“Rental Background Check 101 For Property Managers” written by Mike Marko
Wondering how to conduct a rental background check effectively?
The success of your rental property business depends on your tenants. That’s because the revenue of your property will be from their rents. And also, since they use your property, it’s crucial that you pick tenants who know how to take proper care to your property or utility.
That explains why it’s essential for property managers like you to choose your tenants carefully by conducting a background check.
However, even after a background check, you may still find yourself having bad tenants; renters who do not pay on time or those that damage your property.
Do you know how to prevent this from happening?
What to Know about Rental Background Check
To filter out the bad tenants, you need to know the do’s and don’ts when conducting a rental background check. But before we talk more about it, let’s first see the importance of a background check.
Importance of a Background Check
The purpose of a background check is to ensure that the potential tenant is a responsible renter. That’s because running a background check on a potential tenant gives you an insight if they can pay the rent on time and take proper care of the rental property.
Also, conducting a background check minimizes the risk of endangering yourself and other tenants from criminals or unlawful activities.
A thorough rental background check can help you pick only the good tenants.
Contents of a Background Check
By performing a background check, you will get insights about your potential tenants. You will get to see their rental histories, court records, employment history, and even credit checks.
Here are the information you will get about your tenants when performing rental background check:
- Personal Details,
- Full Credit Score,
- Address History,
- Employment History,
- Consumer Statements,
- Public Records,
- Eviction Records,
- Criminal Records,
- AKAs, and
- Fraud Indicators.
You can use the information from the background report to verify the information on the tenant’s rental application. However, you need to make sure that you’re getting the reliable information before you accuse the applying tenant of committing fraud.
Ways of Conducting Background Check
Property managers should get an accurate background report of the applying tenant to guarantee that the rented property is in good hands. Aside from that, allowing a criminal inside the rental property will put the lives of your tenants in jeopardy.
To ensure that you’re getting an accurate background report, you need to order it from a reliable background check company such as:
The contents of a background check report that you can get from the following companies may differ from one another. But usually, the information presented in the report is the same.
It’s better to order background report from two or more background check companies. Also, it’s advisable to choose a background check company that’ll give the information you need.
A single search background check cost around $20 to $30. You shouldn’t worry about its cost because usually, property managers are allowed to charge the tenant for the cost of the tenant screening process.
But before you start charging your tenant, it’s better to check the rental laws in your area first.
Check Rental Laws in Your Area
Not all states have the same rental laws. That’s why it’s advisable to check it before you proceed to conduct a background check.
There are legal steps that you need to follow regarding a rental background check. Typically, property managers need to inform the applying tenant about the tenant screening process. A written consent from the tenant is needed before you can conduct a rental background check on them.
Also, property managers can’t reject a potential tenant based on their ethnicity/race, national heritage, religion, disability, gender, and familial status.
Rejecting a tenant because of discriminating reasons will result in major legal consequences. That’s why you must apply the same screening guidelines to all applicants.
You must respect your tenants them and their privacy. That’s why you should never disclose your tenant’s information.
Never Disclose Your Tenant’s Information
Property managers aren’t allowed to disclose the content of the potential tenant’s background report to other people. You can be held liable if you divulge private or sensitive information without the tenant’s permission.
Also, rental laws sometimes prohibit you from giving information about yourself. You should never give out your home phone number or home address, and use a PO Box and rerouted phone number. Doing this will make you vulnerable to threats.
Sometimes, the relationship between the property manager and the tenant ends on a bitter note. Some of them immediately have altercations right after the property manager rejects the tenant’s rental application.
To prevent that from happening, here’s how you can properly deny a rental application form.
Deny Tenant Based on Background Report
To avoid having problems in your rental business, consider rejecting applications that do not follow the rental laws in your area to begin with.
Usually, property managers are required to prepare an adverse action notice. You can search the internet for an adverse action template or check your government offices for samples.
After making the notice, mail it to your applicant, along with “A Summary of Your Rights Under the Fair Credit Reporting Act.” Keep in mind that you’re not required to give the tenant a copy of the background check to prevent any heated arguments.
Final Thoughts on Rental Background Check 101 for Property Managers
In this blog post, I talked about the rental background check. Property managers use the background check to ensure that the applying tenant has good credits.
The background check will give you different information about the tenant. However, just make sure that you’re ordering the report from reliable background check companies. Doing this will ensure you that you’re getting accurate reports.
After you get the background report, remember that you’re not allowed to disclose it to anyone. Also, if you’re planning to reject an application background report, make sure to follow the laws in your area regarding this matter.
If you have more questions about a rental background check, leave them in the comments below.
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