“7 Key Tips On How To Do A Background Check” written by Mike Marko
Are you afraid of renting to bad tenants?
A bad tenant could hurt your property management business in a lot of ways. A bad tenant can cause you to lose money on unpaid rents and/or cause property damage to your rental properties.
There is never a foolproof way to avoid bad tenants. However, you can limit your risk by doing a complete background check into the prospective renters rental and financial history.
Doing a complete background check will be helpful when you feel comfortable and content with their outputs. Many property owners or managers have tried using a tenant screening companies to do background checks but still, many bad tenants have slipt through the cracks and they are currently staying in their properties.
This article should help you in developing a guide to the rental process as well as give you a allows you to develop a guide on how to do a background check successfully. Following these tips may help you prevent renting your property to someone you would consider a “bad tenant”.
Tips on How To Do A Background Check Successfully
A bad tenant due to lost rents, or major property damage could bring down an entire rental property business. Luckily, there’s a lot of ways where property managers could avoid the emotional and financial stress that bad tenants could bring.
Developing a thorough screening process is one of the best ways to eliminate bad tenants from renting a property. As a property manager, you should develop a list of things to evaluate in possible renters before you start the process of renting your properties.
The first step to doing a correct and thorough background check is getting the prospective renter to fill out a rental application and sign needed authorizations for you to conduct the background check.
It is the property manager’s responsibility to verify the information on any rental application form and supporting documents. With the right knowledge, looking for possible red flags would be easy and will help in eliminating any possible bad tenant from renting the property.
Here are some tips on how to do a background check successfully.
1. Ask Questions
First of all, it is important to have multiple conversations with the applicant to help in avoiding renting to a bad tenant.
Interviewing and asking questions allows you to begin to get to know the tenant and understand their personality and what it will take dealing with them in the future. Most interviews are face to face or via phone. No matter how the interview process takes place you should always take notes and begin to understand your possible tenants’ agenda.
Asking the right questions could give you an idea if the applicant is a good tenant or a bad tenant. During your interview process, you should have goals to extract the most information you can about them and get important questions answered to determine if they are the most qualified to rent to.
In completing the interview process you should consider asking the following questions:
- When are you moving in?
- Who else will be living with you?
- How many bedrooms do you need?
- Do you have a pet?
- How is your job?
- What is your maximum budget?
- How is your credit report?
- Have you ever been evicted from a property, and why?
- How long do you expect to rent the property?
2. Listen to Their Story
Often times the most important part of the application process is listening and evaluating the applicant’s story of why they wish to rent the property you are renting. Listening to the applicant’s story is not a waste of time and actually, it is a good chance to ask how well or bad is their relationships with previous landlords.
If during the interview process or background check you identify that they had a previous relationship with a landlord that ended on a bitter note, it indicates that either of them is having a problem with the other.
Start a conversation by saying “I know a lot of landlords can be difficult to deal with. How has your experience been with your previous landlord?”
Applicants with bad relationships with their previous landlords are the tenants you might want to avoid. However, asking the tenant to explain why these relationships went sour could help them qualify to rent your property.
As a property manager, it is not advisable to rely heavily on your applicant’s documents. Having a personal engagement and building a personal relationship with them is advisable to know the information that a screening report could not give.
3. Look For Suspicious Signs
Don’t ever think that a tenant screening process is just about checking the employment and landlord references. The entire process is all about checking the references and doing due diligence to confirm that everything filled out on the rental application is truthful and complete.
In taking the time to make an extra effort in knowing the applicant can actually help you in identifying inconsistencies and suspicious information that may arise regarding the applicant.
Be aware that there are many possible tenants who are faking the information on their rental application. As a property manager, it is your responsibility to make sure that you do your best at vetting and determining that the information on the rental applications is truthful. Because, once their application is approved and they begin renting from you, if they will never pay their rent you will incur multiple costs in evicting them and making sure that any property damage is paid for.
Often a bad tenant or evicted tenant will just disappear before you could get any payments of lost rents or property damage as well as the ability to get any help from authorities to find and prosecute them.
Here are some red flags that you should look for and take extra time in interviewing the prospective tenant.
