Tenant Screening, Keep Liabilities Out! | ExactEstate

Property Management

Bad tenants are the biggest challenges and nightmares of being in the apartment rental industry. While the definition of a “bad tenant” varies from one landlord to another, they always spell disaster in the end. That’s why it’s imperative that you do a tenant background check before leasing an apartment over to potential renters. If you don’t, you may encounter some serious problems — including liabilities — along the way that can result in costly consequences.

In this article, you’ll learn more about what tenant qualities to avoid and resident screening steps to follow. Hopefully, by the end of it, you have a more in-depth understanding of why screening is important and how it can help you obtain the best possible tenants for your property.

Tenant Qualities You Need to Avoid

Although your goal as a property owner is to rent out your land as quickly as possible, you also have to pay close attention to possible red flags your tenants may be demonstrating. Below are some of the biggest red flags you can find in a potential tenant.

• They Don’t Pay Rent: The number one red flag you need to watch out for is someone’s inability to pay rent, either on time or at all. Whether it's because of cash flow issues, unemployment, or other personal reasons, their late or missed dues can seriously impact your financial stability.

• They Break the Rules: Rules and regulations are put in place to maintain order and minimize disruptions. When tenants break them, they disrespect your property and your authority, thereby diminishing your reputation as a landlord.

• They Destroy Property: You should also be wary of tenants who have performed deliberate attacks on others’ property or exhibit poor cleanliness, hygiene, and careless home treatment that may result in damage to your property. Not only will this impact the appearance of your apartment, but it will also lead to costly repairs and renovations that you may need to shoulder.

One way to deal with these tenants is to evict them from your space, but this can be time-consuming, costly, and resource-draining. To avoid this problem altogether, a more effective alternative is to conduct a rigorous tenant background check.

How to Do a Tenant Background Check

Comprehensive and consistent resident screening processes are essential to ensure that you get the right tenants for your apartment. This can minimize some of the major risks associated with being a property manager, such as late or missing payments, property damages, and evictions. Without further ado, let’s discuss the five steps you need to take to develop a thorough background check for potential occupants.

1. Obtain Their Signed Consent

First and foremost, you need to get written consent from the tenant before you can run a background check on them. To do this, you have two options: one is to include a section in the renter’s contract explicitly stating the need for their consent in obtaining personal information, and another is to create a separate document that enumerates all the details you need from them. In both cases, their signature is necessary in order to proceed to the next step. 

2. Collect Tenant Information

Once you’ve gotten their approval, you can create a checklist of what you need to know about them. This can cover the basic details, such as their name, current address, date of birth, contact information, social security number, and occupation. However, while this information is necessary, it’s not enough for you to judge their character and their eligibility to rent your apartment. Therefore, you need to obtain additional information to properly evaluate them. This includes:

• Income: In 2021, 70% of people who were behind on rent had either decreased or lost their income due to the pandemic. As such, they were unable to pay on time. If you want to avoid encountering this problem, you need to ensure that they have sufficient funds to pay for their rent on time while supporting themselves. One way to do this is by using a rent-to-income calculator.
• Credit History and Score: When evaluating the applicant’s financial stability, looking into their credit history and score is a must. The ideal applicant should have a high credit score; the minimum requirement to rent an apartment is at least 650. However, this varies with the location and type of property they want to rent. High-end apartments, for instance, will require a credit score of at least 700. This ensures that the applicant is able to pay their dues on time. 
• References: You should also get references from their previous landlords and employers. Doing so gives you valuable insight into their traits as a tenant.
• Eviction Records: Every property owner should know if their tenant has had prior evictions. Those who have been evicted before are more likely to be evicted again due to poor behavior and missing payments.

This vital information can help you gauge if the applicant is trustworthy and capable enough to meet your requirements. Should you require assistance in screening a tenant before signing a lease agreement, you can hire tenant screening services at ExactEstate.

3. Interview the Potential Tenant

If you think they pass the initial tenant background check, you can proceed to the next step, which is interviewing them. Whether it be through phone, an online platform, or in person, touching base with your potential tenant will allow you to learn more about them, like their lifestyle. 

Some questions you can ask are:

• Do you have any pets? Do you plan on having pets in the future?
• Will you live alone or with your family?
• Are you planning on getting a roommate? 
• Are you a smoker?
• Do you expect to have guests over frequently?

4. Finalize Your Decision

After getting all of the information that you need, it’s time to make the final decision. Is the potential tenant a match for your apartment’s criteria? As a landowner, you are in the best position to determine the eligibility of the applicants, but you have to remember that you must be flexible.

If you need more time or information before making a decision, ask for it. It’s important not to rush the process and to consider every aspect in great detail. Only then can you be sure that you’ve found tenants that fit your requirements.

Use Tenant Screening Services at ExactEstate

Despite the extensive procedures of resident screenings, they are a necessary step to protect you and your property from harm and liability. They also enable you to guarantee a safe and secure environment for all of the other tenants in the community.

As a provider of property management solutions, ExactEstate offers a modern, fully-customizable, and cloud-based property management software that makes the whole process easy and convenient. From streamlining rental applications to managing documents and screening tenants, ExactEstate makes sure that you get all of the services you need for hassle-free tenant acquisition.

Set up your demo today to learn more about how ExactEstate can assist you.