Did you know that renters comprise over 35% of households in the U.S.?
Still to this day, the majority of landlords who own these homes are individuals, not real estate companies who buy properties to rent.
One rental alone can generate mountains of paperwork, including tenant applications, maintenance invoices, lease contracts, and more documents.
Tenant screening is another item to add to the checklist, but a crucial priority for your bottom line. The ROI on an ideal tenant is worth the cost of rigorous screening.
However, should you outsource your tenant background check or do it yourself?
Here are a few points to help you decide.
The High Costs Of Rushing the Tenant Screening Process
Refer back to that mountain of paperwork. If your tenant screening responsibilities get lost in the shuffle, you can count on that pile growing even higher.
When you don't properly screen for tenants, you increase the following risks:
- Unpaid rent
- Property damage
- Noise complaints
- Neighbor conflicts
- Poor landlord-tenant relations
- Health and safety hazards
- Lease breaking
- Criminal activity
All of these risks add up, putting your cash flow and reputation at risk. Despite your best efforts in finding tenants, these problems often arise when you handle tenant placement on your own.
Should You Use Online Background Check Services?
Landlords who don't have property managers often turn to online background check services to screen for tenants. While this may seem like an affordable option, these services may be more trouble than they're worth.
If you're looking for 100% accurate information, these services are not the way to go. Free and low-cost online screening companies often aggregate data from social media profiles and other web sources. A screening could yield the wrong address, phone number, age, and occupation for a tenant applicant.
On the other hand, property managers use official national databases to confirm names, social security numbers, and previous addresses. They also check criminal databases to rule out past criminal activity. Eviction information is also available to check.
Financial Tenant Screening
Online background checks don't typically screen for financial records.
Property management companies will check credit scores, bank statements, pay stubs, rent payment history, and other financial documents. This process rules out any concerns about paying rent.
It's important to highlight financial eligibility requirements in marketing material, whether it's in a real estate listing or during an in-person viewing. Such information should also be stated in the lease contract.
Tenant Interview Questions
The more properties you have the harder it is to keep track of tenant placement duties. That's why it's vital to work with a property manager from the start.
Property managers know exactly what tenant interview questions to ask when assessing applicants. They're experienced in finding responsible tenants who can deliver high ROI numbers. Managers will also call application references during this final phase of the process.
Invest In the Ideal Tenant
Every tenant you secure should match your ideal tenant profile. Hire a property manager who takes tenant screening (and your rental income) seriously.
You can always ask about best practices during your client consultation.
PMI Lighthouse has a dedicated team of professionals who leverage the latest digital platforms to manage properties and optimize profit goals. We're committed to rigorous screening to find only the best tenants for your rental properties.
Book your consultation today!
