Tenant Screening Dos and Don’ts

Posted by Teresa on December 8, 2009 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

tenant credit check on tenant screening blogTenant screening involves conducting background checks on potential tenants. Typical checks include tenant credit check, criminal background check, and tenant rental history. Landlords and rental property managers also have the option to check previous addresses, identity and name validation, address validation, evictions, liens, bankruptcies, and sex offender status.

Here are some dos and don’ts to consider when making the decision to screen tenants:

  • Do keep the screening process consistent: screen every applicant, every time.
  • Don’t make yourself vulnerable to discrimination suits by screening applicants based on appearance or other subjective attributes.
  • Don’t skip the tenant screening for an applicant who speaks well or dresses nicely, or the tenant applicant who drives a nice car—again, these are subjective observations that do not mean they will pay rent on time.
  • Do protect your other tenants and the neighbors surrounding your rental property by including criminal history in your background check process.
  • Do choose your screening service carefully. Are they a Better Business Bureau Accredited Business and Fair Credit Reporting Act (FCRA)-Compliant Consumer Reporting Agency? Is the staff FCRA Certified and Bonded?
  • Do ensure that your screening service employs high security measures, such as fingerprint scanners, controlled access, monitored facilities, and proper disposal techniques.
  • Don’t use a screening service without nationwide coverage and access to all three credit bureaus.
  • Do keep all information learned from a tenant credit report in strictest confidence.
  • Don’t neglect to provide a tenant applicant with a copy of the report, and to advise them in writing if you reject them for credit reasons.

Tenant Credit Checks in a Down Economy

Posted by Teresa on September 21, 2009 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

credit report on tenant screening blogIt’s rather difficult to find anyone who has not been affected by the economic troubles of the past year. That includes people who want to be your tenants. What should you look for when running tenant credit checks these days? If everybody’s credit is bad, why bother to do a credit check? Should landlords and property managers lower their standards in light of the rise in rental vacancies? Read on for answers to these questions.

Why bother with a tenant credit check when it’s going to be bad? Besides, if I skip it, I save money, right? Actually, the money you invest by doing thorough tenant screening will more than pay for itself when you consider the long term cost of evicting and/or cleaning up after bad tenants. And believe it or not, lots of folks are making it through the down economy by spending less, saving more, and keeping their credit records clean.

Should I lower my standards? This is a tough rental market, with rents down and vacancies up. You must decide whether to keep your qualifying standards high—and face empty units—or take a chance by lowering them in order to fill your properties. Experienced landlords say that empty units are far better than renting to bad tenants. It all depends on your tolerance risk, your cash flow—and a lot of luck.

Can I ask why a prospective tenant has had a bankruptcy? Yes. There is no time like the beginning to start communicating clearly with your tenants. If there is a bankruptcy on the credit check, ask what happened. You may find out that medical bills forced the tenant into bankruptcy, or that an ex spouse was actually the cause. Of course, if the tenant has other red flags on the credit report, you must take them into consideration, too.

Take a wide-angle view of the tenant’s credit history. If a bankruptcy is several years in the past, and everything else checks out, they may be an acceptable risk. If the bankruptcy was due to a business failure, the economy could be to blame—not the tenant. Past evictions and utility judgments are a higher risk indicators to many landlords than bankruptcies.

Do not ignore your gut instinct. If someone seems untrustworthy, they very well might be. Only you can decide whether a poor credit score or bankruptcy is worth the risk. The important thing is to perform consistent tenant credit checks!

