7 Common Tenant Screening Mistakes and How to Avoid Them

Choosing the right tenant can not only help increase the profitability of your rental property but can help to minimize the headaches of being a landlord. You could choose many potential tenants, but you don’t want just anyone. You want a tenant who will pay on time, who obeys the law, and who will keep the property nice. 

The National Multifamily Housing Council reports that 44.1 million households in America are renters. So to choose the right tenant, you want to make your tenant screening a priority and avoid making the following mistakes.

1. NOT USING A GOOD TENANT SCREENING SOFTWARE

The decision you make will only be as good as the information you collect. In the past this was done manually but today there are a variety of reliable resources you can use to screen your tenants. Make sure you are working with the best tenant screening software so that you have the facts to make the right decision.

2. NOT COMPLYING WITH HOUSING LAWS

There are both federal and local laws you will need to abide by during the screening process. Be careful with the questions you are asking tenants during the interview. 

Fair housing laws protect people from potential landlords discriminating against them because of their religion, marital status, race, gender identity, and more. You cannot discriminate against a potential tenant. If you do not abide by such laws, there are legal ramifications for this. Ignorance will not save you, you need to know the law.

3. NOT SCREENING CO-APPLICANTS

Many rental households will have more than one adult living at the property. If you have multiple adults moving in, screen all the adults, not just the person completing the rental application form. Background checks for tenants must be for anyone age of 18+ living on the property. If you do not screen everyone, you could have some big issues later.

An example may be if married applicants have adult children living with them. It is important to learn if they have a criminal history. You do not want illegal activities taking place on your property.

Another example is when co-applicants move in and they are contributing to the rent. What would happen if they were to move out or stop paying the rent? Will the other party be able to keep up with their commitment, or would it leave them in a bind? If so, you want to have all the information needed to hold all applicants and co-applicants responsible.

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4. NOT READING A CREDIT REPORT

Spending the time and money to have a potential tenant complete a rental application form is to protect you. So a background check for tenants must include a credit check too. A tenant that has a history of nonpayment brings a higher likelihood that you could be the next victim. This could lead to an eviction which is a significant enough reason to choose another tenant.

However, you should not look at the credit score number alone, you need to read the entire report. Many times, a credit history will condense the information and tie it to one number. You need to look at the circumstances surrounding that number. For example, the credit number could be low because the tenant has a single enormous debt, but they pay all their bills on time. That is really what you want, someone to pay you on time.

5. NOT CHECKING BANK STATEMENTS

During the tenant screening process, you want to not only know if the renter has good credit but get a sense of their spending habits.

When is their payday? How do they prioritize their spending? How often do they have more expenses than income? 

They could lie to you about their salary. You want to verify their information and not get caught off-guard by a fraudster.

6. NOT CHECKING EMPLOYMENT HISTORY

For an applicant to be a reliable rent payer, they need to have a stable job or income source. Does the potential tenant have a secure job? Verify how long they have been at their job because if it is a new job, your risk increases.  Use caution when choosing a tenant with an unstable work history.

7. NOT DOING A LANDLORD VERIFICATION

You’ll want to do a landlord verification on all new potential applicants.  You need to know how they have treated a previous rental property, whether they fulfilled the terms of their lease, and if they owe the previous landlord any money.

Tenants with good landlord verifications are a great sign of them being good tenants again.  Likewise, if the landlord verification does not come back favorable, it’s a good indication that the tenant may cause you problems.

TENANT SCREEN MISTAKES

You want value when you pay a property management company for their services. Envy Property Management, LLC, will help you avoid these tenant screening mistakes. Envy is the natural choice in Salt Lake City and the surrounding areas, helping, make your real estate investing life stress-free!  Contact us today.