There’s a lot of math involved in rental property management, especially when it comes to screening tenants. Hopefully, math was one of your best subjects, but if it is wasn’t, no need to worry. This math is less about running calculations and more about verifying that the story the tenant is telling is adding up. Here are three critical areas where it pays to run the numbers:
1. Tenant credit reports. These days, it’s easy to determine whether a tenant demonstrates a pattern of financial responsibility. Instant credit reports make it fast and simple by condensing credit information into an easy-to-read scale.
If you choose, you can view a full credit report that offers a more detailed view of a tenant’s debts and payment history.
Whichever credit reporting you choose to receive, it’s important to understand what’s behind those numbers.
Credit reporting agencies have analyzed a long list of factors, including how much credit is available to the individual, how much debt he or she is carrying, and how reliable this person has been in managing finances. This is one of the best indicators of how a tenant will handle the responsibility of a lease agreement.
This math is easy: simply run a credit report on your prospective tenant before you make the decision to rent. Compare the results of the report with what you see on the rental application, once you’ve confirmed this person’s identity and eliminated the possibility that the credit report belongs to someone else.
2. Rental History. Dates are key when exploring a tenant’s rental history. Using the information in the rental application, cross-checked against the credit report and confirmed by previous landlords, count the number of days that a tenant in unaccounted for at past addresses.
Unexplained gaps in the rental history flag a potential problem tenancy — a time when this applicant walked out on a lease or was facing an eviction.
Verifying these dates is an easy way to catch a tenant who is stretching the numbers — and the truth.
3. Sufficient Income. Another number to crunch is income. Find out the tenant’s exact income figure, regardless of the source of that income. Tenants often exaggerate, round up, or simply misunderstand how to report their income. It can be tricky to convert a pay cheque figure to the pay period requested on the rental application. Avoid miscalculations by:
Asking tenants to state how often they are paid, and what that amount is. Then, you do the math!
Requiring supporting documentation, like pay stubs, or a letter from the income source.
Confirming the information with the employer, if applicable, to avoid renting to a fraud.
In the end, the most important figure is zero — the number of problem tenants you want to encounter. Running these numbers can eliminate unqualified rental applicants, and that adds up to profits for your rental business.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
Click Here to Receive Landlord Credit Reports.
Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.
