If any of you have listened to my previous blogs, you know that I believe tenant screening is the most important function a property manager can perform.
Basically, it’s because past performance is the best indicator of future performance. If you screen someone and they prove to be very highly qualified, they will likely be a great tenant for you as well. Unfortunately, there are exceptions. People lose jobs, divorce and illnesses happen and sometimes very qualified tenants all of a sudden go south very quickly.
Nothing is guaranteed.
However, generally speaking, when someone screens well they will make a good tenant. A credit report must be reviewed. There are a few hoops you have to jump through in order to run credit on someone if you are managing your own property.
I recommend that you not accept a credit report that an applicant brings to you. That can lead to difficulties for you. Some tenants will avoid a property they know is professionally managed when they have bad credit. Those tenants will go to a property that is being managed by the owner because they’re hoping their credit reports will not be checked. So, always check credit.
Criminal background checks are imperative. You need to know what kind of person is moving into your home. Do a thorough verification of wages. Ask for pay stubs and make sure that person qualifies from an income and financial standpoint.
Always talk to current and previous landlords. If they have paid rent on time in the past, they will probably pay rent on time for you. The trick with landlord references is to make sure you’re actually speaking to the person who the landlord is, and not someone posing as a landlord. Unfortunately, that does happen.
Have a consistent and written credit policy in place. For example, you can say you won’t accept any tenants with a credit score lower than 600, or you won’t accept anyone with a felony record in the last 10 years. You have to be consistent across the board. Fair housing laws are important and they must be followed.
We have found that screening can be complicated for landlords, but it’s very important. You can have a property manager take care of the screening and the leasing and then take over the management on your own once a tenant is in place. That might be a good option if you want to manage your own property, but you need help with the tenant screening.