Did you know that 59 percent of landlords believe that a steady income is more important to consider than criminal history, late payment, credit score, or history of late payment?
Tenants that are difficult to live with might cause problems to their neighbors and result in costly evictions if they do not pay their rent. Tenant horror stories are everywhere. But many of them could have been averted if the landlord had adequately done tenant screening in advance.
Many landlords believe they can trust their gut instincts. Yet, bad or good feelings about a potential tenant rarely indicate how they would behave.
Using a quick and simple tenant screening service will assist you in swiftly screening tenants while also reducing future headaches. Read on to learn more about the importance of tenant screening.
Determine Applicant’s Financial Capability
Since renting an apartment is a business deal, landlords must ensure that tenants are a good fit financially. A credit check will give you a glimpse of a potential tenant’s financial history.
Credit checks provide relevant information like previous debts, late payment history, and previous bankruptcies. A full credit report will give you a better idea of the applicant’s financial capability.
In other words, this process will help you determine whether potential tenants can pay rent on time. However, some items on the credit score may be less concerning. For instance, property managers can overlook student loan debt.
In some instances, an applicant may lack significant credit history. This is especially common among young renters who haven’t built a credit history. In such a case, you must require the applicant to provide a co-signer.
Having a full tenant financial history will enable you to gauge whether to lease them or not.
To Safeguard Other Tenants
Tenant background checks will provide you with information like criminal history. No landlord will want to lease someone who has a history of violent offenses.
Thus, you must review applicants’ criminal history before deciding to lease them. However, you can ignore minor crimes like traffic violations or offenses convicted decades ago. But still, you can speak with the applicant to better understand the situation.
Minimize the Risk of Legal Battles
As a landlord or property manager, you possibly want tenants who can pay rent and keep your property clean. The last thing you will want is legal issues with a tenant.
Lawsuits can be a total waste of time and add a financial burden that can cause stress. Busy landlords may be tempted to think that the risk of lawsuits is low and thus skip screening applicants.
However, conducting a tenant’s background check is necessary if you want to avoid discrimination claims. The process allows you to legally deny leasing unsuited applicants without being accused of discriminatory practices.
If applicants decide to sue you for discrimination, you will have a record stating why you have chosen not to rent them. Additionally, property owners are advised to conduct pre-and post-rental walkthroughs with tenants to evade litigations regarding repairs and maintenance issues.
Know Tenants’ Employment History
The goal of every landlord is to lease and keep good tenants. Though the tenant screening process may be time-consuming, it is crucial to know their employment history.
Often, landlords seek tenants who earn more than three times their monthly rent. However, if a potential renter can’t prove their source of income or employment status, it might be a red flag. You should also contact their employer to confirm their current income.
But a high income is not an indication that a tenant will be good. You also need to check whether they have a history of late payments or large debts.
Additionally, a tenant with a stable income but keeps on changing jobs may not be ideal for a long-term lease. A new job often comes with a lower or high income, and thus they may find your rental unsuitable. A new job may also require a tent to look for an apartment elsewhere.
Screening Reduces the Risk of Evictions
Tenant evictions are usually a costly and lengthy process. Thus, knowing potential applicants’ past eviction history can help you reduce such instances in the future.
But why do landlords evict tenants?
Evictions occur mainly due to lease agreement violations like a late rent payment. However, you can evict tenants if they destroy the property or conduct illegal activity on your property.
If an applicant was evicted from a rental property, the same instance could happen if you allow them on your property.
Though eviction instances show up in credit reports, you should not skip the eviction report that will provide you with more detailed information. Additionally, it can take more than 60 days for the eviction to appear on background checks.
Tenants who have been evicted may take advantage and move in fast before the eviction is reported to a credit bureau.
You Now Know Why Tenant Screening Is Important
Tenant screening is a great way to avoid issues with tenants. Landlords might be extremely busy and may not have time to handle the process. But if you hire property managers, you will not need to undergo the tiresome process of finding the best tenants.
At Memphis Investment Properties, we are a reputable property management company currently leasing more than 2400 properties in Mid-South. Our team of experts is well trained to provide services and amenities that meet tenants’ expectations.
Contact us today to learn more about our services.