As a landlord, one of the most important responsibilities you have is to ensure that you select responsible tenants who will take good care of your property and pay rent on time. Unfortunately, it’s not always easy to determine who is a good tenant just by meeting them or reviewing their rental application. That’s why it’s crucial to perform a thorough tenant screening on every potential tenant before signing a lease agreement. In this article, we’ll discuss tenant screening and the importance of background checks, and how they can protect you and your property.
What Is Tenant Screening?
Tenant screening is the process of evaluating a potential tenant’s rental history, financial stability, and criminal background. The purpose of tenant screening is to determine whether the applicant is likely to be a responsible tenant who will pay rent on time, take good care of the property, and follow the terms of the lease agreement. Tenant screening typically involves several different types of checks, including:
- Credit Check: A credit check is used to evaluate the applicant’s financial history, including their credit score, outstanding debts, and payment history. A credit check can help you determine whether the applicant is likely to pay rent on time and whether they have a history of financial responsibility.
- Rental History Check: A rental history check involves contacting the applicant’s previous landlords to verify their rental history. This can help you determine whether the applicant has a history of paying rent on time, taking good care of the property, and following the terms of the lease agreement.
- Criminal Background Check: A criminal background check is used to evaluate the applicant’s criminal history, including any past convictions or arrests. This can help you determine whether the applicant is likely to be a responsible tenant and whether they pose a risk to other tenants or the property.
- Employment Verification: An employment verification involves contacting the applicant’s employer to verify their employment status, income, and length of employment. This can help you determine whether the applicant has a stable source of income and is likely to be able to pay rent on time.
Why Is Tenant Screening So Important?
There are several reasons why tenant screening is so important, including:
1. Protecting Your Property
One of the most important reasons to perform a tenant screening on potential tenants is to protect your property. By screening tenants, you can help ensure that you select responsible tenants who will take good care of the property, report any maintenance issues promptly, and follow the terms of the lease agreement. This can help prevent damage to the property, which can be expensive to repair.
2. Reducing the Risk of Evictions
Evicting a tenant can be a time-consuming and expensive process. By screening tenants before signing a lease agreement, you can help reduce the risk of evictions by selecting tenants who are likely to pay rent on time and follow the terms of the lease agreement.
3. Minimizing the Risk of Financial Loss
Renting out a property can be a significant source of income, but it also comes with financial risks. By screening tenants, you can help minimize the risk of financial loss by selecting tenants who are likely to pay rent on time and who have a history of financial responsibility.
4. Ensuring a Safe Environment
As a landlord, you have a responsibility to provide a safe environment for your tenants. By performing a criminal background check on potential tenants, you can help ensure that you select tenants who do not pose a risk to other tenants or the property.
5. Complying with the Law
Finally, performing a background check on potential tenants can help ensure that you comply with local and state laws. Many states have laws that require landlords to perform certain types of background checks on potential tenants, such as criminal background checks. By screening tenants, you can help ensure that you comply with these laws and avoid legal issues down the line.
How to Perform a Tenant Screening
Performing tenant screening can be a time-consuming process, but it is essential to ensure that you select responsible tenants who will take good care of your property and pay rent on time. Here are the steps you can follow to perform tenant screening:
1. Collect the Rental Application
The first step in performing tenant screening is to collect rental applications from potential tenants. The rental application should include information such as the applicant’s full name, contact information, employment history, rental history, and personal references.
2. Request Consent to Perform Background Checks
Before performing background checks on potential tenants, you must obtain their consent. You can include a consent form with the rental application or request it separately.
3. Perform Credit Check
To perform a credit check, you will need to obtain the applicant’s Social Security number and run a credit report. You can use a credit reporting agency to obtain the report, or you can use an online tenant screening service that includes credit checks.
4. Verify Employment and Income
To verify the applicant’s employment and income, you can contact their employer directly or request a pay stub or tax return. This can help you determine whether the applicant has a stable source of income and is likely to be able to pay rent on time.
5. Contact Previous Landlords
To verify the applicant’s rental history, you can contact their previous landlords. Ask about their payment history, whether they caused any damage to the property, and whether they followed the terms of the lease agreement.
6. Perform Criminal Background Check
To perform a criminal background check, you can use an online tenant screening service or hire a third-party company. The background check should include a search for criminal records at the county, state, and federal levels.
7. Evaluate the Results
After performing all the necessary checks, evaluate the results to determine whether the applicant is likely to be a responsible tenant. Consider their credit score, rental history, employment and income, criminal background, and any other relevant factors. Once you have evaluated the results of the background checks, you can make an informed decision about whether to approve the applicant for tenancy.
Tips for Effective Tenant Screening
Performing effective tenant screening requires attention to detail and a thorough understanding of the process. Here are some tips to help you perform effective tenant screening:
- Develop a Screening Policy: Developing a screening policy can help ensure that you follow the same process for all potential tenants. Your screening policy should outline the types of background checks you will perform and the criteria you will use to evaluate the results.
- Use a Tenant Screening Service: Using a tenant screening service can help simplify the process and ensure that you perform all the necessary checks. These services typically include credit checks, rental history checks, and criminal background checks.
- Obtain Consent and Notify Applicants: Before performing background checks on potential tenants, obtain their consent and notify them of the process. This can help avoid any misunderstandings or legal issues down the line.
- Verify Information: Whenever possible, verify the information provided by the applicant. This can help ensure that you select tenants who are honest and trustworthy.
- Evaluate the Whole Picture: When evaluating the results of background checks, consider the whole picture. A low credit score or criminal record alone may not disqualify an applicant, but it should be considered along with other factors.
- Follow Fair Housing Laws: When performing tenant screening, it is essential to follow fair housing laws. This includes treating all applicants equally and avoiding discrimination based on protected classes. Also, ensure that your screening criteria are based on legitimate business reasons.
Final Thoughts
Performing tenant screening is a critical part of the rental process. By screening potential tenants, you can help ensure that you select responsible tenants who will take good care of your property and pay rent on time. Tenant screening can also help protect you from financial loss, property damage, and legal issues down the line.
While tenant screening may require some time and effort, it is well worth it in the long run. By following a thorough screening process and using best practices, you can select tenants who are likely to be a good fit for your property and maintain a positive landlord-tenant relationship.
Finally, performing tenant screening can help you avoid legal issues related to fair housing laws. These laws prohibit discrimination based on protected classes such as race, gender, religion, and national origin. By following fair housing laws and treating all applicants equally, you can ensure that you comply with the law and avoid any legal issues.