Finding the right tenant in Utah County is the most important step in renting out your home, but it’s not without its challenges. Often, landlords can be lured in by a prospective tenant who presents themselves well, has cash ready, and wants to forgo the tenant screening process. However, accepting these kinds of applications can spell disaster. How so? This article outlines why due diligence is necessary for successful property management and some tenant screening tips to consider along the way.
Leasing a home without having a prospective resident go through the basic screening process step is a financially irresponsible move. Failure to screen a tenant may lead to the tenant moving out without ever paying you a dime, or even worse, turning your investment into a possible liability. Imagine what could happen if a tenant damages the property and then leaves without paying for it. Not only would you be responsible for the repairs and maintenance, but you would also have the added expenses (and drama) of taking them to court.
In addition to rent collection and property damage, consider the consequences such a tenant could have on the community. Tenants with a criminal background could be using your property as a hub of illegal activity, which puts the neighbors’ health and safety at risk. Running credit and background checks as part of an extensive screening process can greatly reduce, or even eliminate, these issues.
Before accepting applications, you should research credit and background check companies to find a fit for your needs. Credit and background checks often cost around $25 per applicant. But there is also the footwork that goes into verifying this information, which takes time and money.
I have an applicant, now what?
Once you have a company to run credit and criminal background checks, ask the company for a screening application you can utilize. As people show an interest in renting from you, make sure you have a rental application on hand. It is also a good idea to do all of the following:
- Verify their identity by referencing their state ID with the information on the application.
- Verify their income with recent paycheck stubs or bank statements.
- Identify all residents who will be living in the home.
- Identify any pets (if applicable) with height, color, and breed.
Once you have the application filled out and signed, send it to the credit and criminal reporting agencies. Getting a response back usually takes 24-72 hours.
How do I check the information they gave me?
While the application is being processed, follow up on the employment references, if applicable. Contact the prospective renter’s employer and ask whether the tenant is employed. Be mindful of how the “employer” answers the phone to ensure that it actually is a business. Most businesses do not answer with a simple “Hello?”
Next, contact any past landlords and personal references. If a prospective renter is being evicted, the current landlord most likely cannot give negative information. That is why it is important to request 2-3 past landlord references. Ask each reference to answer the following questions:
- Did the renter fulfill the terms of the lease?
- How many times were they late on the rent?
- Was the tenant evicted or asked to leave?
- Would the landlord rent to them again?
- Did the renter leave the property in good condition?
After looking at the credit and criminal background and finding the prospective resident to be a good risk, take the rest of your findings to build a picture of the prospective tenant. If all things come together, let them know they are approved. Then, set up a lease agreement signing and move-in date.
What do I do if it’s a wrong fit?
If the fit is not right, you have to let the resident know you will not be renting to them. It is best to call and follow up with written correspondence, like an email, stating the reason for not accepting the application, such as: “We will not be extending an invitation to lease due to your credit findings.”
Remember that you are allowed to reject tenants with bad credit history, insufficient income to meet the rent demands, previous damage to other units, consistent late rent payments, poor job history. However, you cannot reject any application for discriminatory reasons, including race, religion, nationality, gender, age, disability status, and/or familial status.
Completing your due diligence in selecting a quality and qualified renter for your investment property is time and money well spent to ensure a prosperous and healthy relationship for you and your renter in the future. Many busy landlords have delegated this task to a trustworthy property management company with excellent results. If you’d like to know more about how we can help you screen tenants, please contact us online or call us at 801-224-0033.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.