3 Reasons Why Tenant Screenings Are Important

Why should you invest in tenant screning?

15:45 08 July 2021

Renting out property is considered an easy way to make money. However, any landlord will tell you that it isn't easy to find, qualify and manage tenants for a property, no matter what type. 

 

As landlords entrust their properties to strangers, they expect to treat them as their own homes and pay rent on time. That is why many homeowners prefer to do a background check into possible tenants before letting them move in. 

 

The whole process of screening for the perfect tenant is just as helpful and productive as it is time-consuming and hectic.

 

But failure to carry out due diligence early on can result in unnecessary stress and expenses later. Malicious tenants can go so far as to challenge your property rights in some cases.

 

Why Carry Out Tenant Screenings?

Here are several reasons why investing your time and energy in effective screening may make your life easier as a landlord:

 

Ascertain If The Tentative Tenants Can Pay On Time

If you're renting out to a corporate entity, the company status and reputation will help you understand their liquidity. Figure out how long they've been in the market and what kinds of market they operate in.

 

Ask individuals to provide guarantors and references that you can trust. You’ll also need the bank ratings, minimum credit score, and proof of employment for the tenant to ensure that they will pay the rent determined after the rent estimate. 

 

An individual guarantor can minimize the risk. But do take the time to check the guarantor’s profile, assess their financial stability, and only take on the tenant if you are satisfied with what you see. 

 

Protect Your Property From Unwanted Individuals

Tenant screening helps you ensure that there aren’t any legal issues or recurrent collection notices in the tenant’s past. Their reputation for repeated legal troubles may rub off on your property and make it dubious for other renters. 

 

Also, take the time to review the applicant’s criminal history before making a decision. However, don’t discriminate based on a one-off criminal hit. For example, a minor traffic violation shouldn’t keep them from securing a home or business property. 

 

But all in all, landlords want peace of mind, and tenant screening can help them differentiate applicants they can trust. 

 

Avoid Costly Future Evictions

Landlords who’ve been in the business long know that it’s a lot cheaper to leave a property empty than let unscrupulous individuals move in. 

 

The average cost of tenant removal can be up to $3500 and involve lawyers and even the police if the need be. Additionally, it can take three to four weeks to get them to leave your property for good. 

 

This makes it important to carry out tenant screenings because past evictions indicate future evictions and other troubles. You can get an eviction report about the tenant that provides information on any past instances of failure to pay rent, unlawful detainers, writs/warrants of eviction, and other tenant judgments.

 

The Process Of Tenant Screening

Here’s what you can do to ensure that your tenant is the perfect fit for you:

 

Step One: A Quick Interview

This would be your first interaction with the interested party, and it can tell you a lot about them. Have a quick round of questions, enquiring about their reasons to move, income, and references. This interview would tell you if it is worthwhile to spend time on the application process of the said party. 

 

Step Two: The Application Process

You’ll get some much-needed additional info about them through the application form. This is another opportunity for you to reject them based on what they’ve written. Take the time to spot documentation and reject it instantly. Move accepted applications on to the next step. 

 

Step Three: Contacting the References

Contacting the employers, previous landlords, and the guarantor is all part of this step. Validation of the information provided in the application will happen here. Hence, being diligent and spending a reasonable amount of time at this step is crucial. 

 

Step Four: Formal Screening 

This is where you contact third parties to run a report on the shortlisted applicants. A credit report, criminal report, and eviction report are all part of the process and make your final screening foolproof. Collecting these reports will conclude your selection process as all kinds of history and background checks will be completed by now. 

 

Conclusion

Investing in the tenant screening process will bring you peace of mind as you can secure a long-term contract with the applicant you deem the best fit. 

Whether you are renting your space to a business entity or an individual, make sure you get the paperwork right. Involve your lawyer so they can draw up a contract that details the terms and conditions of the deal.

Account for any factors that might affect your screening process so that they don't become trouble spots later on.