Clayton Sanders

8 Tenant Screening Mistakes You Don’t Want to Make
by Clayton Sanders

Having the wrong tenant will lead to loss of money in the form of unpaid rent, costly repairs and costs of evictions. More often, landlords may end up with wrong tenants due to common errors and skipping the tenant screening procedure. Below are some of the frequent tenant screening mistakes that most landlords make and, if avoided, it could help you avoid loss of income.   

1. Skipping the Screening Process Altogether

As a time and effort saving mechanism, some owners skip the screening process on a prospective tenant entirely.   Sometimes they are motivated by the prospect of collecting income and filling empty units, but it doesn’t always pay off.  Lack of screening is a mistake that could cost you in the future. It is essential to implement even the most basic screening to get your best return on investment.

2. Not Checking the Credit Report

When leasing out your property, it’s important to do a credit check on your prospective tenant. You’ll want to look at how they have been paying their bills and debts. Red flags would be late payments, unpaid debts, and in turn, a poor credit score.  These are pretty good indications about how you’ll receive your rent if they become your tenant.

3. Failing to verify identity

Verifying and documenting the identity of the potential tenant is one of the first things an owner should do to protect their interests.  There are a few ways to verify they are who they say they are, but the first is asking for an issued photo ID. Once you’ve received it, you may want to keep it on file for their tenure in the home.   If they are unable or unwilling to verify their identity, that is a red flag.

4. Failure to do a background check

While credit reports are widely used among those that do tenant screening, you should not overlook the importance of a criminal report. Your property and that of your neighbors will be at risk if you involve people with questionable characters.  

5. Failure to comply with the law

Most landlords are not familiar about the rules governing tenant-landlord relationships. Failure to comply could lead you into trouble, and you may pay hefty fines and penalties. Some mistakes are avoidable, and it is important to familiarize yourself with local laws. Some laws may seem to favor tenants. Therefore, you should know the more delicate details, such as ensuring your screening process follows fair housing laws. You can consult a lawyer for further clarification.

6. Lack of references from previous landlord or employers

In addition to verifying the income information on the application that they gave you is correct, getting references from an employer and previous landlords, is important. You can determine more about the type of person they are based on how an employer or landlord speaks of them, you can verify that they treated any previous home well and can feel more comfortable about to whom you are renting.

7. Not verifying income

Making a reference check with the employer is not enough. It is essential to also find out about the potential tenant’s source of income. Whether they are employed full time, how long they have worked there and that their current income is sufficient for rent and utilities.  You can also request for their bank statement to establish the financial soundness of the prospective tenant.  If a prospective tenant just switched jobs or their income shows their funds will be tight, consider asking them to provide a co-signer. A guarantor, who isn’t planning to occupy the home with them, but can guarantee the rent and liabilities.

8. Lack of standardization of the process

Tenants come and go, and you can make it much easier on yourself if you standardize the process.  You may feel comfortable doing only a few simple things to screen potential tenants, but make sure you’re set up to do those same things for every applicant.  Write everything down. Organizing your process in the form of a spreadsheet or a checklist to make sure you aren’t missing anything.    

Clayton Sanders
Clayton Sanders is a real estate enthusiast and Brand Ambassador for Transactly living in St. Charles, MO. Clayton spends his time researching real estate trends, and the implications of NAR data on the current US housing market. Clayton credits the foundation of his real estate knowledge to Worth Clark Realty.

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