Tenant ScreeningPosted by Jordan Muela in Property Management Articles
No landlord ever wants to land a bad tenant, but regretfully all screening processes were not created equally. Applicants put their best foot forward and the more they have to hide the greater lengths they will go to hide facts that would eliminate them from consideration.
The screening process can vary widely from company to company so its important to find out just how much protection the company is going to provide you from what later turn out to be bad tenants. It only takes one eviction to drive home just how important this aspect of the management companies duties really is. In addition to the questions below, ask for a copy of the rental application they use to find out if its a generic document or custom tailored.
Get an idea of how much protection the management companies you interview will provide you with their screening process by asking the following questions:
Will they "hold" a property for a tenant, and take it off the market before a lease is signed? If so, do they charge a fee?
There should absolutely be a fee so that you are protected in the event that things fall through.
What systems do they have in place to protect against rental scams? Have they ever been duped by one?
Scams are becoming more widespread and more advanced. It’s not just Nigerian scammers, but local scammers who will copy your ad, break into your home, and show the unit so they can collect a "security deposit" and run. We're not joking, either.
What methods do they use to screen tenants?
The more comprehensive the better. Former landlords should be contacted, income and employment should be verified, credit report run, application information verified for authenticity, personal references contacted, public notice (bankruptcy, eviction) search run, etc. There are so many tricks of the trade in this area and each manager will have their own time-tested methods. If they use a third party for tenant screening find out who and why they use them instead of doing it in house.
Which tenant qualifications are most important to them? Will they consider a tenant who meets their qualification is some areas but not in others?
Ideally, you want them bringing in people who are serious about their job or schooling. Remember that the less someone has to lose in life (money, family, career, reputation, personal pride), the less you can expect from them as a tenant. The eviction rate and tenant turnover rate on the properties they manage is a good indicator of how well they screen tenants.
Do they provide you with tenant information so you can approve or deny each tenant?
This may sound like a good idea but in reality it’s not. Tenant screening is what property management companies do, it’s what they should be experts at, and it’s what you are paying them for. If you don’t trust them to perform this CRITICAL function then you should not consider hiring them. When owners get involved in the screening process the possibility of discrimination (well intended or not) goes up significantly. Fair housing violations lead to lawsuits that can cost thousands. This is a significant liability both for you and the management company.
Other Miscellanous questions to ask:
- What do they charge tenants for the application fee?
- Do they require the application fee be paid in certified funds?
- Do they require each adult that will be renting to complete their own application?
Next: Examining the Organization - Background, Qualifications, Portfolio.
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