01 Jun Resources for the Tenant Screening Process
While browsing rental advice websites, I stumbled across a gem. According to RentalCreditChecks.org, “64% of landlords are content to entrust their house to tenants depending on little more than a hunch.”
That is an overwhelming number of landlords who base their opinion of a potential tenant on insufficient knowledge.
Thankfully, with the help of a property management company, the tenant screening process is no longer a bothersome chore. There is a plethora of websites and databases available to help the property manager find a suitable tenant for your home. As expected, there is usually a onetime fee tacked on to these services, but in the long run, it’s worth the money to find out that the person wanting to rent your home or apartment has defaulted on past landlords/management companies or has routinely threatened them.
In addition to these services, a few other things your property manager should take into consideration during the screening process:
1) Most state government websites have open access to information such as judgments, liens or bankruptcies. This tool is invaluable. While no one is perfect, if your property manager can find that the tenant has numerous liens or judgments on their history report for not paying their bills, landlords know that they’re probably not the people they want renting their home to.
2) Debt-to-income ratio. Property managers need to acquire the applicant’s credit history. They need to verify if the tenant is able to pay their debts with their income. Most use a range between 30-40%. If the ratio does not add up, then the applicants might not be the tenant for your home.
3) Absolutely, ask for the address history of the applicant. After it’s been verified that they lived there and were acceptable tenants, a criminal background check for them in that area should be conducted. The extensive nationwide checks that most landlords themselves perform are not comprehensive. In fact, they provide very little information. Searching by city or county, like most management companies do, will narrow the search and provide a more accurate report.
This process can get a bit tedious, but you have to protect yourself and your investment. It’s a shame that most deals can’t be done with a handshake anymore, or that we can’t trust our gut instincts. Be safe. Be extensive. Be secure.