- The tenant wants to move into your property immediately without seeing it. This is a big red flag and you should ask questions to determine if they are someone you want to rent to instead of being excited about them moving into your property, a wise and good tenant will check your property first before moving in.
- Information on the rental application does not match information obtained by interviewing the tenant. This is a big indicator that the prospective renter is trying to hide something from you or is not giving you the whole story about something.
- Tenant does not have enough for the rental deposit. This is a red flag in indicating that the renter may have problems paying their rent in the future.
- The applicant’s rental application contains incomplete information. Leaving out information or not completing the application is an immediate red flag during the rental process. It can be suspicious if the rental application form includes only the good things and information you need to see?
Identifying and resolving red flags on rental applications is important to the process of finding the most qualified renters for your properties. Trust your guts because it is very rare to see a perfect tenant, always do your due diligence and review asking questions and verifying the information in the best way possible. Don’t trust them easily.
4. Confirm Their Identity Using The Internet
Never trust that a prospective tenant will be truthful in every aspect of the rental application. I know this sounds funny but often times bad tenants will steal others identities to disguise that they have a bad rental history or criminal past.
Using the Internet to confirm their identity could either tell the truth or tell a lie but in most cases, it could help you in a positive way.
The best way to do this on your own is to simply type the applicant’s name on large search engines such as Google or Yahoo. Once the results are loaded, basic information on the applicant’s rental application could be found online. If the information from the rental application and the internet matched, then it is possible that the applicant is telling the truth.
However, you might want to use an online identity verification system that would help identify if the person you are talking to is the person on the application.
5. Never Use The Contact Number Of The Employer
Never trust the contact number on the applicant’s application form. The reason for this is that the prospective tenant could put a fake employee reference and have you call someone who is not affiliated with the company and have them lie to you regarding their employment history etc. It’s easy to fake the information in this field.
Instead of using the contact number provided on the application, it is better to look for the employer’s contact number on the internet. This way you will be guaranteed to be speaking with an actual representative of the company and be referred to their human resources department to verify employment.
Nowadays, almost all companies have their own social media accounts that can be contacted. If the provided information on the applying tenant’s application form doesn’t match, then it is time to get suspicious.
Just like employers, it is also advisable to verify the identity of the applicant’s previous landlords using the internet or background searches to make sure you’re speaking with the true landlord over someone faking to be that landlord.
6. Ensure Financial Capabilities
Checking the applicant’s financial capabilities and stability is one of the most important elements in the process of tenant screening. During the process of filling out the rental application identify and get authorization to run and credit checks or verify financial capabilities from the tenants signature.
Every property manager should develop their own rule regarding the acceptable rent vs. income ratio. It is better to have an idea about the salary of the applicant. If the applicant’s salary doubled the amount of the monthly rent, then it is a good reason to accept the applicant.
Since it is easy to fake documents of employment, asking for the applicant’s most recent pay stub is advisable. Paystubs are harder to duplicate, this will lessen the chances of being fooled by fraud tenants.
7. Make Your Own Report
As a property owner, it is possible that some of the applying tenants are bringing fake documents and that is the reason to conduct a different background checking.
Aside from the provided documents, it is important to check the applicant’s background on your own.
In developing a property management business you should have a list of how to evaluate and screen and do background checks on possible renters. Doing credit checks, paying for background checks and obtaining free info from the internet should all be included in your process of doing a complete background check
I would suggest never relying solely on the free information you can find on the internet on the internet. This can be risky since not all evictions, bankruptcies or bad debts are not easily obtained from free internet sources. The internet is a great source of information and you should incorporate the information you find easily on the internet with background checks and credit check you might have to pay for.
I would highly recommend combining all the information obtained in the background check process as the best way to avoid possible bad tenant in the future.
Final Thoughts About Tips On How To Get Background Check Successfully
In developing a property management business you should have an established process for evaluating and conducting background checks on possible renters. Doing credit checks, interviewing the tenant, paying for background checks, and obtaining free info from the internet should all be included in your process of doing a complete background check
To become successful in your rental property business, you need to be careful in choosing the tenants that will be living in the properties.
I hope this article gives you useful tips on how to get background check successfully.
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