Screen Your Tenants to Avoid Problems

Submitted by Leigh on Sat, 07/31/2010 - 09:58

We have all heard the horror stories. A well intentioned landlord rents a newly renovated house or apartment. Then a couple of months later they are in eviction court getting the bums thrown out. Then the real fun begins as they walk into the completely trashed unit. It has driven some to give up and sell off their real estate rather than go through the emotional toil and heartbreak again and again.

I am here to tell you this problem is the fault of the landlord much more than the deadbeat tenant. Why? Because, 99.99999% of the time when this happens, the landlord did not do a proper background check on the tenant. They might have run the credit on the people claiming to fill out the application but the value of credit reports is just not what it used to be.

Credit reports are being gamed and when you get one it often is no better than the "liar loan" applications underwriters were approving just a few years ago. The information may or may not even be complete. After all, did you report your full credit experience with the last tenant you evicted? Well, did you? I didn't think so and I'll let you in on a not so secret fact - most landlords don't do that either. And I will let you in on another not so secret fact - fewer and fewer landlords are even bothering to pull credit files on applicants. Those that still do, usually pull it as the very last step.

Because of change upon change of the Fair Credit Reporting Act, what is in someone's credit files is more a representation of how persistent they are at getting things removed or suppressed on technicalities than their actual credit experience with a creditor or landlord.

So, what is the solution? Expensive background checks? You could spend hundreds, even thousands, having the detailed backgrounds of your applicants checked and verified. But, I certainly don't do that and don't recommend you do it either!

But, a background check is the way to go. Just do it yourself or have your property manager do it.

Wait! Before you wander off saying, "I don't have time for this," hear me out. In my company there are two people who do our background checks, my son and myself. Neither of us have time to spend hour upon hour on this even though it is a critical function to our business. We spend no more than 15 to 30 minutes on each application. A big part of our process is to use an information aggregation service. The one we use is Gov Resources and they are running an incredible special until August 7, 2010. You can get five years of unlimited searches for less than $30. That is just $6 a year! For $6 a year you can eliminate 90+% of the deadbeats wanting to rent from you from consideration.

With the information from a good rental application, which you can find attached to this article talking about the importance of using a good application and your report from an aggregator like the one above, you can easily check out your applicant. It doesn't have to take a lot of time or money, but it will save you both time and money and emotional angst and frustration.

Oh, and when they then skip out without paying you what they owe? You can search for them on a regular basis and find them. Sooner or later they will get another job, open a bank account, establish utilities, or something that puts a new entry in the public records. When that happens, an aggregator like the one above will eventually find it.

Don't rent to another tenant without checking them out through a service like Gov Resources

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