Pre-Qualify Tenants for Lower Turnover

Posted by Teresa on September 14, 2009 under Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

check-mark on tenant screening blogPre-qualifying tenants means a good start to a mutually respectful, mutually beneficial landlord/tenant relationship. So what exactly is pre-qualifying, and how do you begin to implement this strategy? Here’s a list of what pre-qualifying is and is not:

  • Pre-Qualifying is about finding the people who fit the minimum requirements you set for income, references, job and credit history. Proper tenant screening will further narrow the field by giving you solid background check results to base your decision on.
  • Pre-Qualifying is not about discrimination. As a landlord, federal law prevents you from using a person’s race, color, religion, nationality, familial status, age, gender, or disabled status to determine housing eligibility. Your state may have additional guidelines.
  • Pre-Qualifying is about laying the groundwork for a great landlord/tenant relationship by communicating clearly and effectively from the start.
  • Pre-Qualifying is about reducing tenant turnover by avoiding broken lease agreements and evictions.
  • Pre-Qualifying is not about judging applicants based on personal appearance, the car they own, or the number of people in their family unit.
  • Pre-Qualifying is about applying the same rules and requirements to all applicants.
  • Pre-Qualifying is a way to reduce your risk by keeping tenants with previous criminal convictions or negative rental histories out of your rental properties.
  • Pre-Qualifying is started by advertising your property for rent in the right publications, including enough information to weed out individuals who are not a good fit for your rental.

Every landlord should consider pre-qualifying tenants. While it takes effort to begin any new procedure, it will soon be a habit—and this is a habit that will pay off through better relationships with your tenants and increased profits for you!

Rejecting a Tenant Application

Posted by Teresa on June 18, 2009 under Fair Housing Act, Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment

Rejecting Tenant ApplicantWhat are your risks when considering applicants for your rental property? Even in these tough times, you cannot approve every applicant. It’s important to know your parameters when you must reject a potential tenant.

The federal Fair Housing Act prohibits discriminating against tenants on the basis of race, religion, sex, disability, or national origin. Some states have laws making it illegal to discriminate based on sexual orientation or marital status.

Of course there are legitimate reasons to turn down an applicant. Just be sure to document your process thoroughly and to be fair and consistent with each applicant—so you are well prepared if you’re ever accused of discrimination.

Here are some legitimate reasons to turn down a rental applicant:

Income level: It is legal to use a prospective tenant’s income as a basis to approve or reject their application. Be sure to check the income of all tenants on the application to avoid any potential problems.

Bad Credit History: Prior bankruptcies or low credit score are objective criteria for rejecting tenants.

Exceeding Occupancy: You do not have to rent to a family of six applying to rent your one-bedroom apartment.

Inadequate Rental History: You may require a reasonable number of positive rental references, and reject an applicant based on a negative reference from a previous landlord.

Past Eviction: If an applicant has ever been evicted, you may reject the application. However, if he or she won an eviction lawsuit brought by a previous landlord, you cannot hold the lawsuit against them.

Criminal Record: If an applicant has been convicted of a crime, it is probably enough reason to reject their application. Take care, however, to make a distinction between an arrest and a conviction.

Pets: If you do not allow pets in your rental unit, you may reject a pet-owning applicant. However, be aware of how the Americans with Disabilities Act (ADA) views therapy pets. You may have to make an exception to your no-pet rule to accommodate a disabled tenant.

As always, staying consistent with procedures is extremely important—especially when considering whom to approve or reject as tenants. Keep your paperwork in tip-top shape, and follow the same process with each applicant. Favoring any person or type of person over another is a lawsuit waiting to happen.

Your best practice is to run credit and background checks on each applicant. Screening tenants is quick, easy, and inexpensive—and it could potentially save you thousands in legal fees. Use the facts—just the facts—to determine whether or not you approve an applicant.

How to Write an Effective For Rent Ad

Posted by Teresa on May 26, 2009 under Landlord Tips, Marketing for Landlords, Screening and Background Checks, Tenant Credit Checks, Tenant Screening & Background Checks | icon: commentBe the First to Comment


pencil-and-paper on tenant screening blog

When it comes to written communication, the “Two Cs” should be top-of-mind: Clear and Concise. This is particularly important when composing an ad for a rental unit. Follow these steps to an easy, effective ad:

1. Attract attention. Make your newspaper ad stand out by adding a border or bold headline. On Craigslist, the descriptor is short, so use creative language: “Amazing house in Oak Tree neighborhood,” “Best $500 apartment in town,” or “Hardwood floors, 3BR, super-quiet” are all ways to capture attention quickly.

