Tenant Screening 101

Effective tenant screening allows a property owner landlord to make an informed rental decision. Without proper tenant screening tools, you might as well flip a coin in making your tenant selection. This strategy will only lead to rental nightmares that will cost you thousands of dollars in rent and property damage. The following tenant screening tools will save you money and make your rental decision based on fact, not fiction.

Complete Rental Application
Make sure every rental application is completed in full, especially previous addresses, employment, and references. Confirm the applicant’s identity with a picture ID, preferably a valid drivers license. Pay attention to any discrepancies between the application information and your interview with the applicant.

A fully completed rental application will give you the data you need to begin your tenant screening process.

Tenant Credit Report
First, go to a reputable tenant screening company like http://www.creditlink.com and use their internet tenant screening service which allows you to complete a simple applicant form, submit your data, and within seconds, your tenant credit report appears on your fax machine. CreditLink’s Profile Report will show you all the credit/trade data, public records, social security verification, previous addresses, a Fraud Scan, bad check search and eviction history all for $10.95. I would also recommend that you use CreditLink’s CrimeFactor Search for an additional $19.95 to make sure you do not rent to any serious criminals that could jeopardize your existing tenants or your rental property.

Take a good look at the report, paying attention to their payment patterns and their credit balances. This will tell you if your applicant is over extended or whether he can afford your rent. The old rule use to be income must be three times the monthly rental amount, however with today’s high rental rates, you should be safe if they are a little over 50%. Also, check to see if the tenant credit report data matches the information on the rental application. If not, then ask your applicant to explain any differences.

Negative credit vs. Positive credit
Examine to see if there are circumstances that resulted in negative credit, i.e. job loss, divorce, medical reasons, etc…Pay attention to the dates listed. You want to see improvements in the applicant’s payment history. You should always choose a tenant who has more positive credit than negative. If your applicant has a “no record” then have him show you his electric, phone, cable or other bill so you can verify that he can pay his rent on time, otherwise choose a more suitable tenant with good credit.

Reference and Employment Verification
Do not solely rely on a credit report/criminal report to make your rental decision. Take the time to make a few phone calls to the applicant’s previous landlords, his employer, and references listed. You must verify current employment and the applicant’s salary or wages. You do not want to rent to a person who is unemployed or on government assistance.

Make sure the employer is not a relative or one that is a setup bad tenants will often give you an employer who is really a friend or relative that will fraudulently verify income and employment. Also, previous landlords will give a “good tenant reference” even though the opposite was true. They do this because they fear being sued by their previous tenants or they want their tenant to move on to your property so you can deal with their rental problems.

Summary
If you practice and use the tenant screening tools above, your tenant selection will greatly improve your tenant vacancy and default rate. This will save you thousands of dollars in lost rent, property damage, and eviction attorney fees. Rest assured that your tenant will continue paying rent on time and you will enjoy his tenancy. Remember, it only takes one bad apple to spoil the bushel.

Category: Business