Should I Screen Rental Applicants?
Many landlords find themselves trying to manage property without the right tools. The answer to the question, “Should I Screen Rental Applicants?” is always YES. Here’s why.
Buying rental property is a huge investment. In some cases, it’s the biggest investment a person will make in their life. The biggest mistake a landlord can make is not protecting their investment. We’ve heard it all over the years:
– I just trust my gut feeling…
– I only rent to people I know…
– I live next door so I’m able to keep an eye on the place…
– I like helping people out and giving them a chance…
Most think renting property is no big deal, simply rent it and make a profit. The reality is, landlords that use the above statements probably aren’t making much of a profit, and I would bet they are spending more money than they are making in the long run. For a rental property to be an actual stream of income, it should be treated like a business. And in this case, it can only be profitable when the proper due diligence is used.
Profit and success are directly tied to the tenants you put in the property. Here are a few things that should be considered before ever turning over the keys:
1. Credit Check: Most think the credit score is the biggest reason to search credit. It goes much deeper than that. The trade lines and history are the most important information. If a person pays their bills, they will most likely pay you too. Medical bills and other things may cause a bad credit score, but you will know by their patterns of payment how likely they are to pay you as the landlord.
2. Criminal Check: When looking at criminal history a landlord should always take into account the type of offense, age of offense, and is there a pattern of criminal history? For instance, If someone gets in trouble when they’re 18 years old, and they are now 25 with no other records, the criminal history might not play as much into your decision. If someone is violent, or constantly in trouble with the law, they may be a threat to the community in which your rental property is located. The worst thing you can do as a landlord is put the community at risk.
3. Eviction Search: This is so important, if a person has been evicted, they know the process as well, or better than you do. Evictions are costly, very costly. And even more costly if they get mad and damage the property. You should have guidelines in place for applicants that have been evicted, for example, “We do not rent to persons evicted within the past 3 years.” It’s ultimately up to you if you search for evictions or not, but if you find yourself having to evict someone, you will see the importance of avoiding applicants with eviction history.
4. Call the current and prior landlord: A good source for information can be talking to their past and current landlords. It is important to call both, just in case you get two different stories. For the most part, landlords are glad to help you avoid a problem, but in some cases, the current landlord may be trying to get rid of a problem by saying they are a model tenant, and the past landlord will give you a much different story.
5. Employment Verification: Always verify the person’s employment to the best of your ability. A major piece of the equation is: do they have a consistent paycheck coming in? Some landlords even ask for bank statements to prove consistent deposits. While some may think this is asking too much, others understand their profitability depends on the approved applicant making rent payments on time.
Profitable landlords know their success depends on the applicants they approve. You are turning over the keys to your investment, your financial future. Yes, you should screen your applicants. No one likes a bad tenant, but bad tenants can sometimes start with bad landlords. The tools are readily available at www.tenantreports.com. This allows landlords to screen tenants and make a decision based on the facts. Not a gut feeling.