5 Things Landlords Need to Know About Tenant Screening

by | Jul 27, 2020 | Tenant Screening

Finding the right tenants is key to any profitable rental business. Here are some tips that make tenant screening easier and more effective for landlords:

1. Tenant fraud is a real and growing concern for landlords. The best way to expose fraud is to catch it early. For that reason, savvy landlords and property managers withhold the rental application until they have seen an applicant’s photo ID. Without that baseline, there is no way to know that the information provided pertains to the applicant. The ID also provides personal info — legal name, birth date, address — that can be compared to the completed rental application to flag identity theft and others acts of fraud.

2. By reading the rental application first and then verifying the information provided, including contacting references, a landlord can determine if an applicant is unqualified before running tenant screening reports. That way, the landlord will not be required to send an adverse action notice, and the applicant can continue the housing search without having wasted time on a property that is out of reach.

3. Running the applicant’s credit is important, but screening using a threshold credit score is not always effective. The credit report flags irresponsible financial behavior like chronic late payments and defaults. And while good credit is characteristic of a good tenant, it is not the only qualification. Previous evictions or a poor rental history may not impact credit but may disqualify the applicant. A tenant can have 750 credit and still be a jerk.

4. Prior evictions are a deal-breaker for many landlords. That’s because an eviction signifies a tenant who broke the rules or failed to pay and yet refused to move out.

Unfortunately, tenants can fall through the cracks on eviction reports by moving to a new location before the eviction is finalized. Look for warning signs that an eviction is ongoing:
Tenant asks you not to contact the current landlord;
Tries to discredit the current landlord;
Is moving mid-lease; or,
Wants to move in right away without a plausible explanation.

For past evictions, in addition to running an eviction report, look for evictions that were never finalized — because the tenant moved at the last minute. Ask the applicant to provide previous addresses and look for gaps. Confirm the dates of previous rentals when speaking to the references. And always speak to the previous landlord references before renting to any applicant.

5. Criminal history is becoming increasingly regulated by both federal and state governments. For instance, landlords no longer can ask an applicant to report arrests that did not lead to conviction. Not all crimes impact housing, so landlords cannot apply a blanket ban on all criminal history. Before disqualifying an applicant based on past crimes, several factors should be considered when weighing the likelihood of recidivism. Because minorities are more likely to be arrested, convicted, and to serve longer prison sentences, rejecting these applicants for crimes may be considered discrimination. If the applicant does not meet other qualifications, there is no need to investigate criminal history. For these reasons, it is best to run criminal history as the last step in the tenant screening process, after determining that the applicant is otherwise qualified.

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 is 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.

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