“How To Do A Background Search On Every Tenant” written by Mike Marko
Do you do a background search on every tenant before accepting them?
You have probably heard about the horror stories about renting to questionable tenants, and how they can cost property managers time and money.
So does a background search help protect the property manager?
To answer this question, and to talk about other possible advantages, today I would like to talk about why and how you may do a background search on every tenant.
Importance of A Tenant Background Search
The background check process allows you to find the best and most qualified tenants to rent the properties you are managing. Doing a tenant background search before accepting a new tenant is vital in understanding the type of tenant you will be renting to. It should be done on every tenant you are considering for rentals.
Now that we understand the importance of doing a background check on every potential tenant now let’s talk about the tenant background search and what it can it do for your business.
What Is A Tenant Background Search
A tenant background search is the process of searching and gathering the criminal records, commercial records, and financial records of an applying tenant. This process is done once a prospective tenant has passed interview guidelines and has become a candidate to rent the property and has submitted a rental application form to the property manager.
When doing a background check the company performing the check or your own employees should produce a detailed report of the findings of the background check. Normally the results of a background search give information about the prospective tenant’s past employment verification, credit history, and criminal history. The tenant background search is frequently done by landlords or property managers as their way of determining a potential tenant’s ability to be a qualified renter for the property.
Background searches are also done to make sure that the tenant does not have a history of causing damages to rental properties and if they would pose any danger to the property due to illegal activities in their past. The outcome of the results heavily affects the decision of the property manager in deciding whether they will approve or deny the rental application of an applying tenant.
A tenant background search can also help landlords or property managers in verifying the validity of the information written in a potential tenant’s rental application form. The process of a tenant background search can help property managers in avoiding the individuals that are stealing another person’s identity. Simply by reviewing the application side by side to the background check, you can identify any discrepancies or misinformation that could lead to identity theft or other misrepresentations to rent the property. The tenant background search helps landlords and property managers to confirm that the potential tenants are who they claim to be. The tenant background check helps to verify information provided on applications as well as identify past personal and professional history of potential tenants that help in the rental determination process.
Do A Background Search On Every Tenant
As part of the rental determination process you, need to know and understand the possible tenants that you could be renting the property that you are advertising. Learning how to use all the tools and information available is key to finding the most qualified tenants for your properties.
To avoid all the possible problems that a bad tenant could cause it is advisable to develop a fair and complete tenant background screening process to be used for every possible tenant.
A tenant background search can minimize any future problems caused by bad tenants. Bad tenants usually give property managers a lot of problems including the delayed or late payments, damage to the rented property, and annoying behaviors.
But before you conduct a tenant background search, make sure that your tenant is serious about renting your property. Remember to ask important questions if a prospective tenant is inquiring about your rental property.
Important Questions To Ask
Here are some of the important questions that you should ask every inquiring tenants.
- Name of prospective tenant
- Telephone contact number
- Date prospective tenant wishes to occupy premises
- Any landlord references
More Questions To Ask
Here are more detailed questions to help you in prescreening an inquiring tenant.
- Reason for choosing to move
- Number of people in the family
- Number of children, if any, and their ages
- Type and number of pets, if any
- Is anyone in the family a smoker?
If the inquiring tenant decided to continue their rental application, set up an appointment or personal meeting with them and talk more things about the upcoming tenancy.
By doing your due diligence in the interview and showing of the property, you can have a good feel or determination of which possible tenants you would like to have applications from…
Meeting The Prospective Tenant
As part of the sorting process to finding the best tenants to rent the property meeting and interviewing the tenant is key to helping you understand and know the tenant better. Like in any business venture, first impression are lasting. Every time you have communication with possible tenants you are building relationships and determining if this is someone you would want to rent the property you are advertising.
Here are the important notes to consider in meeting the prospective tenant for the first time as well as ongoing communications between you and the tenant.
What To Consider In The Meeting
When meeting the tenant you should always take note of the following:
- The appearance of the tenant – Unfortunately a lot can be inferred by the way a person presents themselves. When a person takes time to look clean and approachable this is a good impression of appearance and could make you feel like the tenant will treat the property they rent in the same way. In the same way, when a tenant presents themselves in a messy uncaring way that could infer that they will most likely be messy in his/her property as well.
