As a landlord, your rental property is your investment. Your tenants can make or break your investment. Finding the right tenants who will pay rent on time and take care of your property can save you from a lot of stress and problems in the future. It's essential to take the necessary steps to ensure that the tenant you select is reliable, responsible, and financially stable. One of the most important steps that landlords and property managers can take is to use background checks.
Background checks are the thorough investigation of a tenant's past. It can include a criminal background check, credit report, rental history, employment verification, and more. By doing a background check, landlords and property managers can get an insight into the tenant's character, behavior, and financial situation. Here is how landlords and property managers can use background checks to screen potential tenants effectively:
1. Start With an Application Form
Before proceeding with a background check, landlords and property managers should ask potential tenants to fill out an application form. The application form should have essential information like the tenant's name, current address, job status, social security number, and a reference list. The reference list should include the tenant's previous landlords, employers, and personal references.
2. Criminal Background Check
A criminal background check is one of the most critical aspects of a background check. It helps landlords and property managers learn any criminal record that a potential tenant might have. A criminal record can include anything from minor offenses like traffic violations to significant offenses like assault or theft. A criminal record can indicate that the potential tenant may pose a risk to the community or property.
3. Verify Income and Employment
Verifying the potential tenant's income and employment history is critical to ensure that they can afford to rent the property. Landlords and property managers should ask for the tenant's pay stubs, bank statements, and employment history. They should verify that the tenant is employed and earning enough money to cover the rent.
4. Check Credit Report
A credit report is a great indicator of a tenant's financial situation. It shows a tenant's credit history, including their credit score, debt-to-income ratio, and payment history. A good credit score can indicate that the tenant is responsible and pays their bills on time. A bad credit score can indicate that the tenant has a history of not paying their bills and may be a financial risk.
5. Contact References
Before renting to a potential tenant, landlords and property managers should verify their references. The reference list should include the tenant's current and previous landlords, employers, and personal references. Contacting these references can give landlords and property managers a better understanding of the tenant's character and behavior. It can also help them determine if the tenant is a good fit for the property.
6. Evaluate Rental History
A tenant's rental history can be a great indicator of their behavior as a renter. Landlords and property managers should ask potential tenants for their rental history. They should contact the previous landlords and ask questions like, did the tenant pay rent on time, how was their behavior, and did they receive their security deposit back?
7. Use Professional Background Screening Services
Landlords and property managers can use professional background screening services to perform background checks on potential tenants. There are many companies that offer this service; some include SmartMove by TransUnion, Experian Connect, and MyScreeningReport.com. These services can provide landlords and property managers with comprehensive background check reports, which can eliminate the risk of leasing to problem tenants.
In conclusion, choosing the right tenant is essential to the success of a landlord's investment. To avoid renting to problematic tenants, landlords and property managers should conduct thorough background checks. Background checks like criminal background checks, credit reports, rental history, employment verification, and reference checks can provide landlords and property managers with vital information about potential tenants. By taking the steps mentioned above, landlords and property managers can make informed decisions that will protect their investments and ensure a successful rental experience for both parties.