If you own a rental property, then you know the importance of screening your tenants effectively. You can determine if a potential tenant will be able to pay rent on time consistently just by looking at the details of their credit report.
If you find that the tenant has no credit history, you can require a co-signer to assist the tenant with rental payments. Tenant screening also protects your neighborhood because you'll find out if a potential tenant has a criminal background. Here are five ways to screen tenants effectively, outside of standard criminal background checks and credit scores.
Contact Previous Landlords
This gives you a better understanding of how reliable the potential tenant will be. You want to ask the landlords if the person owes any outstanding rent, if they has a history of late payments, if they damaged the property during their stay, and if the landlord would rent to this person in the future.
Verify the Tenant's Employer
Start by requesting the tenant's pay stubs from the past two to three months, along with their most recent W-2 form. You can make copies of those and use them to verify how much income the tenant earns per year.
If the tenant is self-employed, then you can request their most recent bank statements as evidence that they are receiving regular income from the business. You can also have self-employed tenants submit a copy of their Form 4506 so you can get detailed information on their revenue.
Use Resident Score from TransUnion
There's the traditional credit check, and then there's the Resident Score credit check from TransUnion. With this service, landlords get to see if a potential tenant is more likely to be evicted based on data that is tailored to the rental industry.
In addition to a tenant's credit history, Resident Score also includes criminal history and employment history. This service also comes with a detailed eviction report.
Hire a Property Management Company
Sometimes you won't be able to screen tenants due to a hectic schedule. In this case, you should hire a property management company. The company staff will do a great job of screening tenants in your absence, and will follow your guidelines for doing so.
Hire a company that has a solid track record of working with rental property owners. You also want to hire a company who can communicate well with the tenants on a regular basis in your absence. This reduces the stress of owning a rental property.
Review Each Application Carefully
You don't want to be in a rush to pick the first tenant that appears to be a decent match. It's important that you review the applications carefully and verify as much of the information as possible. You might run across a tenant who has steady employment and good income, but has a poor credit history.
Or you could come across a tenant with great credit credit, but has a poor history with previous landlords. It is okay to take your time when screening tenants. Appearances and good conversation can be deceiving, so you want to make sure you choose the most reliable tenants.
The process of picking tenants isn't something that you can do lightly. While there are no guarantees that you will choose the perfect tenant, you can make things easier by screening them carefully. When you choose your tenant, have him read the contract carefully and answer any questions he might have before he signs the lease.
If you're a rental property owner in need of management of your rental property, contact us. Reedy and Company Realtors, LLC manages the properties of local and foreign investors. We also offer services such as in-house maintenance, leasing, collections, and acquisitions.