Rentec Direct Blog

Tenant Screening 101, Deciphering Your Reports

sample_reportWhat is it that seasoned landlords and property management services know about tenant screening that every property owner should?  This guide will show you how to successfully screen a tenant quickly and accurately and to form an informed decision on which prospective tenants to approve and which to decline.

Two of the most important traits a landlord looks for in a prospective tenant are 1. the ability to pay rent on time and 2.the ability to care for the property.  Absent either of these traits and a tenant can cost a landlord thousands of dollars in damages and lost rent.  Follow these steps for the best chances of finding a tenant who complies with both of these important traits.

CREDIT: Credit reports are available to both professional property managers as well as private landlords and costs roughly $10.  The credit report gives insight into how well the tenant pays their bills.

CRIMINAL: There are a number of criminal reports available to landlords and property managers.  One of the most popular and easy to obtain is a nationwide criminal history which costs about $9.  This report aggregates criminal data from states nationwide to provide a concise view of the criminal behavior of an applicant nationwide.  Below are some tips to get the most from your criminal background reports.

EVICTION: Perhaps the single most important factor when renting to a new tenant is whether or not they have previously been forcefully evicted.  Eviction reports cost a landlord around $10.  There are three primary ways a tenant moves out of previous rental homes.  1) They paid their rent on time and choose to move out voluntarily.   2) They were required to move out by their landlord (often referred to as “eviction”) for non-payment or other reasons, and did so as requested of the landlord.  This type of “eviction” will not show up on an eviction report because it is a voluntary eviction.  3) They were asked to move out by their landlord, and refused to do so forcing the landlord to file for a court ordered eviction and forced removal of the tenant from the property.  This will show up in the eviction history on an eviction report.

The reason this eviction report is so vital when screening your next prospective tenant is because if a tenant has a tendency to be required to move out by their landlord and fails to do so without the court and sheriff forcefully removing them from the property, you as a landlord could stand to lose a lot of income catering to this type of tenant.  A court ordered eviction can take at best many weeks, and at worst many months.  All this time you cannot move in a new tenant, and are not collecting rent from the previous tenant amounting to a huge loss.

PERSONAL: The final critical step in screening a tenant is to verify the information they have submitted and interview the prospective tenant.  Much of the information provided on your application can be corroborated via the reports above and the remainder by calling the employers, past landlords, and other references.  If the information on the application does not add up or there is any evidence that the tenant provided invalid information on your application, that is a sign of trouble and is generally a reason to decline the application. Meeting and performing background screening on all adults that will reside in the household is an important step often forgotten.  It is normal and allowed in most states to charge a reasonable application fee which will cover your costs to run the combination of all reports above.

In conclusion, the reports listed above tend to be the most popular and in use by most landlords; however, there are many more reports available to landlords.  Regardless of the reports ordered, be sure to comply with all federal and state laws as well as FCRA (Fair Credit Reporting Act) guidelines.  If in doubt, most areas have local associations of landlords which are happy to help instruct in the legal aspect of screening prospective tenants.  The information above is opinions from many landlords nationwide; however, may not be effective in your particular market.  Define your own criteria and seek local legal assistance if necessary.

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