“Top Reasons Why Property Managers Must Perform A Tenant Background Check” written by Mike Marko
Probably the most common risk to a rental property is the… renter. You have probably heard of the war stories from other property managers and landlords about the worse experience(s) they had with renters:
Property damage, late or unpaid rent, illegal activity, disturbing neighbors, … etc.
And the first line of defense you have is a background check.
In case you need further convincing, in this article I will talk about the top reasons why you should consider implementing a thorough tenant background check.
The Tenant Background Check
Doing a tenant background check is a process that a property manager should conduct to help learn about potential renters. It’s how the property manager gets the information to make educated decisions about who to rent to and who to turn down.
What Is A Background Check
A background check allows you to get a rough idea of what to expect from future tenants. The background check also allows you to begin to develop a good relationship and trust between yourself and future renters.
A background check is the first line of defense for your rental property so doing a proper doing a complete process is key to finding the most qualified renters.
Here is a list of questions and types of authorizations needed in completing the tenant screening and background check process:
- Meet the tenant personally
- Require them with a rental application
- Verify their income and employment
- Ask for an authorized credit report
- Ask for a criminal background
- Analyze their rental history report
- Analyze credit background check
When asking or using the above-referenced questions this will help you put together a complete background check that will help you find the most qualified person for the rental property.
The Background Check Begins The Relationship Building
One of the most important reasons to do a complete background check is to develop trust between you and your future renters. Trust is the key to having a good relationship as you determine the most qualified renter to rent to. Developing trust between the tenant and the property manager allows you to build a good relationship for business purposes and communication moving forward.
The best way to establish trust between you and future tenants is completing a background check.
The best background check process includes looking at past rentals, financial history and habits, and the entire interview process. Using background and credit check companies only show you part of the background check necessary in determining the most qualified renter. I have found using Top1Score services to underwrite a future tenants financial risk has been key in helping me find the best and most qualified renters to work with.
Tenant screening is the part of the background check. Tenant screen is conducted during the interview process, including when you show the property. As the property manager, you should be prepared to ask tough and personal questions about renters past rental history and personal habits. The answers to these questions combined with a more complete background check is key to the tenant screening process.
The way prospective renters answer or what documents reveal in the background search are vital to helping you determine if this person is someone you want to rent the property to.
You may ask the following questions:
- What is the reason you are moving?
- Do you have any pet?
- Do you smoke? Indoors or outside?
- Who else will be living with you?
- Do you have any relatives or friends who might frequently spend the night?
- Will you be able to pay the first months pay and deposit before moving?
Following the Rules of the Property
While conducting a background check, you have to make sure that this person is responsible enough to abide by property rules. This includes doing your best to ensure that they will get along with the other renters in the complex.
More complete background checks will include a criminal background check that will uncover bad previous behaviors. A background check that looks at past criminal history will not only protect the people who will live by your prospective tenant, but this will also help you know the best way to communicate to them and avoid future possible arguments.
A complete background check will evaluate habits, review criminal background checks, and give you guidelines to determine if this person could be a good renter and neighbor. The background check will also identify whether a person is an ideal renter for your property. It will be your best predictor with regards to how they will act during their residency in the rental property.
The background check, interviews, and reviewing past rental history will help you be able to determine if the prospective renter will follow the rules established at the rental and will be safe to interact with other tenants.
Avoid a Tenant Who Hides a Secret
Having a strict background check broadcasts a message to discourage applicants that may be hiding bad records.
Don’t be surprised that after you announce that you have a strict background check process that these applicants stop their communication with you. Especially after a couple questions specifically about the background check. Alternately, if the applicant refuses a background check it should also be a red flag… what do they have to hide?
If the applicant stops communication: let them go. Don’t follow up. Their lack of response only shows that the applicant is no longer interested in your property anymore.
Don’t chase them. Tenants hiding information will probably only ultimately make your property management experience miserable. Stick to your plan and find the best fit for your property.
Have High-Quality Applicants
Implementing a background check procedure, and openly revealing you have a background check process, helps make sure you are only working with higher quality applicants. By just announcing you have a strict background check up front, you’ll only attract higher-quality applicants. Only those who are confident that they will be accepted will take the time to apply for the properties.
This will help save you time and money because you’ll only be dealing with more desirable applicants.
Protect Yourself From Liability
An often overlooked aspect of the background check is that it helps protect you from litigation.
Let me explain… the background check should be used to help reduce the chances of an incident happening. If you skip steps, or see a potential problem and ignore it, and something happens… you could be legally liable.
Remember Ignorance is not a defense. If a crime happens in a building you’re managing, you could be sued for negligence. Help reduce the risk by implementing a thorough background check, documenting it, and taking action based on anything you find.
When you conduct a tenant background check, it can be a delicate balance between protecting your properties and be discriminating. Make sure you establish a background check procedure and adhere to it in all cases. Also, make sure you are familiar with anti-discrimination laws. https://www.nolo.com/legal-encyclopedia/free-books/renters-rights-book/chapter5-2.html
Final Thoughts About Conducting A Background Check For Tenants
As we discussed, there are a lot of reasons why you should consider implementing a strategy of having thorough background checks before allowing tenants to move into your property. It’s a lot easier (and cheaper) to screen the tenants early than have to evict down the road.
If you have questions or comments, leave them in the comment box below.
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