Landlords, increase your luck by utilizing a professional tenant screening service

Every landlord seems to have a horror story of a problem tenant who passed the tenant screening process with flying colors but still managed to be habitually late with the monthly rental payment, or destroyed the rental property, or disrespected the neighbors. Does this mean tenant screening isn’t worth it? Is it a waste of time and money hire a tenant screening service, to conduct a background check and pull someone’s credit report? Is it a waste of time to check references?

Absolutely not. Let’s be honest: There are dishonest people out there. There are tenants who appear to be something they’re not. There are also decent tenants with a reliable history who become victims of circumstances beyond their control. The greatest way to shield yourself from this kind of bad luck is to employ the very best tenant screening service, to gather all the pertinent facts about a potential tenant before offering them the keys to your property.

It’s true, there is a little bit of luck involved with picking the right tenant. There’s a healthy dose of gut instinct, too. But that instinct should be backed by solid facts supporting your decision, whether it’s to say yes or no to a potential tenant. Selecting someone to sign a lease might seem like a giant leap of faith; while there is a bit of trust involved in the decision, that trust is made much stronger when you have all the knowledge necessary about someone’s criminal record, employment, credit and landlord history from which to draw. 

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Recruit Neighbors To Watch Over Your Investment Property

Sometimes even the most attentive landlord isn’t around his or her property all the time. Unless you live right next-door, chances are a lot of your tenants’ behavior — and possible trouble — will go unnoticed by you unless someone tells you directly.

There’s no need to wait until the police call you to tell you about an arrest or other issue that happened at your property. The best observers of a tenant’s activity are that tenant’s neighbors, whether they also are your tenants or not.

Get to know the property owners who live near your rental property, and give them more than one way to contact you if something is amiss on your property. They have a vested interest in keeping their neighborhood safe and clean — and property values up — so they will be more than happy to send you an email or call you if they see or suspect trouble. Retired residents and stay-at-home moms are particularly helpful, because they’re home more than most and are fairly observant of their surroundings.

Increasing the number of eyes and ears on your property means you’re more likely to be alerted if there is a domestic violence issue, problems with people (or pets) that might not be on the lease, noise complaints, or another symptom of a problem tenant that didn’t show up on an instant tenant report or background check.

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Being Nice Doesn’t Mean Compromising Principles

It’s OK to negotiate with potential tenants, especially if they’ve made a good impression on you and their application is in order. But too often landlords find themselves compromising their goals or going outside their comfort zones to appease people who haven’t even technically signed a lease yet.

That’s why it’s crucial that the landlord or property manager stays in control of the situation, from the initial walk-throughs to the lease signing and beyond.

1. Don’t accept someone’s copy of their credit report. Run your own. In fact, do an instant tenant report to see right away whether someone is worthy of being your tenant.
2. Don’t trust the fact that the person “seems nice.” Do a background check to rule out any criminals or sex offenders.
3. Don’t blindly accept someone’s request for a favor regarding when to give you the security deposit or first month’s rent. If they’re already having trouble coming up with money owed to you, it’s a good sign they’ll have trouble every month.
4. Don’t allow a prospective tenant to dicker with you over the rent price. Do your market research before deciding on what to charge for rent. That way when they complain that nobody in the area is asking that much, you’ll know whether they’re lying.
5. Don’t overlook a red flag, such as a pet being moved into the rental unit when the tenant said there were no pets. A tenant who lies is a problem tenant, and you’re probably in for a lot of headaches.

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Should An Applicant’s Bankruptcy Filing Be a Red Flag?

Thanks in part to the economic crunch happening across the country, more and more people are resorting to bankruptcy to get them out of the debt they’ve accrued. Should bankruptcy be a red flag for a possible problem tenant? And can a landlord reject an applicant because they’ve filed for bankruptcy?

In short, yes, landlords do have the right to set specific tenant selection criteria — including bankruptcy filing — as a reason for rejecting an application. Federal fair housing laws do not include a protected class for financial status. Whatever criteria the landlord sets up, he/she must be fair and apply that criteria across the board to every applicant.

Is it always the wisest decision to bounce an application because of a bankruptcy filing? That’s hard to say. Bankruptcy is a legal right allowing relief from certain debts, but a landlord wants a tenant who has a fairly solid history of managing his finances. A bankruptcy filing indicates the applicant was unable to meet his financial obligations during a certain period.

But a landlord should take a look at the circumstances and timing surrounding the bankruptcy filing. Bankruptcy stays on one’s credit report for seven to 10 years. If the prospective tenant is nearing the end of that time period and has had a clean credit history since then, there’s a good chance he/she has put their financial troubles behind them. Talk to the applicant about the underlying cause for the bankruptcy, and see if those details check out in the applicant’s credit report and background check.

Finally, some landlords believe that if the applicant has adequate income to cover rent and living expenses, he is probably in a better position to be a qualified tenant than before the bankruptcy. Since bankruptcy discharges old debts, freeing up the applicant’s income for present expenses. Also, bankruptcy cannot be filed again for several years, which means those who’ve been down that road once are highly unlikely to go there again.

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