Thinking about buying an investment property to rent? Do you already own a rental property and are looking for the best way to assure that your renters are qualified? A tenant background check will help to assure that your potential renter will be able to make their payments, and you will not be left with a host of issues after they leave.
First step, make sure your rental application has you covered. You can use an online application service such as On-Site, or you can create your own application form. You will need to make sure that your application states that you will be running a background check, credit and criminal history report and that the potential tenant is authorizing you to check into their personal, employment and financial history.
When it comes time for your potential tenant’s background check, make sure it covers the following:
- Contact former landlords and validate the following: amount of rent paid, how long the tenant rented, reason for leaving, were there any late payments, did the tenant disturb any neighbors?
- Make sure that your application covers number of occupants along with pets, if they are allowed.
- Ask for personal references including name, number and length of acquaintance.
- If the tenant has a record of eviction or a criminal record, you may want to reconsider, or you can request more information to see if they could still be a good fit as a renter.
Employment Information to be covered:
- The most important information that you will need to gather from an employer is whether or not your prospective tenant has a reliable source of income. You can either contact the employer directly, or ask for a pay stub to verify the income.
- You will also want to request how long they have been employed and look for a record of switching jobs frequently.
Financial Information to be covered:
- You will want to get a complete financial picture of your renter such as bank accounts, credit card debt, and any other monthly debts they owe such as car payments and student loans.
- Look for a history of consistent late payments, and be especially aware of bankruptcy.
Finally, feel free to run a quick phone interview to complete the tenant background check. You need to be aware that the Fair Housing Act stipulates that landlords cannot discriminate based upon disability, family status, national origin, race, religion, or sex, but you can inquire about pets, smoking, work schedule and potential roommates.
Evicting a renter is not an easy process, so put the time in upfront to help guarantee that the process is headache free in the future.