Renting to strangers can be risky. Even applicants who seem ideal in person or look responsible on their applications may be hiding something about their past or making false statements during the application process. Tenant background checks help you learn more about prospective tenants before you hand them the keys to one of your most valuable assets.
A background check uses technology to find and verify information about prospective tenants. This guide looks at why property managers should require tenant background checks and provides guidance on how to choose the best tools to support this process.
Reasons You Should Require Tenant Background Checks
A background check gives you the information you need when you’re trying to decide if you want to rent to a prospective tenant. This due diligence ultimately safeguards your bottom line and improves your rental business. There are countless reasons to perform tenant background checks, including:
1. Reducing Financial Losses
The primary reason property managers should require tenant background checks is to minimize financial losses. Anyone can sign a lease and promise to pay the rent, but what happens if they move in, lock the doors, and refuse to pay? You suffer financial losses that could significantly damage your business. Background checks help insulate you from this risk.
2. Protecting Neighborhood and Personal Safety
Someone who seems respectable and responsible may be a wolf in sheep’s clothing. Running a criminal background check can help you identify if someone may present a risk to you, your family, or your neighbors. You might still choose to rent to someone with a criminal record, but you need to know the details to make an informed decision and protect your safety.
3. Minimizing Liability Risks
A crime in your building is not necessarily your responsibility, but if you allow a nefarious person to rent your property and they hurt another tenant or a guest, you may be held liable. The law might rule that you’re negligent due to not performing a background check. Tenant background checks can reduce your liability for these types of issues by looking through local police records, wanted lists from the FBI, sex offender registries, and other criminal databases so you can choose a tenant with your eyes wide open.
4. Assessing Tenant Responsibility
Checking your applicants’ credit histories and looking for past evictions can help you assess a prospective tenant’s responsibility levels. A tenant who has never been evicted and pays their car loans or credit card payments on time is much more likely to pay the rent on time than a tenant with a history of evictions and a low credit score.
5. Reducing Tenant Turnover
Turnover increases the cost of owning rental properties because you have to advertise, show the property, and possibly paint or handle repairs between tenants. You may not be able to collect rent for a month or two if you cannot find a new tenant or need to do many repairs. Tenant background checks help ensure that you’re choosing responsible tenants who are likely to stay in the property for a relatively long time, reducing the risk of tenant turnover.
6. Verifying Income or Employment History
You should check tenants’ income to ensure that they can afford the rent. This process typically involves looking at pay stubs and calling employers. You may also want to use a tool that looks at the tenants’ income history. Then you can ensure that they have a consistent record of gainful employment.
7. Uncovering Hidden Identities
Tenant background checks can also help you determine if your applicant is trying to hide something about their identity. Quality background checks look for aliases, which people often use to hide criminal convictions or other details about their past.
8. Reducing the Risk of Property Damage
Any applicant can give you a fake phone number to a friend who pretends to be a previous landlord, and if you only call that number and get a glowing review, you will never know the real risks of allowing that tenant to move into your property. A background check, in contrast, can find out if previous landlords have ever had to take the tenant to court for excessive damage. This information is critical if you want to protect your property.
9. Avoiding Evictions
No one wants to deal with an eviction. They can be extremely expensive, time-consuming, and emotionally draining for everyone involved. Irresponsible tenants often need to be evicted, and tenant background checks are the most effective way to minimize this risk.
Prospective tenants can seem friendly and responsible, but they may be hiding something. It’s wise to rely on more than your gut instinct when you’re a property manager. You need to protect your property and your bottom line by getting to know prospective tenants as well as possible. Tenant background checks give you an X-ray view and let you see what your applicants are like.
Tips for Choosing Tools for Tenant Background Checks
There is no one simple way to run tenant background checks. You don’t have to manually run credit checks, search through local and federal criminal databases, and spend hours on the phone verifying details yourself. You can instead choose a tool that handles all of these steps and more. You should search for a solution that offers the following:
Comprehensive Background Checks
Thorough tenant background checks look at several elements. They provide you details about the applicant’s credit and criminal history, as noted above, but they should also look at the applicant’s address and employment history to verify the details presented on their application. Look for tools that help you find as much information as possible.
Streamlined Application Process
Your background check tools should integrate with your application process. You can save time and effort with a solution that allows tenants to apply and then runs the background check based on the application’s names and Social Security numbers.
Contemporary renters don’t want to fill out paper forms, and dealing with paperwork is time-consuming and error-prone for property managers. Look for a tenant screening tool that allows you to create and distribute your custom applications electronically.
The tool you select should feature a user-friendly interface that is intuitive and easy to learn. It should also have a dashboard that shows all the details of your applicants on a single screen to simplify the decision-making process.
Every landlord has unique needs regarding what they want to know about their tenants. You need a customizable program so you can request and view the exact details you require.
The right tools can make tenant background screening a seamless, stress-free, and transparent process. Quality software is available that can let you create your own application and easily collect information about co-applicants, co-signers, and references. These programs help you identify the best prospects for your rentals and ultimately save you time, money, and hassles.
Common Pitfalls of Tenant Background Checks
Tenant background checks are critical, but you need to handle the process carefully to ensure they are as effective as possible. Mistakes in the tenant screening process can cost you time and money. Avoid these common pitfalls when deciding how you want to handle background checks:
- Trying to check multiple criminal, credit, and financial background records on your own
- Not checking enough background records
- Not pulling credit reports
- Failing to ask tenants the right questions
- Not having a standard application process
- Wasting time and resources with paper applications
- Only calling landlords listed on the application and not verifying previous address records
- Failing to verify income
- Refusing to consider tenant background check software
Investing in tools that streamline the application process and handle tenant background checks for you is essential if you own or manage rental properties. A DIY approach takes a lot of time, and in most cases, you end up missing critical details.
A New Way to Upgrade Your Tenant Background Screening Approach
Landlords who are struggling to find high-quality tenants and want to minimize the risks of financial losses, property damage, and evictions should try Rent Safe. Our online tenant screening platform is easy to use, lets you create custom application forms, and runs tenants through multiple background screenings.
Landlords and tenants both love our simple but powerful approach to making the entire application process more transparent and organized. Protect your property, your business, and your bottom line with Rent Safe — contact us today to learn more.