- Vehicle – Appearances and income level affect the type of car a potential tenant is driving. The age and the make of the vehicle may give a landlord or property manager a hint about the potential tenant’s income level or expense habits.
- Personal character – The most important part of the interview process is to try to get a true read or understanding of the potential tenant’s character and if you can work with them in the future. When you get to know the potential tenant’s character to predict if he/she will be someone who you can easily deal with once the lease term is commenced.
Start The Application
Throughout the rental process, you will need to take notes to help in determining the applicant’s you would like for the rental of the property. It is illegal in most states to deny accepting applications.
Once you and the potential tenant determine that they are eligible for the property the next step is to ask them to fill your rental application form. When accepting rental applications it is important to inform the potential tenant about the important terms and policies in renting your property. Also, it is important to mention their responsibilities and their obligations of paying monthly rent on time regularly.
Important Information To Include In Your Rental Application Form
Your rental application form should give you various information about the tenant to help you in identifying who they are. The more detailed information required will help you in completing the background screening processes more effectively.
The following sections will detail what should be included and what information your rental application form should ask for…
Basic information of the tenant
Since renting a property is done using legal documents like leases and rental contracts you need to have basic information to identify the person signing or committing to the contract. Like most legal documents, the first part of your rental application form should get various identifying information about the tenant to help you know who they are. The information that they provide here is also needed in conducting a tenant background search.
The first part of your rental application form should include
- Social security number
- Date of birth
- Current address
- Driver’s license number
- List of vehicles
Public Records And Employment History
As the property manager, you should also know the prospective tenant’s financial capabilities. Your rental application form should get various information about their employment history and several public records such as criminal records and driving records.
Here are the important items that should be included in the second part of your rental application form.
- Current job and salary
- Past employment for the last 3 years
- Copies of pay stubs
- Copies of driver’s license
- Questions about their credit and criminal records
Rental History And Details About The Tenancy
It is also important to know the prospective tenant’s experiences and behavior in their past rentals. By verifying information with past landlords or property managers this will help you know what kind of renter they are.
Consider adding these items in your rental application form
- Names and contact information of their current and last 2 landlords
- Names of individuals that are moving with the tenant
- Why they decided to move out
- Why they choose your property
- Personal references
You may choose to add more questions but be careful in not adding any questions that could be determined discriminatory or illegal according to the fair housing act and your State and local guidelines.
Proceed With The Background Search
In order to conduct a background check on a potential tenant, you must first make sure that all processes are discussed and that the tenant agrees to allow you to do a complete background check. Additionally, when doing background checks on potential tenants you need to be aware to avoid any violations of rental laws and follow the correct procedure for conducting a tenant background searches.
Ask your tenant to sign a consent form
As part of the official application process you should have a separate form detailing authorization to do a complete background check for the tenant. This form needs to be authorized and signed prior to conducting any background check process. Additionally, if you require a credit check then you should have a separate authorization form signed by the potential tenant.
After gathering various information about the prospective tenant ask them to sign a document that allows you to conduct a background and credit check on them. Under the Fair Credit Reporting Act, landlords and property managers cannot conduct any kind of tenant screening procedures without the tenant’s permission.
As the property manager you, are required to have a signed written consent from the prospective tenant before you proceed with the background search.
You could conduct a background search on your own but most of the time property managers use paid services offered by background check companies. The services offered by background check companies comes with a certain price and in most States you can ask the tenant to pay for the services as part of the application process.
Only use services by your trusted agencies or companies
Make sure that the agencies or companies that you’re going to use to do the background check services are certified and allowed to do background and credit checks. Avoid having wrong and unreliable documents as this will only make things worse for your rental property business.
You are required to give a copy of the background checks results to the prospective tenant and you need to check with local laws and regulations on how long you should legally keep background check documents.
Final Thoughts About Background Search
Choosing the wrong tenant for your rental properties can cost both time and money. That’s why in this article we talked about how a background search can be used to help screen new tenants. We talked about whether doing a background search actually works. We also talked about how to implement your own background check throughout the tenant screening and sorting process.
Please comment below with any questions or thoughts you may have.
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