Your rental properties are an investment – which is exactly why you do not want to let just anyone sign the lease agreement. You are looking for high-quality tenants that you can count on to be respectful, communicative, and on-time with the rent. This is precisely why a thorough tenant screening report is crucial.
Sadly, tenant scams are becoming a major issue in the rental world. And certain past behaviors can predict future behaviors. Before you rent out your investment to a new tenant, be sure to carefully review the screening. Taking precautions rather than accepting the report at face value may save you a huge headache and a lot of money down the road.
Here are 5 warning signs to look out for in a tenant screening report.
You should always review a tenant’s employment history. After all, a tenant with a steady work history shows reliability and responsibility. There is a good chance this tenant will pay rent on time. But, what about the tenant who changes jobs frequently? This is a red flag. If he or she does not often maintain regular employment, how can you be assured rent will be paid?
Another thing to consider is double-checking employment. Tenants often try to scam landlords by putting down a friend or family member as a supervisor – even giving a personal number as a business contact. Do your due diligence by looking up the company’s info online and calling the number listed on the website to confirm employment.
COVID-19 added another important layer of employment verification. At Real Property Management we require potential tenants to provide proof of income. We verify the ability to pay rent by requiring a minimum of two pay check stubs from the employer. Unfortunately, those who were hit hardest with COVID were those making cash tips. Often, cash tips are not reported through pay check stubs and are not considered verifiable income. This is important to require and review from potential tenants in order to reduce the risk of non-payment due to COVID-19 hardships.
Nearly everyone has some debt. Things like student loans, car loans, credit cards, and even medical bills are quite common. Too much debt – and too many open accounts – may mean there will be a lot of people out looking for money from your tenant. Will your rent get paid?
While reviewing the credit report, look at negative marks, such as late payments, foreclosures, and auto repossessions. These are warning signs that could form a picture of the tenant and his or her ability (or lack thereof) to be financially responsible.
A tenant with a criminal history should not always be an automatic no. A history of minor incidents years ago in the past may not be worth denying someone who otherwise seems like a perfect fit. Those early adulthood years were a struggle for many high-functioning adults today. However, the red flags on a tenant screening report that you should pay attention to are whether there is a consistent pattern of crimes over time – or whether there is a serious crime listed on the report.
Use your judgment and determine whether the crime committed could potentially leave you, your property, or other tenants in a vulnerable situation.
On the tenant screening report, the applicant will have to list prior addresses with landlord references. Depending on your procedure, it may go back any number of years. Look at the most recent landlord/s and follow up to discuss the renter.
You will want to know if payments were made on time, if notice was given before leaving, if the property was well-cared for, and so forth. Consider asking the landlord if he or she would rent to the tenant again in the future.
When the tenant filled out his or her application, were there any blanks? Not only could this interfere with a thorough tenant screening process, but it could also mean that something is being hidden. Never assume that a blank is a simple oversight.
Your tenant screening report could be missing information if it was not included on the application – so be sure it is completed in its entirety so that you can have a solid report.
To find new, long-term tenants, you need to make sure your screening process is exhaustive. However, you also need to take into consideration that your gut has a lot to say. Sometimes you can learn more from talking to and interacting with the tenants than you would with just a formal application.
For instance, you should see a red flag flying high if you encounter any of the following:
When you meet with the tenant, always ask to see ID. Make sure that it matches the person you are talking to – and make sure it is a legitimate ID. Too many fake ID’s are circulating and that can lead to an entirely different situation that you would be better off avoiding.
Are you feeling a little overwhelmed right about now? It is understandable. As careful as you would like to be with your tenant screening, sometimes you just don’t have it in you the discernment to find high-quality tenants. Or, perhaps you have better, more effective ways of using your time.
Hiring a property manager means hiring experts familiar with a tenant screening report. You can rest easy knowing that your investment is being filled by excellent tenants who have gone through a rigorous background check by those who know all the ins and outs of the business. Of course, it also means you have more time to do what you do best – invest!
Do not risk your leaving your property in the wrong hands. Look for the warning signs, trust your gut, or simply hire a property manager.