Why is tenant pre-screening extremely important?
Firstly, to avoid tenants from hell and secondly to ensure the safety of your property.
Bad tenants exist and the risks they carry are enormous. Sadly, one Colorado property owner had to find out the hard way according to this story published on June 16, 2021, by The Washington Post.
Following her eviction, the tenant was allowed back onto the property after a successful court appeal. Left unsupervised however, the renter proceeded to destroy rooms with a hammer, spray-paint walls with obscenities, and soil carpets with feces.
Definitely not ideal.
So, what can you do to avoid such nightmare tenants?
Here are four of our recommended tenant pre-screening best practices.
Pre-Screen Step #1 Conduct Criminal Background Checks
Background checks are standard practice for many landlords.
Since the signing into law the Rental Application Fairness Act by Governor Polis in April 2019, landlords must adhere to prescribed legislation where background checks are concerned.
Some of the considerations in this Act include:
- Landlords may only use collected application fees to offset the cost of conducting background checks and credit reports.
- Landlords are required to return to prospective tenants any unspent fee monies
- Landlords are barred from discriminating against tenants whose convictions are older than five years (except in the case of sexual offenses)
Familiarizing yourself with what’s contained in the Act will serve you well in your tenant pre-screening initiative.
Pre-Screen Step #2 Research Prior Tenant History
There are numerous rental history report agencies that you can approach to find out more information about a tenant.
Alternatively, you may ask tenants to submit their tenant history report as a requirement that must be enclosed at the time of application.
If it is not possible to secure such a rental history report, you may ask for reference letters from previous places of residence. You will then have to make a follow-up on each of these references to verify and authenticate the tenant’s claims.
Pre-Screen Step #3 Run a Credit Check
In order to check a tenant’s credit report, you’ll need access to their full name, Social Security Number or Individual Taxpayer Identification Number, and their address. All this is generally available on their rental application form.
With this information, you’ll be able to engage the services of a private credit reporting agency to access the information you require.
What sort of things can you tell from such a report?
Convictions, felonies, evictions, late rent payments, state of repayment of student loans, lawsuits, and the tenant’s general level of financial responsibility.
Pre-Screen Step #4 Confirm Tenant Employment
Verifying employment involves calling a prospective tenant’s employer and asking to speak to the reference they have put down in their application.
This can also be done by sending an email to the company in question.
This verification will serve one of two things: It will confirm that the renter will be able to keep up with payments and that the information they have provided on their application is actually correct.
Tenant Acceptance Criteria
The information you’ve gathered will give you a good overview of the type of people applying to be your tenant. The basic tenant acceptance criteria can include:
- Clean criminal record with no misdemeanors (or none within the last 5 years)
- Good credit score of 620 and above
- Solid work history and employment record
- Secure income source verified by employer
- Traceable personal and professional references
- Clean tenant histories from previous places of residence
There is no denying the fact that this all takes a lot of work. Fortunately, this is where property managers can step in to help.
Would you like to discuss tenant pre-screening with a property manager?
Contact PMI Front Range and talk to a qualified property manager today.