If you’re renting out a property, thorough tenant screening is a must. A bad tenant is not only a hassle to deal with, but can also cost you thousands of dollars.
Take a look at the true cost of eviction to see why you should always conduct tenant background screening.
If you need to evict a tenant, it won’t happen overnight. Eviction is a lengthy legal process, and it typically takes about 2 to 3 months from when you file the paperwork to when the eviction actually occurs. How much do you charge for rent on the unit? Multiply that by 2 or 3 and that’s about how much money you’ll already be out, and keep in mind that the process of evicting a tenant could take even longer.
Going to court isn’t free, and you can anticipate it costing about $100 to $300. If you need an attorney, and you will if you want to make this process go as quickly and efficiently as possible, those legal fees could be anywhere from $200 to $750.
Once the tenant is gone, you need to get the unit ready to rent again. That will likely run you between $500 and $2,000. Of course, if you had a bad tenant, there’s no telling how much damage they might have done. There’s no shortage of landlord horror stories about tenants who damaged walls, ruined appliances or let their pets destroy a unit. And don’t think that putting a “no pets” clause in the lease will always protect you, as plenty of tenants have chosen to ignore those kinds of restrictions.
There’s no telling how long the unit will be on the market after you put it up for rent again, but you should expect to lose about 1 month of revenue. You can also expect getting it rented to cost you about half a month’s rent, as you may need to provide concessions to a new tenant or advertise the unit. Even if you don’t do either and simply advertise your unit in free classified ads, you’ll still be losing money on the time you spend showing the unit to prospective tenants.
So, how much are you spending for all of that? Let’s say that you have a unit renting for $1,000 per month, you’re able to keep your costs to the low end of these estimates throughout the process and you find a new tenant within a month. You’ll be looking at:
$2,000 in lost rent while evicting the bad tenant
$1,000 in lost rent while finding a new tenant
$500 in make ready costs
$500 spent on finding a new tenant
$200 in attorney legal fees
$100 in court costs
That all comes out to a grand total of $4,300, which will take you over 4 months just to make back. And that’s if you’re able to minimize your costs. It’s obvious that each bad tenant comes at a huge price.
What is the Cost of Tenant Screening?
You can have a thorough credit check completed for as little as $10.95. That screening will provide information on the prospective tenant’s financial history, including their credit score and any bankruptcies, their payment history and verification on their ID.
It doesn’t cost much to screen a prospective tenant, especially compared to the cost of a bad tenant. Go through the screening process with any tenant you’re considering to give yourself peace of mind and minimize your risk.