Any landlord will vouch for the fact that finding a good tenant is akin to finding peace of mind. Not only are you sure that you will be paid the rent on time, you can also rest assured that the property will be well looked after. Contrast this with a scenario where not only are you worried about timely rent, you possibly also have to deal with irate neighbors. Little surprise then that tenant background check is an extremely important step in finding the right tenant.
Here is a handy 8-step guide that we use in the tenant screening process at Beach Front Property Management, before we turn any applicants into tenants.
1. Online Application
The first step in the tenant check is to have the applicant fill out an online application, which has the details of his or her income, previous landlords, personal references, and more.
We make sure that the application captures as many relevant details as possible. The three important areas that we seek information under include :
- Personal information
- Financial information
- Employment information
We also ask for relevant lifestyle information such as the number of occupants, pets, etc.
Any missing data on the application form acts as a red flag, as the tenant might be withholding relevant information.
2. Confirm Employment
Confirming the status of the tenant’s employment early in the tenant background check indicates the applicant’s ability to pay. Some of the verifications made include:
- Employment status
- Job title
The other aspect that is checked is whether there is long-term job stability as indicated by the employer’s comments on job performance. Continued employment can clearly be as important as the amount of salary drawn.
3. Rent-to-Income Ratio
While verifying employment and income details is a crucial aspect of the rental background check, a thumb rule followed at Beach Front Property Management is to check to see if the applicant’s monthly income is at least 2.5 times the rent. This ratio points out if the tenant can indeed afford the rent.
4. Credit Check
Arguably the most important aspect of the tenant background search is to determine if the applicant has a good credit history. A low credit score is one of the biggest red flags in the applicant’s ability to pay on time. A credit report also allows us to assess the applicant’s debt-income ratio.
5. Criminal Background
The need to screen a renter’s background is just as important as the tenant credit check. This means checking the state and federal records for criminal history. We check for the nature and seriousness of the crime, as well as the time that has elapsed since the crime, if any. Sex offender registries and terrorist watch lists are other important areas that we consider when it comes to the tenant background search.
6. Call Two Most Recent Landlords
While most landlords would think of running a tenant check past the last landlord, it is important to reach out to the last two. In fact, the landlord prior to the current one may be a better source of information than the current one. Let’s say an applicant is late on rent, destroys their unit, smokes inside, and is overall a bad tenant. Their current landlord may rave and rant about how sad they are to lose that tenant, hoping you’ll take the bait and relieve them of having to go through the eviction process. The landlord before an applicant’s current one will have nothing to lose and therefore may be more transparent about how the applicant truly behaves as a tenant.
Also, while calling the previous landlords it isn’t just enough to ask if the tenant pays rent on time. Some of the other questions that we ask include:
- Does the tenant owe any outstanding debt?
- Has he caused any damage to the rental unit?
- Did he qualify to receive the security deposit?
- Were there any other issues?
- Would the landlord rent to the tenant again in the future?
7. Eviction History
Eviction history is yet another crucial aspect of the tenant check. In checking for the eviction history, we lookout for the three Ws:
- Where was the applicant evicted from?
- When did the eviction occur?
- Why did it occur?
Other than evictions, we also check the local housing court records to see if there are any judgments for damages in court history.
8. Applicant’s References
An applicant will likely list employers and coworkers as their personal references. We are wary when an applicant only lists family and friends. As nice as it would be to talk to Granny about how trustworthy and responsible her grandchild is, these sources are most likely biased.
To sum up, some of the reasons to deny an application after the tenant screening include:
- The rent to income ratio isn’t favorable
- Credit history is poor
- There is a criminal record
- The employment record is poor
- Screening shows up evictions, unpaid rent or other such issues.
At Beach Front, we take the tenant background check very seriously. We strive to reduce the number of unreliable residents so we can focus on the day-to-day responsibilities of your property while you sit back and relax.