Looks Can Be Deceiving –The Importance of Applicant Background Screening

If you own a rental property, chances are you fall into one of two groups –experienced investor or “unexpected landlord.” Right now, let’s focus on the latter –the “unexpected landlord.” What exactly does that mean? Unexpected landlords are those who aren’t in the business of buying, renting, and selling investment properties. Perhaps you’re managing property for an aging parent or need to relocate quickly for a job. Regardless, it’s not something you do daily. Here at RentLife®Property Management, we often get asked, “What is your Screening Process?”

Applicant Scenario:
Ok, the scenario (courtesy of The National Association of Independent Landlords): Well dressed tenant John drives up in a beautiful new sportscar. He tells you that his wife recently passed away, and he no longer wants to live in the home they shared –too many memories and all. He tugs at your heartstrings, and by all appearances, he is the ideal tenant. You shake hands, sign a lease, and away you go feeling pretty good –easy peasy, right? Wrong!

The Scam:
After the first month, tenant John stops paying rent. Two months go by and still no rent. It turns out tenant John filed for bankruptcy prior to signing the lease and legally does not need to pay rent while his case is heard in bankruptcy court! In case you don’t know, there is nothing quick about bankruptcy court. Tenant John gets to live in your property rent-free for seven months, during which you’re making insurance, mortgage, and tax payments. You’re bleeding money! Later, you decide to do a bit of snooping and find out this isn’t tenant John’s first rodeo.

Now we admit this is an extreme example of “tenants gone wrong,” but it was completely avoidable. How? Enter background screening. Did you know in 2017, the number of arrests amounted to 10,554,985-could your tenant be one of these? Background screening is one of the MOST essential duties of a landlord
RentLife®Property Management in Tomball, Texas, has been in the property management and real estate investing business for over 40-years! We have seen and experienced a few things. We pride ourselves on our Rental Applicant Screening Process, which is second to none! We are so excited that we have partnered with Acutraq.com, who is an Independent Third Party that we depend on to run thorough background screening for us. ACUTRAQ’s background screening system is very user friendly, and reports are extremely easy to understand. ACUTRAQ Customer Service Team is available during working hours to answer their phone when we call and are knowledgeable in answering any questions we have.
A rental background check is a screening tool that allows landlords to review an applicant’s past behavior. This includes report includes the following:

• Federal and National Criminal Background
• Credit Report with Score
• Employment verification
• Rental history verification
• If you are not using a background screening company, contact ACUTRQ at https://www.acutraq.com/ to provide you with at least a credit report and criminal background report. They are inexpensive, and you can have the applicant pay an application fee to cover the cost. If you ask your applicant to supply previous rental and employer information as references and if they refuse, run away!

A Professional Certified Property Management company is well worth the money. They have the experience and connections to run a proper background and credit screening. Don’t ignore red flags. If it smells like bad fish, it probably is bad fish. Go with your gut. If you’re like most people, you want to get your property rented fast. No tenant is better than a bad tenant, right? Professional Property managers around the world are shaking their heads.So, what are a few red flags to look out for?

Requests a quick move–
while it’s not always the case and many have a good reason, this can be a sign of something bad –like a recent eviction, pending bankruptcy, criminal activity, or employment termination. It’s not a reason to rip up the application; it’s just something that warrants additional scrutiny.

Needs to take the application home-
again, it’s not always the case, but a well-organized, serious renter should arrive on-site with all the information needed to apply. They should also be ready to answer any of your questions right away.

On the job hunt–
an unemployed tenant is always a scary thing. Where will the rental money come from? It’s important to find out why they are unemployed, how long they’ve been searching for a new job, and if there are alternative financial resources to pay the rent and security deposit.

Lack of references–
this is a hard one sometimes. If someone has never rented before, there won’t be any rental references. However, past rentals aren’t the only source of information. Employer references and historical mortgage payments (if any) are two ways to fill in the needed information. Knowing why the applicant needs to rent is essential.

Bad financial history–
this is background screening 101. If someone has minimal income, debt, or a history of bankruptcy, chances are they’re not the tenant for you.

Multiple changes of addresses–
it’s not uncommon for people to move these days, and just because someone has moved frequently doesn’t mean they’re a bad tenant. Again, this is where knowing why they need to rent is key. However, it can also be an indication of past evictions or criminal activity. It’s certainly something that warrants a bit more digging.

All of this probably seems a bit overwhelming and time-consuming. There’s no sugar coating it –it is. But we have a solution. As professional property managers, here at RentLife®Property Management, comprehensive applicant background screening is a service we provide to all our clients. We’ll make sure your tenant is indeed what they appear to be. Contact Mark Kallus MPM®, RMP®, TRPM®, TRLS® at RentLife®Property Management Houston’s Local Property Management Experts at 832-562-3600 or on their website at www.RentLifePm.com. Topics: Property Management, Investment Info, Real Estate Brokerage, Discover our Services