I harp on it lot, but tenant screening is perhaps the most important thing a landlord does. Keeping problem tenants out of your properties will save you money, time and loads of frustration.
Most are already aware that effective tenant screening should involve a credit and criminal history background check. We run one on every adult applicant through our property management software, Appfolio. An alternative background check source is RentPerfect.com. In my opinion however, to be truly effective, tenant screening has to go deeper than the standard background check. Effective tenant screening requires a landlord to seek out what is hidden and what may be lurking outside of standard background reports.
To help you be more effective with your tenant screening, here are four tenant screening techniques that we use to dig deeper and avoid those problem tenants.
1. Verify Income – One rental standard that we and many other landlords use is based on income. This standard ensures that your applicant has the income to be able to afford the rent and most other necessities in life. If this standard is not met, your tenant will be making choices on who to pay every month. You very well could be on the losing end of those decisions if they do not have the necessary income.
Despite the standards you set and advertise, some applicants will tell you anything. The will tell you that they do meet your income standards when they do not. Thus, you simply cannot believe what you are told. You have to verify it. Sometimes a credit report will tell verify or at least offer clues to income, but other times it will not.
When it comes to income, you should contact your applicant’s employer to help verify it. You do not have to be real specific when doing so. Simply asking if Ms. Applicant makes approximately $X per month will do.
Sounds easy and straightforward right? It is not. People do work for themselves after all, so who would you call in that case? Some companies also charge (I’m looking at you FedEx) to verify income. Others will lie, falsify records and set up schemes to try and dupe you. One way to get around these issues is to ask for recent check stubs and bank statements. But, as I said, these can be faked. So make sure names match, employers match, addresses match and dates are correct
If you decide to make a phone call to either a bank or an employer, it is best not to use the phone number provided to you by the applicant. Who knows who is on the other side of that number? It could very well be the bank or the employer but it could also be a friend or relative helping with the cover up. Instead, Google the name of the bank or employer and call the main number. Then get transferred to the person you need to verify the information.
2. Check Local Data Sources – Yes, a nationwide credit and criminal background check should be done, but local sources of information should not be overlooked. Many local records, such as those from civil and criminal court, property transfers and even utility hookups are online. Those records should be searched by you for info on your applicant. Here in Memphis we use the Daily News. They charge a monthly fee to be able to access their services, but the cost is minimal compared to dealing with a problem tenant.
3. Search Local Sex Offender Registries – Your national criminal and credit background search will likely include a sex offender registry search, but why not check out your local sources as well just to be sure? It only takes a few minutes and sites such as the Tennessee Sex Offender Registry even provide a picture. In that way you can be sure who your applicant is as many names can be similar and mistakes in data entry do happen.
4. Ask Questions Again – A key to uncovering lies and red flags is to ask the same questions over and over again. Not repeatedly and aggressively, but as part of a smooth and general conversation you might have over time. You should for example ask questions when you receive that first phone call. Make note of the answers. Then ask the same questions again when doing a showing and on your formal application. Ask your questions and then be silent. People hate silence and will begin to babble to fill it up. Listen and look for for inconsistencies. People will often have a hard time remembering the lies they have told. Their attempts to continue to weave the web will often make those lies show themselves.
I wish that everyone could be trusted in this world, but unfortunately a few bad apples make it hard on everyone. Hopefully the techniques I have descried above will help you weed the bad ones out. If you do not weed then out, bad tenants can do a lot of damage in a very short amount of time. It is incumbent on you to do all you can to prevent this before it starts. Just remember to be sure that whatever you do when screening tenants, that it is legal and evenly applied to all.
Kevin Perk is the founder and publisher of Smarterlandlording.com. He is the author of Advice From Experience To New Real Estate Investors. Subscribe to Smarterlandlording here. Contact Kevin here.