2. Be clear.  At a minimum, list the number of bedrooms and baths, the neighborhood, parking information, and the monthly rent. State that you check previous landlords, criminal background, and credit history. You can eliminate unqualified tenants easily with a well-worded ad. 

3. Use photos. A picture is truly worth a thousand words. A photo can instantly tell a prospective tenant whether your rental property is the right place for them. 

4. Don’t skip the details. Do you include utilities with the rent? Say so! Are you okay with pets? Put it in the ad. Are you completely against smoking in your rental home? Tell us! Tell readers about the schools, whether a grocery store is close by, and all about the beautiful landscaping. Brag about your place, and you’ll get enthusiastic responses. You want the most qualified tenants to act upon finding your ad. 

5. Make it easy to respond. Put your primary phone number in the ad, as well as an email address. For Craigslist ads, all responses will be through the site’s secure email unless you add a telephone number in the ad. 

6. State a good time to call. You can certainly list what time you will accept telephone calls from prospective tenants. And if a call is made outside that time, the caller either didn’t notice, or didn’t care that you requested otherwise. It’s a good screening mechanism to find the tenants you’ll get along with best.

An effective ad is the first step in prescreening tenants. You can eliminate the ones you don’t want and attract the ones you do by being clear, descriptive, and detailed in your newspaper or online For Rent ad.

For more landlord resources, including everything you need to know about tenant screening, turn to E-Renter.com. You’ll know that you have the best possible tenants when you prescreen tenants.

Landlords and Maintenance: Working with Contractors

Posted by Teresa on May 5, 2009 under Landlord Tips, Screening and Background Checks | icon: commentBe the First to Comment

tools on tenant screening blog

Maintaining rental property can be a big challenge for landlords. There is always preventative maintenance that should be performed to keep your rental units in top shape. And then there are the emergency repairs that require your attention now.

If everyone around you clears the room when you start handling power tools, you should definitely hire an expert to help you with rental property maintenance. Even if you consider yourself reasonably handy, an endless to-do list probably means you need some help. Sure, you can save money by performing your own repairs and maintenance, but is that the best use of your time?

Finding the right balance between hiring expert help and breaking the bank isn’t easy. Consider these tips for finding and hiring a professional to help you keep your income property safe and functioning properly.

First, determine whether you need to hire out for individual projects, or if you’d rather enter into a longer-term contract for regular maintenance and repairs.

Research your local builder and remodeler organizations—they’re a great source for contractors and repair people. If you contact companies who cannot help you—for example, the work you need is below their ideal level—ask for a referral to an individuals or subcontractors with excellent track records and experience in rental property maintenance and repair.

Once you have contacted several individual contractors or repair people, conduct your due diligence: make certain they have all the required licenses and insurance in place, meet with them to ensure you can establish a good rapport, and ask for references. Your state licensing entity can provide current insurance and bond information. And don’t neglect to contact their references!

Set your job specifications and obtain proposals from each contractor. Award the project based on pricing, experience level, and references, keeping in mind the lowest price may not be the best choice. Work with the firm or individual you feel most comfortable with.

Be sure you have a clear understanding about payments and contract details. Do not fall prey to a contractor who requests payment in full before the job begins. Deposits and progress billing are reasonable, depending on the size of the job. You should withhold at least 10% of the contract price until the entire job is completed to your satisfaction and specifications. And make sure they clean up the job site, too!

And finally, be sure to properly supervise your repair and maintenance people. Do not allow anyone to have unlimited, unsupervised access to your rental property. For more security, consider background screening checks on any individuals you hire to perform work on your behalf. Mitigate your liability and keep your tenants safe by knowing exactly who you are hiring.

For more landlord resources, including everything you need to know about tenant screening, turn to E-Renter.com. You’ll know that you have the best possible tenants when you prescreen tenants.