You may already know how convenient online rental applications are, but what about tenant screening services? If you think these reports are overkill, absorb these eye-opening facts and think again.
Do you really know who’s living in your home? Most landlords have already begun streamlining their search for the perfect resident by moving to an online rental application. However, without a qualification process in place, a landlord is often left hoping the details on that application are accurate. Professional tenant screening services can help remove the guesswork and give you objective evidence of who applicants are, where they’ve been, and whether they’re worthy of your trust.
Property Insurance & Tenant Screening: Do Landlords Need Both?
Property insurance can help protect your investment from damage caused by renters, but it's a smart move to minimize risk from the outset by screening each online rental application upon submission. Tenant screening services help you weed out bad renters. Prescreening all applicants and getting good landlord insurance coverage are complementary ways to protect yourself and your investment.
As a landlord, how well you screen your tenants can have a big impact on your finances. The ideal tenant pays you on time, causes no problems, and leaves the rental unit in great shape when they leave. A bad tenant can keep you up at night wondering what problems they'll cause next and leave you with a large clean up bill due to damaged property. Proper tenant screening can help you to increase the odds of each of your tenants being an ideal renter.
Reduce Your Risk By Conducting Thorough Tenant Screening
Take the time to do a complete screening on every applicant. This will weed out the people who increase your risk of having to deal with one or more of the following problems:
Payment issues - These tenants can have an excuse for why they can't pay on time, or can't afford to pay the entire amount. They may take advantage of you and delay paying as long as they can. This makes your budgeting impossible to do accurately.
Damage issues - Unless you have an annual inspection policy, you're likely not going to see the inside of a unit until the tenant moves out. An irresponsible tenant can leave you with ruined carpets, damaged walls and ceilings, and broken sinks and toilets.
Screen for All Potential Risks
A thorough screening uncovers the financial risks and behavioral issues that a tenant may bring to your complex. A complete screening process takes time but will save you money if you don't to deal with rental issues. Many successful property managers rely on tenant screening services to do these checks into a tenant's rental history. If you do them yourself, make sure you cover all of the following areas:
The Online Rental Application- This is the initial source of information you need from a prospective tenant to determine if they are a good risk as a renter. This information is the starting point for the various checks you'll do to research the tenant and is useful to any service you use to perform those checks for you.
The Credit Check- The information lets you see the current financial status of the tenant as well as any issues in their credit history that may be a red flag for renting to them. Because this is a critical part of the tenant evaluation process, some property managers make use of a rental credit check service to make sure they get accurate information.
The Rental History Check- Another important part of the process is looking at the tenant's history with previous landlords. A rental history report will show if there were issues with the tenant paying on time or any history of property damage.
Because this requires contacting previous landlords to get the information, using a service to get the rental history reports will save time and frustration, should you have difficulty connecting with a landlord. You'll get accurate information to answer your questions about a tenant's renting behaviors.
Sorting the Information
Collecting all of this information is just half the battle; the other half is reviewing it so you can determine how big a risk an applicant is as a renter. If you manage a small number of units or have very low turn over, you may find that a tenant screening service is worth the time and money. They can provide you information for your tenant background check, credit check and rental history.
A good tenant screening service will provide you with a tenant score. This will indicate how likely the applicant is to default on a lease, which can save you time and money in the longrun.
As a landlord, one of your biggest fears is having a property that sits empty for weeks or even months. Every day that rolls by marks another dip in your bank account. That said, the last thing you want to do is rush in a new tenant only to discover they’re stuck in a financial quagmire or have a long history of trashing homes and failing to pay rent. Plus, losing a tenant (even if you’re ready for them to go) brings its own slew of budget-busting costs beyond lost rent, including marketing and administration fees, screening costs and potential maintenance or required upgrades.