Choosing the wrong tenants can have a significant impact on your real estate investment. There's the chance that they'll break something, commit illegal behavior, and force you to evict them. All of this means a loss of revenue and extra work for the property owner.
The best way to avoid these issues is to perform a comprehensive tenant background check. Tenant screening means looking at an applicant's previous behavior and determining whether or not they're worth the risk.
Here's how to do tenant background checks in three easy steps.
1. Review the Tenant's Application
First of all, make sure to properly review the tenant's application. It's important that you put all the necessary questions on it so that you know where to start with them.
For example, the most basic information you'll gather on the application includes the applicant's name, employment information, and references. However, you may also want to ask for their previous landlord's contact information. You'll also need the same for any guarantors they plan to use.
In addition, see if an applicant has pets or plans to get one. They'll also need to provide additional information if they're planning on having roommates.
2. Do an Online Background Check
Once you've gathered everything you can about a person through their application, you'll need to confirm it all. Luckily, you can perform many background checks online with ease.
Tenant screening services and property management companies can perform tasks such as a tenant criminal background check, look into past evictions, and screen for identity fraud. You'll also want to look into their source of income and past rental history.
It's completely possible that a potential tenant has faced eviction in the past but turned things around since then. Your job is to differentiate problem applicants from those you can rely on.
3. Reach Out to Their References
One of the best ways to verify a person's background is by reaching out to their references and related contacts.
Their employer can let you know the person's income and employment status. Previous landlords will let you know if they had any issues with an applicant and if those issues were ever resolved.
Things may get a bit more complicated if an individual is part of the gig economy or self-employed. However, you can always access their financial information through bank statements and tax documents.
If the applicant is utilizing a guarantor or cosigner, then you should also reach out to them and run additional background checks.
Tenant Background Check Made Easy
If you're not sure how to perform a comprehensive tenant background check, your best option is to utilize a property management company. They're responsible for everything from tenant placement to tenant evictions. They streamline the process so you can focus more on growing your real estate portfolio.
Pristine Property Management offers services for both tenants and owners. We're one of the top companies in the Miami area. Contact us to learn more or if you have any concerns.