As a property owner or manager, finding the right tenant is essential to the success of your rental business. While some might think the process of renting out a property is all about listing it, showing it off, signing the lease and collecting money, the most critical and often overlooked step in the entire rental process is detailed tenant screening.
In-depth tenant screening isn’t just about verifying if the tenant can pay rent on time; it’s about protecting your investment, ensuring the safety of the property, and creating a positive long-term rental experience for both parties. Let’s dive into why thorough tenant screening is the most important aspect of renting.
1. Reduces the Risk of Non-Payment or Late Payments
One of the most significant risks property owners face is tenants who fail to pay rent on time, or worse, stop paying altogether. Non-payment of rent can quickly become a financial strain, and eviction processes can be costly and time-consuming, especially in a tenant friendly state like Massachusetts. By conducting a detailed tenant screening, you can assess a prospective tenant's credit history, income/employment status, criminal history and previous rental payment behavior.
Key factors to consider during screening:
- Credit Score: A tenant’s credit score gives you an insight into their financial reliability. A solid credit history typically correlates with a tenant who is responsible and likely to pay rent on time. South Boston Property Manager’s partnership with Transunion allows us to see every payment made on an applicant’s credit history, which ones were late and complete picture of the applicants financial standing and debt/income ratio to confirm they can afford rent comfortably.
- Income Verification: Confirming a tenant’s income ensures they can afford the rent. South Boston PM requires all of our applicants to show gross income of 2.5x rent to move forward to lease signing. Our partnership with Plaid allows us to confirm income from our applicants via their direct deposits from their employer to their bank accounts.
- Previous Rental History: Checking references from previous landlords is key and is often a step that is skipped by self- managers and property management companies alike. Landlord verification can reveal whether the tenant has a track record of timely payments and caring for the property. South Boston PM will not move forward with a lease signing until we receive this verification from the most recent landlord and will attempt to get the verification from the past 2 landlords if available.
2. Helps Prevent Property Damage and Maintenance Issues
Renting out a property means trusting someone else with your space. Unfortunately, not all tenants treat rental properties with respect, and some may cause damage, either intentionally or due to negligence. An in-depth tenant screening process can provide insight into how well a tenant has cared for properties in the past.
Look into:
- Past Eviction Records: If a potential tenant has been evicted previously, it could indicate a history of poor behavior or irresponsibility. This could suggest future issues, such as damage to your property.
- Behavioral Red Flags: Signs of problematic behavior, such as a history of violating lease agreements, noise complaints, or other disturbances, can be revealed through tenant screening.
A comprehensive screening process gives you a clear picture of a tenant’s past actions, which can help prevent future property damage and disputes.
3. Ensures Legal Compliance and Safety
As a property owner, you have the responsibility to ensure the safety and well-being of your tenants and comply with all legal requirements. By thoroughly screening tenants, you ensure that you are choosing individuals who do not pose a threat to other tenants, neighbors, or the property itself. Criminal background checks and national sex offender registry searches are part of this process.
Key components include:
- Background Checks: Criminal history checks help to identify whether a prospective tenant poses any safety risks to the community. While some criminal offenses can be overlooked, certain convictions such as violent crimes or drug-related offenses could be grounds to reject an application.
- Sex Offender Registry: Screening tenants for any ties to a sex offender registry ensures that you are maintaining a safe environment for all tenants, especially in family-friendly properties.
- Identity Verification: Ensuring the applicant is who they say they are can protect you from potential fraud or fraudulent lease agreements. Our PM software, Rentvine verifies identity for all of our applicants to assure they are indeed the person we are running the screenings on.
Screening tenants carefully helps mitigate legal risks and ensures that you’re renting to individuals who will contribute to a safe and harmonious living environment.
4. Helps Build a Better Tenant-Landlord Relationship
A comprehensive screening process not only protects your investment but also creates a foundation for a positive relationship with your tenants. When you select reliable tenants who respect the rules, you’re more likely to experience fewer disputes, misunderstandings, and stress during the tenancy.
Well-screened tenants tend to be:
- Respectful of Property Rules: They are more likely to follow lease agreements and maintenance schedules, leading to fewer conflicts.
- Long-Term Renters: Screening helps you choose tenants who are serious about long-term commitments, reducing turnover and vacancies.
- Good Neighbors: A thorough screening process can help you find tenants who are respectful of neighbors and contribute positively to the community.
By choosing the right tenants, you can create a peaceful and cooperative environment, making property management smoother for everyone involved.
5. Saves Time and Money in the Long Run
While it may seem like a lot of effort upfront, investing time and resources in in-depth tenant screening can save you significant money and time down the line. Avoiding tenants who don’t meet your standards—whether for financial reasons, property care, or behavioral issues—will save you from costly repairs, evictions, and vacancies.
Consider the hidden costs of not screening tenants:
- Eviction Costs: Evictions can cost thousands of dollars in legal fees, court costs, and lost rent.
- Property Damage: Even minor damages can add up to expensive repairs, not to mention the lost rent while repairs are made.
- Time Spent on Disputes: Time spent on dealing with tenant complaints, unpaid rent, or disputes takes away from your ability to manage and grow your property portfolio.
In-depth screening helps you choose tenants who are responsible, pay on time, and respect your property, ultimately saving you both time and money.
Conclusion
Tenant screening may seem like an extra step in the rental process, but it is arguably the most important one. By taking the time to conduct thorough background checks, verify employment and financial stability, and assess tenant behavior, you protect your property, ensure the safety of your community, and set the stage for a positive rental experience. The investment in tenant screening pays off in the long run by reducing risk, preventing issues, and providing peace of mind. At South Boston Property Managers, we do not skip any steps in this crucial process and we ensure all of our potential tenants pass our extensive screening process before moving forward to the lease signing. We have partnerships with many reputable companies that help make this process accurate and efficient for both tenant and property manager.
Thinking about hiring a property manager to manage your real estate investment? Check out our pricing page today for our spring special for any contract signed by June 30th!