According to the Joint Center for Housing Studies, during the COVID-19 pandemic approximately one-third of landlords reported rent shortfalls of at least 10%. Nearly 10% experienced shortfalls exceeding 50%. Without proactive management, you risk similar losses because of other unforeseen events.
As a landlord, it's your responsibility to navigate these risks successfully. Most of the risks you face won't involve global catastrophes; they'll involve your tenants. Thankfully, you can do a tenant background check to ensure your tenants are trustworthy.
Do you want to know how the background check process works? Then check out these rental property screening tips.
Criminal Background Check
One of the most important steps in a tenant background check is to review criminal history. If someone has a criminal past, it's more likely they're involved in undesirable activities. A problem tenant could damage your property or even turn it into a hub for criminality.
By looking for details about the applicant in criminal databases, you'll find out if they have any criminal convictions. Of course, you should take certain crimes more seriously. Consider the following crimes a serious red flag:
- Vandalism
- Theft or robbery
- Fraud
- Drug dealing
Minor infractions like unpaid parking tickets are less of a concern - it's up to you how you handle such cases.
Tenant Credit Report
More crucial insight comes from the tenant's credit report. Ideally, your tenants need to pay rent on time, and a credit report gives you a strong indication of how reliable an applicant's payments will be. A credit report will reveal if an applicant has any outstanding debts or other financial problems.
If someone has a lot of debt, it suggests they're not responsible with their money. Due to poor financial decisions or accumulating debts, they could be unable to pay rent.
Always try to rent to tenants with a solid financial record.
Landlord Reference Check
Negligence in reporting maintenance issues or excessive wear and tear can seriously harm your ROI. But, not all negative tenant behavior is going to show up on a criminal or credit check. There are some things you can only learn by talking to a previous landlord.
The ideal tenant background check involves getting in touch with an applicant's old landlord. If they have nothing but good things to say about your applicant, it suggests you've found the right person. On the other hand, if you hear about problems, damage, and inappropriate behavior, you might want to go with another applicant.
Get Help With Your Tenant Background Check
A tenant background check needs to be comprehensive. You can't afford to leave any stone unturned. If you miss the red flags, you risk renting to tenants who won't respect your property.
The only way to guarantee reliable results is to work with a professional property management company. Here at PMI Green Country, we have decades of experience helping landlords in the Broken Arrow area find great tenants.
Ready to get comprehensive background checks on rental applicants? Contact us today and discover why so many landlords trust PMI for all their property management needs.
