As the inflation crisis grows, screening your tenants is more important than ever. Last August, nearly 6 million renters were behind on their monthly payments. This equates to approximately 15% of all renters in the United States.
To keep your revenue stream flowing, it is imperative to find high-quality tenants. Otherwise, you may be left with unwanted vacancies or tenants who cannot pay.
There are screening techniques to alleviate this risk. Read on for a comprehensive guide to tenant screening. Explore topics such as running background checks on tenants and other landlord tips to help you find success.
At a minimum, most property managers want to weed out anyone who cannot pass a simple background check. There are a few different reasons why a prospective tenant’s background is so important.
Those with a criminal rap sheet find it harder to land and maintain employment. Employers run background checks, too, and often pass on those with a criminal history. As a byproduct, these tenants are susceptible to income lapses that lead to missed rent payments.
Also, residents want to live in a safe area. Bringing in tenants with egregious criminal offenses taints the makeup of the neighborhood. Other potential residents are turned off by this prospect, and some will look elsewhere.
The next step is to check on your tenant’s financial condition. This is accomplished in several different ways.
For starters, a credit inquiry gives insight into the applicant’s ability to pay their rent. A credit check says whether the applicant makes on-time payments. It also advises on credit card usage and other types of debt carried by the individual.
The next step is verifying the applicant’s income. The potential tenant’s pay stubs are the first thing to ask for. This way, you can make sure that they have a steady stream of income on a biweekly or monthly basis.
Pay stubs only provide a snapshot over a short time period. Therefore, you should also ask for a copy of the applicant’s W-2 or income tax return. This allows you to see how much money they earn over the course of a year.
You also want to look into the applicant’s character. This is often achieved by asking for personal and professional references on a rental application. Take time to reach out to the tenant’s employer and ask detailed questions about how he or she conducts themselves.
Another effective technique is to reach out to the applicant’s former landlord. This way, you can see if there were any issues at their previous residence. Screening in this manner is designed to root out any potential headaches before they begin.
Your Guide to the Importance of Tenant Screening
Clearly, screening your tenants is an invaluable process. The end goal is to keep your property attractive and also reduce tenant turnover. At the same time, it is imperative to keep rental funds flowing into the property.
If you want to learn more about tenant screening, contact us today to speak with an expert.