Did you know that in a brief survey I’ve found that 9 out of 10 landlords do not properly screen their new tenants? Granted, the term “properly” is somewhat arbitrary. Here’s how I define a proper tenant screening.
First and foremost it’s absolutely vital you know the criminal history of your new tenants. Do you want the liability of renting to a convicted felon in your property? A proper background screen will give you address history for your new tenant, which is good for verifying the legitimacy of their application as well as knowing just where to run criminal background reports on. Did you know the typical “nationwide” criminal report is simply a compilation of that particular screening agencies information? More often than not it seems, those nationwide reports do not include any records. That’s why you see “no data for subject” so often when running them. For this reason it is absolutely vital to run the background reports based on the address history of the subject.
The second thing I want to know is has this tenant ever had any judgments, liens, or bankruptcies. If they rented in the past and defaulted or caused a hardship on a previous landlord they most likely have a judgment against them if the landlord turned them into any form of collection. If bankruptcies or liens show up in the tenant history it also gives a good example of how responsible they have been with their bills in the past as well.
There are a couple really cheap supplemental reports which are optional, but often a good idea. Performing a SSN validation usually only costs a couple dollars and confirms this person is who they say they are. A good SSN validation will also include complete address history. You can also search the federal government maintained terrorist database if you are so inclined.
Running a credit report used to be on my list of must have reports; however, rules have recently changed which prevent private landlords from running credit reports. If you have the ability, I find verifying a tenant’s current bills, including their new rent payment, vs their income is useful to see if they can afford to rent.
So why is it that 90% of landlords aren’t properly screening their tenants? It usually boils down to choosing the wrong screening vendor, or product. From my research, most landlords run what is usually referred to as a “nationwide criminal” report because it sounds like it searches the whole country, and usually is fairly cheap. The unfortunate part is, these reports often do not do an exhaustive search of every state’s records and therefore do not have complete or accurate results. They more often than not are very old databases as well. It is vital to know your tenant’s address history so you can choose the correct databases to search.
The second important thing to know is if the records you received valid. If you receive a hit on a statewide search, it is absolutely critical to check with the county in which the record originated to ensure validity. In fact, a landlords use of non-public information is dependant on this step. You must verify a record with the county prior to using the information as a basis for rejecting an application. Your screening agent should be able to do this for you.
Finally, one last critical point to address. Run background reports on every applicant. This includes husband, wife, roommates, co-signers and anyone over the age of 18 who is going to be living in the household. Most landlord charge an application fee per-person to cover these expenses. It is completely expected nowadays.
Rentec Direct now offers complete tenant screening integrated into our already popular property management software! We provide you by default our Intellisearch query which, at no cost to you, searches your prospective tenant’s address history and tells you which reports you need to run to get accurate results. We back it up with statwide criminal comprehensive searches, county level queries, judgement and liens searches, as well as an array of important supplimental searches. We also are offering 30% off regular pricing which makes Rentec Direct’s tenant screening the most economical choice available!
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We designed Rentec for individual property owners and investors who own and manage their own properties. Rentec direct is designed for you, the investor who may do property investing full time or part time and you own from one to one hundred properties. The owners and designers of Rentec Direct are landlords too and we know what it is like to manage a handful of properties without the need or expense of paying a property management company. We found the need to create Rentec Direct because there was no software application available that fit our needs fully as landlords. As a current or potential landlord yourself, you may have experienced the same.