If you own a rental property, you probably know that having great tenants is essential. Not everyone fully understands the significance of this topic, they learn it the hard way.
Since we are aware of this, we decided to write an article to teach people how to conduct a tenant background screening in order to prevent themselves from getting into uncomfortable situations with bad tenants.
Without further ado, here’s everything you need to know about conducting a tenant background screening:
Gathering essential information
Having a rock-solid system is crucial to filter out the bad tenants from the good ones. Before you start conducting the background check, you need to gather information from potential tenants, and that is where the rental application comes in place.
Requiring potential tenants to complete a rental application is a great way to gather all the essential information you need and assess whether the applicant would be a good tenant.
You can either obtain sample rental applications online or from your local real estate association.
The rental application should include:
- The applicant’s full name, date of birth, contact information, social security number, and driver’s license number
- Current and previous addresses, dates of residence, contact information for current and past landlords
- Current income, dates of current and past employment, along with contact information of current and past employers
- Banking and credit references for a credit check
Request applicants to complete a credit report authorization form
Now that you have gathered all the essential information, it’s time to start conducting background checks. Requesting applicants to complete a credit report authorization form is an important first step.
Keep in mind that if a potential tenant refuses to sign a credit report authorization form and doesn’t allow for a credit check, you can deny them the ability to rent the property since they’re not being transparent with their finances which indicates financial difficulties.
Set up a meeting in person
Since this is someone that you could potentially interact with frequently, from collecting the rent to addressing maintenance concerns, you want to make sure that you have a good feeling about them. We highly recommend meeting the person face to face since it’s the only way you can genuinely get a feel for a person.
You should also prepare a list of everything important you want to ask them, such as:
- What are the reasons why they are moving?
- Who else will be living with them?
- Do they have pets?
One thing we want to emphasize is that you shouldn’t be afraid to ask. It is much better to keep everything clear with your tenant at the beginning rather than solve issues along the way.
For example, let’s say you don’t want pets in your rental property, but you forgot to ask a potential tenant about this theme. You both signed the lease, and they’ve just moved in. By now, it’s too late to discuss this topic with your tenant if you find out that they actually do have a pet.
In-depth background check
Check your applicant’s credit report
Now, after you’ve already filtered out tenants you don’t want and found a few potential ones that you are interested in renting your property to, it’s time to conduct an in-depth background check on each of them to make sure you’re not missing anything.
By now, you have the credit report authorization form, and thus you can check your applicant’s credit report. A credit report will help you more understand your tenant’s financial stability and reliability. You will see information such as foreclosures, bankruptcies, evictions, unlawful detainer lawsuits, and a credit score.
A typical credit score required for renting a property usually sits at 620 or more.
Contact your applicant’s previous landlords
Directly asking your applicant's previous landlords for feedback will give you a clear picture of whom you’re dealing with. Create a list of questions you’d like to ask. The list shouldn’t be missing questions such as:
- Did they pay on time?
- Why did the lease end?
- Did they cause any property damage?
- Were there any complaints from neighbors?
Check for any criminal records
The ways criminal records are to be considered is changing in many areas. It is always important to check your local laws to ensure there aren’t any additional considerations placed in your area.
Criminal records are a great way to see that someone isn’t a good candidate since you’d probably don’t want someone with a dark past.
How exactly do you request a criminal background check for tenants?
As a landlord, it’s your right to request a criminal background check from any prospective tenant. However, you can’t be selective in which applicant's criminal histories you check.
Before running a criminal background check, you should have the applicant’s confirmation in the form of a signature that allows you to run the criminal background check. Be sure to let your applicants know about all of the costs associated with the process.
Now that we’ve gone through the entire process, you should now have a clear picture of what it takes to conduct a tenant background screening. Make sure you take every mentioned step with the highest level of precision and diligence since it can otherwise cause you many troubles along the way if you choose a bad tenant.
Feel free to check our blog section for more real estate-related content. If you have any questions about property management or real estate in general, don’t be afraid to reach out to us. Our team at Bottom Line Property Management will be more than happy to answer all of your questions.