Tenant Screening Problems and Suggestions

Some readers have asked some important questions regarding the effectiveness of background checks in the tenant screening process.   One major issue to trying to figure out an accurate, current portrait of your tenant’s fiduciary and social responsibility.   What happens if you run a credit report that shows low risk, good credit?   They might have great credit up to the moment, but do they still have that job?  Are they still receiving a paycheck?    Even with a signed release form it can be tough to obtain the information you need to make a wise decision about your tenants. 

Credit Reports:  In the recession, it is not enough to review a prospective tenants credit report.   You need to verify that your tenant can continue to pay the rent.   Make they sure they sign a release form and obtain employment and income verification.   Some employers are hesitant to provide information about their employers work performance but they will provide employment status, position, and sometimes date of hire.   Ask your tenant to provide you with a current pay stub.   You should be able to tell from the paystub how long they have been working for the firm.  Cross reference this with employment verification.   A good background checking firm, such as Corra Group, can provide a thorough employment verification for you and will get all the information that an employer is willing to release.   They can also provide access to credit reports at a reasonable price.  Keep in mind you will need to pass an onsite compliance inspection that usually costs around $57.00.    Depending on how many units you have to rent, this may be worthwhile.   Also, you can charge the cost of the credit report to the prospective tenant.   If the tenant brings in their own credit report, try to determine the chain of custody.  Perhaps they order it on their laptop in your office?

If you are having trouble getting any information from previous landlords, you may want to par down a bit and just try to verify length of residence.  Then run an Eviction Search on your prospective tenant to determine if any problems occurred.   Between the eviction search, paystub, verified employment and residence, you should have a good portrait of your prospective tenant.

Payment Terms–  Renters have been paying later and later in the month, eking out precious days to save month.  Make your maintain strict compliance with your rental agreement and subject to the laws of your community, state and country.   Maintain correspondence with your tenants and enact late fees as needed. Stay out in front of a potential problem by keeping those lines of communication open.   If you suspect there’s a problem, learn your rights.  Study your landlord laws and determine what you can do and when you can do it.   For example, you might want to determine if your  tenant has totally vacated the premises.  Determine what is your legal right to inspect.   As far as receiving payment from tenants, most people hate having to obtain an official check or cashier’s check each month.  If your tenant has shown good faith in the beginning, try allowing them to pay with a check, they will appreciate it.  If it bounces, move back to cashier’s checks.  If your tenant can pay with direct deposit, try to make it an automatic deposit that occurs on a certain day of the month.   You will appreciate the consistency and so will your tenant.  Their may be fees associated with the automatic deposit, and again, you can pass the cost onto the tenant.  Also, there are services that allow tenants to pay over the phone, with credit card, etc.  you can provide your tenants with this option.

Good luck and happy renting!!

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