More than 36% of households rent apartments or homes to live in versus owning homes. As a result, rental properties are always in high demand, which is great for landlords.
Landlords invest money into the properties they purchase, yet they make money by renting them to people. Therefore, landlords must be selective when choosing their tenants.
So, how can a landlord be selective with this process? The best way is through effective tenant screening procedures.
Screening every applicant helps you learn more about each one. The result is finding the best tenants. Continue reading this guide to learn why this is so vital for every landlord.
The Basics of Tenant Screening
Tenant screenings are procedures you perform to weed the bad applicants from the good ones. The purpose is to select the best possible tenant for each available rental unit you own.
You can check several things during a routine tenant screening process:
Credit Score
A person’s credit score tells you how responsible they are with money-management skills. People work hard to have good credit, and most won’t want to lose their high scores once they achieve them.
Therefore, renting to someone with good credit is a great way to choose a responsible tenant. On the other hand, renting to a person with bad credit requires more risk.
It’s always wise to check a person’s credit score before approving their rental application.
Criminal History
Running a criminal check is another vital step to take during a background check. Renting to someone with a clear criminal history provides more safety at your properties.
On the other hand, renting to someone with a criminal history might result in a higher risk of problems occurring at your properties.
Rental History
You might also want to research an applicant’s prior rental history. Through this, you can learn about their rental history, including if they paid their rent on time. You might also learn if they’ve ever experienced an eviction.
Additionally, you can require a deposit when running a tenant screening. Running a background check isn’t free. Therefore, you can weed out tenants that might not be serious about renting by charging a small fee.
If you decide to charge an application fee, you can credit the person’s first month of rent if you approve their application.
Reasons Some Landlords Skip It
Believe it or not, many landlords skip the tenant screening process. But why would they skip it? There are several reasons landlords do not perform these screenings.
First, some landlords don’t know how to perform them. So, instead of learning how to perform them, they decide not to do them.
Secondly, many landlords skip them when renting to someone they know. However, it would help if you still considered running a background check.
Running a background check is the only way you can find out more information about the person you trust with your property.
If you own rental properties and skip screenings because you don’t know how to perform them, you might want to hire this out. You can hire a property manager to perform them for you.
Top Benefits of Screening Applicants
Now that you know the basics of tenant screening, you need to understand why it’s important. So, what are the top benefits of running screenings on your applicants?
Fewer Issues
The best tenants cause fewer issues. Great tenants don’t complain all the time about problems, and they won’t cause issues with other tenants.
Instead, they’ll mind their own business and care for the units they rent.
Less Damage
As a result, good tenants won’t cause damage to their apartments. Responsible individuals care for their properties. When they move out, there will be normal wear and tear, but you won’t have major damages to repair.
Lower Risks
Responsible tenants present lower risks to you as the landlord.
There’s a lower risk they won’t pay their rent and a lower risk they’ll cause damage. There is also a lower risk they’ll cause issues or problems that you must address.
Improved Rent Collection
Additionally, great tenants pay their rent and fulfill the terms of their lease. So you won’t have to hound great tenants to pay their rent or take them to court for evictions.
You’ll Save Money
The bottom line is that tenant screenings help you save money. Yes, you must pay for them initially. However, renting to great individuals helps you save money in the long run.
As you read these benefits, you’ll see the importance of tenant screening procedures. The last thing you’ll need to know is how to perform them.
Ways to Handle Tenant Screenings
Performing tenant screenings isn’t difficult, but it takes some time. First, you’ll need to determine what types of screenings to perform with your applicants.
Next, you’ll need to hire a company that offers tenant screening services. Paying a company to do the work for you is the easiest way. Of course, you can’t run a tenant screening without permission from the applicant.
You must supply the necessary information to the company when you hire this out. For example, they’ll need to know the person’s name, birth date, and social security number.
An alternative way to perform tenant screenings is by hiring a property management firm. Property managers do this for a living, and you can pay them to handle your tenant screenings if you wish.
Hire It Out
Now that you understand the basics of tenant screenings and why you need them, are you ready to start screening every applicant? While you can handle this yourself, hiring it out is much easier.
At Reedy & Company, we offer full-service property management services, including tenant screenings. We use the most effective procedures when screening tenants and can help you find the best ones.
Contact us today to learn more about our tenant screening services and other services we offer.
