Last modified on April 25th, 2016
By Elizabeth Millar
Getting renters into your vacant properties and keeping those vacancies to a minimum is the goal of all property management companies. Unfortunately, some companies get so focused on filling vacancies that they end up falling victim to dishonest tenants. It’s tempting to rent to the first applicant that shows interest. But when companies don’t take the time to do a thorough background check of the applicant before handing them the keys, you can end up with less than a fairy tale renter.
Run a Credit Check
One of the first things any property manager should do is run a credit check on applicants who want to rent a property. Make sure you let your applicants know, in writing, that you will be checking their credit. Have them sign the paper that gives them that information, along with any other checks you will run, or have the right to run, as part of making an application decision. You can legally charge a fee for this, and some management companies charge more than others. If you decide that a fee is necessary, make it strong but reasonable. Running credit can be an excellent indicator of whether someone will be a good tenant, so be sure to look for any judgments or evictions on their report.
Verify Employment History
There’s nothing at all wrong with checking the employment status of someone who is applying to rent from you. You want to make sure they really do work, and that they are employed with the company they state they work for. If they’ve recently lost their job or just changed jobs, they may not want to say that, but lying on their rental application is never a good thing. Make sure you verify employment and dates, along with salary if possible, so you can feel more comfortable with the applicant and screen out more bad or potentially bad tenants who may be dishonest about their ability to pay.
Remember References Matter
While your property management company is checking a potential tenant’s credit and employment, don’t forget that references matter, as well. The landlord your renter had before can be a great source of information about whether renting to that person will be a good idea. Keep in mind, though, that some landlords will give a good reference for a tenant who wants to move, just to get rid of them. Don’t believe everything you hear, and check more than one reference if possible, so you can feel good about the honesty and quality of the renters you sign a lease with.
What if They Haven’t Rented Before?
You can’t get landlord references if someone hasn’t rented before, but you can find out about their previous housing situation. If they owned their home, sold it, moved to your area, and want to rent, you can check their credit report for foreclosures or short sales. If they’re very young and have never lived away from home, you can require a co-signer. There are many ways to determine whether a tenant will likely be honest, so you don’t get scammed by an applicant you trusted when you really shouldn’t have. Lack of a rental history isn’t bad, as long as other areas check out without a problem.
Your Lease Should Be Clear and Direct – and Signed
Having an air tight lease that was written (or at least reviewed and approved) by an attorney is a great way to make sure you don’t get scammed by dishonest tenants, too. You want to make sure you can evict a tenant that’s causing a problem, or that you can take other action against a tenant who may be slow to pay rent or who may be creating other issues. Without a clear lease that doesn’t have loopholes, you could end up with a problem tenant for a lot longer than you would hope for. Good leases mean dishonest tenants are reluctant to sign, and that you have the upper hand if you do need to enforce something in the lease.
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