Are you new to the world of real estate investment, or just want to start finding better tenants? Either way, here’s a simple checklist you can use to protect your investment or property when evaluating someone who wants to rent from you:
#1: Use an Approved Application
Ideally, you want to use online applications with mandatory fields (check with your screening company to see if this feature is available). That way, you can make sure every space is filled, that all entries are legible, and you’ll have a record of the information provided.
#2: Run a Credit Check with Scoring
Some investors love to look at every account and payment history a credit bureau can provide. For the rest of us, a simple number will do. A credit score of around 700 is typically good enough to buy a home at market rate, and 625 is the average renter’s score.
#3: Get an Investigative Criminal Report
There are lots of companies offering “instant” criminal record searches, but having a private investigator is safer and ensures that you won’t be duped by someone trying to hide their past. Also, a live investigator will have the ability to search specific areas in which your applicant has lived.
#4: Make Sure to Search Eviction Records
Eviction records are the hardest to check because they are not recorded with date of birth and Social Security details (imagine renting to a “Mike White” when there are dozens or hundreds of applicants with the same name around the country). Also, it’s possible that your renter might be in the process of being evicted at the same time as they are moving into your property. That’s another reason to get help from a trained investigator who can help spot warning signs.
#5: Inspect a Paycheck Stub
Privacy laws have changed to the point that calling an employer usually won’t yield much information. So, to ensure that your applicant can afford the property, you might want to view one or two paycheck stubs. Along with the amounts, compare the year-to-date income to what’s been listed on the application, and double check that names of employers match.
#6: Get in Touch with Past Landlords
Unfortunately, the current landlord might not give you an accurate report if they want to see the person disappear from their own property. A past landlord has nothing to gain or lose though, so you’re more likely to get an honest, unfiltered opinion.
#7: Use Other Clues
Don’t forget to use your own intuition and good sense. Look at the condition of an applicant’s car, drive by their current home, conduct a Google search, or call other references. In short, take whatever (reasonable and legal) steps you can to ensure you won’t regret your rental decision later.
Remember: finding the right renter is just the first step. Make sure you use a state-specific lease that’s been reviewed and approved by an attorney (the template documents you get at OfficeMax or Staples will not protect you). And most of all, stick to this checklist every time – finding the right renter is the key to protecting your property and earning dependable income in the future.
About the Author
David Pickron has been a licensed private investigator for over 20 years, specializing in tenant screening for real estate investment owners and property management companies. His company, Investigative Screening and Consulting (ISC), helps clients onboard tenants from the initial background check to leasing and payment collection. You can learn more by visiting RentPerfect.com or calling 1-877-922-2547. Note that MAREI members receive a discounted access to set up their own landlord screening acount with Rent Perfect, so be sure to tell them you are a member or check the MAREI Member guide for the discounted link.
David is also our guest speaker on March 11th, 2017 at our Kansas City Landlord Expo. If you want to learn more about what you don’t know about tenant screening, fair housing and HUD rules in that process and what to look for in a tenant screening company, then join us at the Expo.