Whether you're a landlord or a property manager, screening tenants is one of the most important steps in the rental process. After all, you'll want to know who will be living in your property and ensure they are reliable and trustworthy. With the help of background checks, it is possible to identify red flags and make informed decisions when selecting tenants.
So, how can landlords and property managers use background checks to screen potential tenants? Here are some top tips and insights to guide you through the process:
What are background checks?
A background check is a comprehensive review of a person's history, which includes criminal records, credit reports, employment verification, and other relevant information. By conducting a background check, landlords and property managers can evaluate a tenant's risk profile and assess whether they would be a suitable renter.
Why are background checks important?
By conducting a thorough background check, landlords and property managers can protect their investment and safeguard their renters. Background checks provide vital information that helps determine a tenant's reliability, financial stability, and criminal history. Knowing this information can help landlords and property managers make informed decisions about whom to accept as tenants.
How to conduct a background check?
Before conducting a background check, you must obtain written consent from your prospective tenants. This is necessary because background checks require access to sensitive personal information, and you must follow strict legal requirements when handling this data.
There are a few options available for conducting a background check, including online search tools or professional screening services. Online search tools, such as public record databases, allow you to access criminal records, property ownership, and other public information for a small fee.
Alternatively, professional screening services can provide a more comprehensive report that includes credit score, employment history, and rental references, among other details. While screening services may be more expensive, they can provide a more in-depth look at an applicant's background.
What to look for in a background check?
When evaluating a prospective tenant's background check, several factors should be considered, including:
- Criminal history: Look for any criminal convictions or pending charges that could indicate a risk to your property or other tenants.
- Credit history: Assess the tenant's credit score and payment history to ensure that they can afford to pay rent and have a responsible financial history.
- Employment history: Check the tenant's employment history to ensure that they are employed and have a stable source of income.
- Rental history: Contact previous landlords to obtain a reference and determine if the tenant had a history of problematic behaviors or rent arrears.
Creating a tenant screening policy
To ensure that you're conducting a thorough and consistent screening process for all prospective tenants, it's important to create a tenant screening policy. Your policy should outline the types of background checks you will conduct, the criteria you will use to evaluate applicants, and the procedures for handling sensitive personal information.
It's also essential to ensure the screening process is compliant with all relevant laws and regulations, such as Fair Housing laws that prohibit discrimination based on a person's race, gender, or other characteristics.
Real-life examples of how background checks can help landlords and property managers
To help illustrate the benefits of background checks, here are two real-life examples of landlords and property managers who have used background checks to make informed decisions about their tenants:
- Lisa, a landlord with a rental property in a busy urban neighborhood, was approached by a prospective tenant who seemed friendly and well-qualified. However, after conducting a background check, Lisa discovered that the applicant had a criminal history that included drug-related offenses. Lisa ultimately chose not to rent to the tenant, as she did not want to expose herself or other tenants to potential risk.
- Adam, a property manager for a large apartment complex, received an application from a tenant with a low credit score and several delinquent accounts. However, after conducting a background check, Adam found that the applicant had a stable job history and a clean criminal record. Adam ultimately decided to rent to the tenant, with the caveat that they pay higher rent and be subject to more stringent lease terms to account for their financial risk profile.
By using background checks, Lisa and Adam could make informed decisions about whether to accept a tenant and how to mitigate any risks associated with their rental application.
In conclusion, background checks are an essential tool for landlords and property managers when screening prospective tenants. By conducting a thorough review of an applicant's history, including criminal records, credit reports, employment verification, and rental references, landlords and property managers can identify red flags and make informed decisions about who to rent to. With the help of a clear screening policy and a trusted screening provider, landlords and property managers can protect their investment and ensure the safety of their renters.