Posted by Ryan Howard on Fri, Dec 19, 2014
The tenant screening process is always a bit of a dicey one. You may think that the tenant you're considering is being truthful and they may well be. But the bottom line is that you are letting someone else live in a property that you own or manage. Therefore it's vital that you go as far as your gut tells you and that you conduct a thorough tenant screening process.
Most likely the tenants you're considering are looking to rent, so where have they been lately? What do previous landlords have to say about them? Having a bad past experience shouldn't preclude them from being considered for your property in the present day - it simply requires an explanation. If you are satisfied with what someone tells you about a past rental experience, then you may feel comfortable moving forward. What you don't want to see in your tenant screening is repeat offenses, blank unexplained rental histories and landlords who have gone as far as criminal prosecution. Companies like VeriFirst offer property managers an automated rental history search by accessing electronic Eviction data as well as prior Rental Payments via Experian RentBureau.
Financial Stability and Credit History
A pay stub may address how much money they make but does this satisfy their full rental obligations? Employment and credit history does more than just tell you if your future tenants are able to make rent. You will also get a sense of their dedication and ability to commit to something. It also tells you whether or not your future tenants are a good long-term investment or if they appear to be a flight risk.
Employment and Income Verification
Another area that is vital to explore is their verified present income. If your tenant has a substantial amount in savings, investments, annuities, or other inheritance income in their bank account then the employment history might not be such a big deal. The fact is that there are those who work and those who may not need to. However, if they have a bank account balance which is overdrawn or teetering on the edge, you can bet that the chances of their missing a rent payment may be higher than you are comfortable with.
Criminal Background Check
You will also want to conduct a criminal background investigation on each tenant. This may scare off some property owners, but as a rule you need to be sure that your space is going to be occupied by law-abiding citizens. That doesn't mean that all crimes are disqualifying. Work with your tenant screening service provider to establish a set of Pass, Conditional, and Fail criteria. For example, a tenant with a DUI conviction is not necessarily indicative of their ability to pay rent. However a tenant with a felony for distribution of narcotics could be distruptive to your property.
At a minimum, we recommend the following as a standard tenant screening package:
- Credit History and Credit Score
- National Criminal Database Search
- National Sex Offender Search
- Rental History
- Income Verification
To preview a sample tenant screening report, Click Here.
Of course you'd like to believe that you can trust the tenant who'd like to rent your property. To save yourself the headache, protect your property and maintain the trust of your current tenants, consider a tenant screening from VeriFirst. To stay compliant with all of your tenant screening, download our compliance library with all of the forms and templates you need.