Considering a New Tenant for Your Rental Property? Conduct a Background and Credit Check!

BY: HOUSERIE 09/13/2017

As a landlord, you want to be sure renters pay their rent on time. The best way to ensure such dependability is through a credit check.
Here’s Why Completing a Tenant Credit Check on All Tenants Is a Must

Renting can be a lucrative business, but only if the tenants are financially capable to pay the rent on time and will be respectful of your property. A tenant credit and background check should be your first priority. The results of such screenings will give you a good indication if the prospective tenant will pay their rent on time and has the means to afford the rent.

A credit check includes examination of a person’s identification data, credit history, and public records. Such background information should help you make a well-informed decision on whether to accept a prospective tenant or not.

Additionally, credit checks offer a landlord many other advantages related to ensuring the reliability of his or her potential tenants.

Protect Your Property Investment

A successful investment property will hopefully result in even more investment opportunities. Typically, when you invest in an ideal rental property, you expect your rental income to cover your monthly mortgage payments, taxes and all other costs involved with renting out your property. Therefore, financially capable tenants prove a critical ingredient to your objective.

Unfortunately, some tenants fail to pay their rent on time or fail to pay their rent at all. When this occurs, you might encounter a problem being able to pay your mortgage and all other expenses. A delinquent or derelict renter can cause a chain reaction for the landlord. As a result, you can possibly end up losing your property and get stuck with a big debt in the process.

A tenant background check is an absolute must to protect your investment property. It will ensure that your investment can be successful and open the door to acquiring more investment properties or other investment opportunities.

Protect the Property Itself

Unfortunately, sometimes tenants or their pets can cause significant damage to your property from the moment they move in. From holes in the wall, scratches on floors and cabinets, water damage and sometimes even fire damage. The costs of fixing this type of damage can be substantial. Running a comprehensive tenant background check on all prospective tenants will provide the best means to avoid renters with a destructive history as background checks will unveil destructive behavior in a renter’s history.

Avoid Dealing with Any Criminals

A tenant criminal background check is a must as a landlord should know if a prospective tenant has a criminal record. No landlord or property manager wishes to be housing a criminal. Allowing this may end badly as they can make the neighborhood unsafe by inviting other criminals into the neighborhood, and even cause physical harm to your tenants or neighbors.

Make Sure You Get Your Rental Money

The moment a tenant moves in, that tenant will be protected by all kinds of laws if a landlord tries to evict that tenant. These laws prevent landlords from simply kicking out a law-breaking, or agreement-violating tenant on the spot. The eviction process can be a very long, time consuming, and expensive process and should be avoided if at all possible. It is better to be proactive than retroactive. Complete a tenant credit report and background check to find that perfect tenant and avoid evictions.

Make Sure Tenants Will Honor Your Rental Agreement

Rental contracts and agreements are in place to protect both yourself and your tenants. Unfortunately, there are some tenants who will ignore the terms and conditions in the signed lease. Some tenants might make changes to your rental unit that the lease does not allow, some might acquire  pets that can cause damage, some might throw parties with excessive noise, and some might just stop paying the rent. Luckily, an eviction check and background screening can reveal if a prospective tenant has demonstrated such misconduct in the past and can further protect your investment.

Equitable Treatment of Applicants

There are cases in which the landlord can end up being accused of conducting discriminatory and unfair practices during their tenant selection process. In other words, once you establish a credit check and background check procedure, make sure you conduct the same check on every prospective renter without exception. Otherwise, a discrimination suit might get filed against you by a tenant who believes your tenant selection process is inconsistent and discriminatory.

For all these reasons and more, checking a prospective tenant’s credit and background should rank as your first step for any fillings in your rental units. To conduct a comprehensive credit and background check, utilize an agency that specializes in credit checks for landlords. It will save you time, money and give you peace of mind!

Sources:

Tenant Credit Checks and Why They Are Important, american-apartment-owners-association.org

How to Run a Credit Check on a Prospective Tenant, thebalance.com

 

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