Is A Tenant Screening Service Right for You?

Is a Tenant Screening Service Right for You?

By Robert Greenberg, VP Marketing, B2R Finance

Rental property investors want to find tenants that pay on time, adhere to the terms of their lease agreement and respect their rental property.

Using one of the many online services that offer tenant screening is an effective way to find good tenants. Some of these services will even provide you with a tenant score to help you determine if the prospective renter is a good risk.

The decision to rent your rental property should be based on good data, so it’s prudent that SFR investors do some due diligence to help them find a service provider to help them with tenant screening. Investors should feel confident that their tenant screening service is able to provide reliable data and accurate information. Further, while price could be a factor in your decision, it’s wise to weigh the cost against the quality and breadth of data provided.

Here are the basics an investor in single-family properties should consider when screening a tenant:

  1. A credit check
  2. A national criminal background check
  3. A national eviction search
  4. Identify verification

You may wish to get a more detailed look at prospective tenants by looking at past foreclosures, bankruptcies, address history, and by checking employment history and other databases detailing prior criminal history. Some of this information, such as past addresses and employment history, likely will be received with the application, but it’s important to make sure a screening company or a reference-checking service is verifying the information, if you are not doing it yourself.

If the tenant screening shows a criminal record or a past eviction, it doesn’t mean the tenant isn’t a good risk. However, having the information will allow you to review it, question the prospective tenant and make a better, more informed decision.

DENYING AN APPLICATION

A landlord who denies a renter’s application based on what was learned in consumer reports used for tenant screening has a legal obligation to share that information with the prospective renter in what’s called an “adverse action notice.” An adverse action notice also is required if the landlord decides to require a co-signer, requires a deposit not required of other renters, raises the deposit over what is required of others, or raises the rent above what is charged to others.

Renters have the right to dispute consumer reports that they believe are inaccurate or incomplete. Receiving this information can also benefit the prospective tenant, because sometimes these reports are incorrect and the information needs to be corrected at its source.

You may also want to use a reference-checking service to verify your prospective tenant’s references, or attain a list of references that you or your property manager can call. These references should be a combination of work and personal references, or past landlords, who will give you an idea as to whether the prospective renter is a responsible person who is likely to meet his or her lease obligations.

While tenant screening isn’t foolproof, it is just one tool that could increase your odds of finding a high quality renter.

B2R Finance offers rental investors innovative lending products to help unlock equity from existing portfolios and provide the cash needed to build rental portfolios nationwide. For more information about how B2R can help you obtain rental property financing, just call 800-227-8107 or visit www.b2rfinance.com/borrowers and follow us on Twitter @B2RFinance.

The information on this page is provided for informational purposes only and does not constitute investment, real estate, or legal advice. This information should not be regarded as a recommendation or an offer to buy or sell any product or service to which this information may relate. No representations or warranties whatsoever, express or implied, are given as to the accuracy or applicability of the information contained herein. The information may be modified or rendered incorrect by changes in the marketplace or developments in the law, or for any other reason, and may not be applicable to any individual reader’s facts and circumstances.