the very least, a business card should include information about the company and the type of job they provide. If the potential tenant claims to operate a business, check public records or a private information source to confirm that such a company exists and that he is the owner.
7. Have a property manager.
For the landlord, having a skilled, experienced property manager on board has a lot of advantages. To begin with, you won’t have to waste time dealing with applicants who aren’t serious or competent. Second, a skilled and experienced property manager is more likely to stay current on housing discrimination laws and regulations as they change.
Third, suppose the property management makes a mistake. In that case, they usually have many errors and omissions insurance, which can protect you if their mistake causes you to be held liable as the landlord. They can help landlords avoid typical blunders like publishing discriminatory wording in rental ads, which may cost them tens of thousands of dollars in penalties and court expenses.
This is a crucial factor to consider. When interviewing and contracting with property management, you might request proof of E&O insurance.
Private landlords frequently skip tenant screening, which is an essential aspect of the lease process. The potential renters are thoroughly screened to verify that they are trustworthy and acceptable for the tenancy.
Tenant screening is an essential aspect of the leasing process because it protects the property, the owner, and the surrounding community while also ensuring that the rules are followed. With laws challenging the use of criminal and eviction records in tenant screening last year, it’s more vital than ever for landlords and real estate brokers to come together and speak out about the importance of tenant screening.
Landlords risk permitting low-quality renters to live in their properties if they do not conduct thorough screening. This can lead to significant problems in the future. A rigorous tenant screening process is in the best interest of a landlord.