“How A Tenant’s Background Check Affects Renting A Property”

Have you ever had a tenant who didn’t pay their rent on time, or left the rental damaged?

If you have then you know about all the financial hardship and lost time in renting the property has cost your rental business. If not, you’re lucky. But don’t think you are immune to not having a bad tenant in the future

Every property manager wishes to find a good tenant who will perfectly fit their rental property business.

When all your rentals are rented with good tenants, it is easier to manage them.  You won’t have the additional workload caused by bad tenants who can cost you lost rents, damages and lost time to rent your properties.

That’s where a tenant’s background check can help.

In this article, I will share with you the scope of a tenant’s background check to give you an idea on how you should implement it and make it effective in finding the perfect tenant to rent your property.

The Tenant’s Background Check

As a property manager, it’s your responsibility to get to know a potential tenant deeply before you even allow that applicant to rent your property. You have to determine every little detail about them starting from the person’s ability to pay the rent, current financial status, and even up to its personality as a person.

Doing a tenant’s background check will help you determine if a prospective tenant fits your rental criteria and expectations when determining if you want to rent them the property you have for rent.

Develop A List Of Criteria For The Tenant’s Background Check

As a property manager, it is a must for you to know the things that should be considered in doing a tenant’s background check on your prospective tenants. You should work to develop a list of criteria to be measured when evaluating someone to rent your properties. Depending on your criteria, you will have to be diligent in getting the right information to help you weigh things about your prospective tenant. When you know what you need to do a tenant background check then you can get all the correct authorizations needed to complete the checks you need.

However, if you have no idea about the kind of information to discover and evaluate on your potential tenants, conducting the tenant’s background check on them will not be an easy job. Plus, there is a possibility to fail on your ultimate goal of only selecting good tenants for your property.

Before even conducting a prospective tenant’s background check, it would be best if you are already prepared for the kind of information that you need to acquire about an applicant.

Know The Types Of Reports

Being a property manager means you should be familiar with the different kind of reports that you will usually encounter when running a tenant’s background check. Learning about how to deal with the information from these reports will guide you in making a decision of whether or not to accept a rental application. Making the right decision in selecting tenants will contribute to the success of your rental property business.

Rental History

In doing a tenant’s background check, you will be able to discover a lot of things from the tenant, including their previous addresses, their landlords, and their rental history.

When the tenant fills out the rental application they will list their previous rental history. Additionally, when you use a service to do a rental background check, the rental history report will show all the instances of late fees, bad records, evictions etc. that the prospective tenant has during their previous rentals. This will give you an idea of what kind of renter the prospective tenant was in the past, and whether the person has been a good or a bad tenant.

Ask Questions

Asking questions about past rental history and what you found on their rental reports will allow you to uncover a lot of information.  You will learn about the tenant about their previous rentals that will help you in the decision making about renting the property to them.

Ask them about the bad information that you received from the reports and let them explain what happened. There are instances where reports can contain errors so it would be a good practice to confirm details of any reports when you conduct an interview with a prospective tenant.

Contacting their previous property managers could also uncover unwanted facts from the tenant.  It can help uncover things like the reason behind their evictions, late payments, missed rental fees and other negative items on their rental reports. This is also the time for you to know the reliability of the information the tenant gave you during the interview with them.

Work History

A tenant with a good work background is more likely to be a good tenant as well. Knowing their work history will also help you in weighing whether the prospective tenant is responsible enough to hold a job and how they perform at work. When reviewing a rental application, think of yourself as an employer and you are looking at an applicant’s resume. You will be more interested in the applicant if they have an exceptional resume than the applicant with a common information.

Conducting a phone inquiry with previous employers up to the current employer is also helpful in knowing how the tenant performs at work. You will found out if the tenant is a normal worker or a high performing worker.

You may think of this as unnecessary but trust me you will use this information in the long run.

When calling employers or other references always use the internet or alternative sources, from the rental application, to get the phone contact numbers. This helps in preventing talking to a fraudulent person or employer.

When you call the prospective tenant’s employers listed on the rental application form, ask them if your prospective tenant is working for them. Once you confirmed that they are presently employed, you can also ask whether the prospective tenant is working full time or part-time.  This will give you an idea if the applicant has a stable job and stable income. There is a limit on how much information an employer can disclose about a tenant so check your local and State laws to know what questions you can ask.

Criminal Background Check

A criminal background check is often done as part of a normal tenant’s background check. It will show if the prospective tenant has been convicted of crimes in the past.  So be sure to include the criminal background check as part of your tenant background check.  It is a must if you want to protect your rental properties and rental business in the future.

When a background check reveals that the tenant has a criminal past or criminal offenses it is best to verify the information prior to accepting or denying them for the rental property. For instance, if the criminal offense is considered minor you still might accept them for rental.

However, if you find that the prospective tenant has an extensive criminal past you most likely wouldn’t want them renting from you.  They may pose a risk to you and other tenants renting from you management firm. Often if a person was convicted of a crime in the past, there is a possibility that they can do the same thing again.  It could be dangerous for you and your other tenants. It’s your responsibility as a property manager to protect not only yourself but the neighborhood at the same time.

Conduct a phone interview with relatives and references presented by the prospective tenant.  This will help you confirm all the information that you receive from the reports. Validate the information by asking questions that will reveal the prospective tenant’s behavior towards other people.

Credit Check

Running a credit check allows you to find out if the prospective tenant is financially capable of paying the rent. One of the most important things you want to consider in doing the tenant’s background check is if the tenant has a good credit history.

A credit check will show you a lot of information about the tenant’s financial capability and behavior, this will definitely help you a lot in decision making. You don’t only want to have a tenant with a good attitude but with a good financial history as well.

You want to make sure that the tenant doesn’t have any debts and that they can pay monthly rental fees consistently. If you want your rental property business to prosper, you should be wise and practical in selecting tenants, making sure that they are financially capable of paying monthly rental fees.

Final Thoughts About The Scope Of A Tenant’s Background Check

As a property manager, it would be a great advantage if you are familiar with the different reports that you will encounter when you run a tenant’s background check.

Knowing how to evaluate these kinds of reports will guide you in making a verdict whether or not to accept an applying tenant. Be careful and wise in selecting tenants, examine all the information you got from the reports before finalizing your decision. The future of your rental property business lies in the decision you will make.

I hope you find this article helpful, and I will be more than happy if you will let me know that by your comments.




Suggested Articles:
1. What Is A Consumer Credit Report?
2. How To Check Credit Of Prospective Tenants?
3. Are Background Check Services Needed?

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ARTICLE: How A Tenant’s Background Check Affects Renting A Property

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