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Tenant Screening Tips for Conducting a Tenant Background Check
I have used the following tenant screening tips to conduct a tenant background check in order to fill vacancies at my rental properties.
But, unlike all the generic tenant screening tips you find on the internet from authors that don’t even own a rental property, these ones I have learned and used from experience.
I’ll offer them here and you be the judge…
Doing a tenant background check can be expensive and time consuming but nowhere near as expensive and time consuming as putting the wrong tenant in your rental unit!
If you read the first article on tenant screening tips you should now have met the applicants in person and have a rental application in hand that is completely filled out with all the information you need to complete a tenant background check and should have a check for the application fee.
When they turn in the application make sure you request to see a valid form of identification. My applicants had “forgotten” to write down the driver’s license information on their application. I use this opportunity to write down the state of issue, number, date of birth, verify address and or course the photo and physical description of the person which is part of your tenant background check.
Some landlords request a photocopy of a valid I.D. to keep on file. I think that is a good idea but there are also privacy and document protection issues that go along with this in order to comply with landlord tenant laws.
Tenant Background Check and Tenant Screening Services
Now that you have all the information you need to conduct a tenant background check you need to go to work. In order to conduct the tenant background check I needed to do including tenant credit checks I asked for recommendations on tenant screening services and ended up using Tenant Verification Service to get a credit report, a criminal background check and an eviction report.
These three reports are crucial and I was blown away at how quickly and easily I was able to get these through Tenant Verification Service. An eviction filing immediately came up for one of the applicants and I asked the applicant about it.
They were surprised by this eviction notice and claimed they didn’t know anything about it (yeah right, I thought). But it turned out that they went back to the management office of the apartment complex that filed the eviction and the office explained that they had filed for eviction because the rental payment had not been received but that the payment was received eventually and they did not proceed with the eviction.
I further verified the court records and found out that the eviction had indeed been dismissed. Furthermore they resided at that apartment complex for six months after this eviction notice so that cleared their story since they obviously would not have been able to stay if they had been evicted.
So you can see how helpful it can be to use a tenant screening service. Also, by using this service I was able to check their credit report. You should always check an applicants credit report but let me share my experience with this aspect.
Tenant Background Check: The Credit Report
When I first started renting I thought you wanted a credit report on the applicant to see what their credit score was and if it was low then I wouldn’t rent to them. But it turns out that the actual credit score is not that important…the credit history is.
I had a tenant whose credit score was low, about 600. This was due to some student loans that had not been paid on time and some other stuff. However her current salary was good and she had no major debt obligations at the time. I rented to here and she paid on time every month without exception.
So use the credit report and the credit score in combination with the other factors like salary, total debt obligations, employer, rental history, etc., when making your decision.
Additionally if you get someone with a low credit score you can use this as rationale to increase the security deposit to maybe 1.5 or 2 times the monthly rent. This would help mitigate your risk in renting to someone with bad credit. At the same time the higher the security deposit they give you the more likely they are to pay on time and take care of the house because they want to get that high deposit back.
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The crucial thing you need to remember is that you apply your security deposit policies (or any policy for that matter) equally to all applicants. If you don’t that can be construed as discrimination and that can get you into a lot of trouble. Know your tenant landlord laws.
I suggest you set guidelines that if for example someone has a credit score of less than 600 then you charge two months security deposit. If they have a score between 600-650 then you charge 1.5 time the monthly rent for deposit and so on…
Tenant Background Check: The Rest of the Information
You will also verify employment or income if they are self-employed. The easiest way to do this is to request a copy of their most recent pay stub. If they are self-employed ask to see their most recent tax returns.
I ask for the name and location of employment and a supervisor I can contact to verify this. However I try to find a phone number for the location of employment on my own rather than using the one they give me just to make sure they don’t give me a friends phone number.
When I tally up their monthly income and obligations I want to see that the rent for my property is going to take no more than 25% of their monthly income, more or less. This is a rule of thumb not a hard guideline. I also take into consideration how much rent they were paying before. I want to see that they were paying a similar amount so that the rent I am charging will not be a big jump for them. If my rent is significantly higher then I ask them about it and how will they adjust and then I want them to be close to the 25% rule.
Verify their rental history with their current landlord and if possible with the previous landlord. It can be hard to track down previous landlord and/or they might not be very cooperative but try your best. Ask them about payment history, length of residence and any complaints about the applicant they might know about. You can also ask the applicant for a letter from the previous landlord stating all of this. The big apartment complexes are used to this so they can provide this fairly easily, make sure you verify it though.
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Finally, verify their vehicle information and make sure you have the model and license plate for their vehicles. Check any other family/friend references that they provide. Also ask them about any negative information you might have gathered from the application or any area of the application they may have left “blank”. You want to know why it is blank…ask, you might be surprised.
When all is said and done you will still have to use your best judgment and instinct. I have heard landlord stories of people that can pass all of this and turn out to be horrible tenants. So arm yourself with as many facts as you can, make use of the tenant screening services but know that you will still be taking a leap of faith but you have done your best to minimize your risk.
Make sure you know your tenant landlord laws, so you know what you can/can’t ask and what are your state’s laws regarding, deposits, inspections, evictions, etc. These can vary significantly from state to state.
If you apply these tenant screening tips you will show your tenant that they are dealing with a business and a professional landlord and not someone that considers this a hobby.
I am a believer that most people are good and they are looking for a decent place to call home. So far my experience has been that if I offer a good property, in great condition at a rent price that reflects that I will get what I give.
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