With more rental property on the market than ever before, property managers are at their busiest. From showing properties to handling maintenance issues, you’ve got your hands full. The last thing you need is troublesome tenants on top of your daily stresses. Screening tenants thoroughly not only helps you make the best business decisions possible, it also creates a safer, happier living experience for everyone in the property’s community.
As the owner of StarPoint Tenant Screening, I’ve seen a lot of different information products over the last 15 years. It can get confusing for busy property managers to weed through it all. Here we’ll take a quick walk through the basics of the tenant screening process and give you some tips to help you save time, money and energy.
The Tenant Application
Whether you have an online application on your website or a standard form, make it as thorough as possible. This is a situation where more is definitely better. I’ve had many property managers that have had to waste time (which equals money) to track down applicants for additional information so the proper background screening information can be completed. Attached is a thorough application sample that includes all the items below.
First, middle and last name. Get that middle name! It can be a critical factor in returning the correct criminal information on an applicant. Surprisingly criminal and correctional records rarely contain a social security number for the offender. They typically have a fist name, middle name or initial, last name and the date of birth listed. By submitting both the middle name and data of birth, you ensure you’ll get the most accurate records back on your applicant.
Date of Birth. Like the middle name, providing the date of birth will keep you from getting inaccurate results on your criminal record searches.
Social Security Number. If you want to pull a credit report, employment verification or ID verification on an applicant, the social is a must. The credit bureaus cannot supply any data regarding your applicant’s credit history without this 9 digit number. Also, most employers will not verify any employment information without it nor can you verify identity with a social security database which can be valuable in some cases. Be sure that you can make out the numbers on a hand written application. I’ve seen too many property managers input wrong numbers from deciphering handwriting and then they get no data back on the reports.
Current Address. The credit bureaus require a current address be submitted with a request for a credit report. This is also necessary to verify the applicant’s history with the previous landlord.
Previous Landlord Information. One of the best sources for information on what kind of tenant you might have is the previous landlord. In processing these reports landlords have told me everything from “They paid early and made property improvements” to “their pet ruined the property and I would never rent to them again”.
Employment Information. This is critical if you want to verify the applicant’s current employment and salary. It’s also just good data to have in your data base if you choose to rent to them and need to contact them at work.
Signed Release/Disclosure. It is legally necessary to include a release/disclosure statement on your tenant application or as a separate document and the statement must be acknowledged with the tenant’s signature and date. It is a violation of the FCRA to request a consumer report without their consent. A consumer report can be a credit report or any prepared background or reference report.
Now Which Screening Reports do I Run and How?
My company like others offers a wide variety of tenant screening reports and searches. We pride ourselves in not overselling our clients. We want you to get what you need without ordering unnecessary data and increasing your costs. You’ve got a business to run. Here I’ll explain and recommend various reports.
Credit Report. I tell all my clients to start here. There is no better way to get an accurate indicator of an applicant’s probability to pay rent on time than the credit report. You’ll instantly get their entire credit history including their monthly payment obligations, number of collection accounts, amount of past due accounts and any liens of judgments on their file such as bankruptcies, etc. Evictions can show up on the credit report as a public record judgment, but it’s rare. The Eviction Report is your best bet to catch a filing but frankly I think the Previous Landlord Verification is more valuable. We’ll talk more about that below.
Criminal Searches. The criminal search can be the most important report to run next to the credit report. It’s a smart choice to do your due diligence when placing a tenant. These reports are instant, inexpensive and the data is abundant. You get an instant snap shot of an applicant’s criminal history from felonies and misdemeanors, to traffic violations and sex offender data. The draw back? As I mentioned earlier surprisingly criminal and correctional records rarely contain a social security number for the offender. This creates a problem on applicant searches for common names like John Smith. You can get a flood of records that match the name. By entering the middle name and data of birth, you can ensure you’ll get the most accurate records back on your applicant. The screening system my company provides also allows you to filter the data returned. You can view all data, or just records less than 10 years old plus you can view supplemental data for the offenses such as sentencing dates, prosecutor information and arrest dates.
Eviction Reports. The eviction report searches court records for eviction filings and reports them whether the tenant was judged or not. Again, this report is searched by name and date of birth only as social security numbers are not entered on the eviction filing.
Previous Landlord Verifications. I personally think the previous landlord verification is more useful than the eviction report. With this verification, the tenant’s landlord is personally contact by a company like mine and asked to verify lease dates, rent amount, if there were any late payments or returned checks, whether they would rent to the tenant again and more. We see that most landlord complaints are not severe enough for them to evict the tenant, but they are negative enough for them to never rent to the tenant again.
Employment Verification. This is a very important report which verifies the tenant has the salary they stated on their application and can meet your income to rent ratio criteria. The employer is personally contacted by a company like mine and asked to verify the applicant’s hire date, current status and salary.
ID Verification/SSN Verification. I would not run this report if you are also running a credit report as the social security number is verified by the credit bureaus. However if you are not running a credit report it can be useful to determine the applicant is who they claim to be.
All of the reports above can be ordered conveniently online with most vendors, including my company, StarPoint Tenant Screening. A very thorough screening can easily be done inexpensively and quickly helping you make sound decisions quickly. Making good tenant selections makes for a more profitable bottom line and a lot less headaches. We wish you happy leasing!
Questions? E-mail me at firstname.lastname@example.org