Hey, Mario Gonzalez back with you. On this blog we’re going to talk real quickly about tenant selection criteria. I’m going to give you six major points and at the end I’m going to talk about the warning signs that are there for trouble tenants that you really should look out for.
THE CREDIT SCREEN:
So the first thing is the Credit Screen. Now, a lot of companies will say, “oh yeah, we’ll tell you the credit score”, but that doesn’t tell you if they’re rising from, you know, a 600 credit score doesn’t tell you if they’re rising from the ashes or if they’re crashing from 850, it really doesn’t. You need a full credit screen. So just like they would if you’re making a major purchase. That full credit screen will show you everything they have, 30, 60, 90 past due or credit now, it will show you all the way back to seven years. It will check both the installment accounts and the revolving accounts, the big ones and the little ones. You can look for past due, collections, any repossessions they’ve had, foreclosures, everything. And also, you need to check bankruptcies. You do not want anybody with an open bankruptcy because they can tie the rent into that.
The second thing is your criminal background and the criminal background shouldn’t just be a local record search, it should be a national records search. So you’re looking criminal background, both misdemeanors and felonies, sexual predators, eviction history, all very big. And you have to be very careful how you screen tenants with regards to criminal activity now because of this impact. We have a whole other blog on that.
The third thing you need to look for tenants is their employment. Is their employment current right now, do they have pay stubs that they can show you. If they’re moving from out of town, you need to really look and see what does they’re employment guarantee their pay to be right now. If they’re self-employed you really need to look at pay stubs, bank records, tax statements, and all that kind of stuff to really prove they can pay for the home they’re looking to rent.
PAST RENTAL HISTORY:
The fourth thing is if they’ve been a renter before you want to look at their past rental history. And the past rental history isn’t just the last place they lived, it’s the last few places they’ve lived. And you want to really, you know, just because they gave you a number for the past landlord doesn’t mean that’s the past landlord, so do your research properly. Go through that last landlord company. Do your own research to find that number and then come out there and check back. You should have something that they can fill out that says ‘did they pay on time, were they ever late, did they ever bounce a check, did they ever miss any payments whatsoever, did they fulfill everything that was on the lease, how much was the rent that they paid, how much deposit did they have, how much deposit did they get back, did they damage the place, did they have any pets, did the pets damage the place, you name it’. We have a very long form and I’m happy to send that over to you if you like, free of charge, if you want to know how we look at past rental history. Another thing is you want to look at their pets, do they have pets. You can do a full background on pets alone. There are online services like Petscreening.com that will tell you things like ‘do they have their shot records, do they have their owner records, photo, size, weight, type, any history of biting or any violence whatsoever’, so you really need that in today’s world of assistance animals, service dogs and all that type of stuff. We have a whole other blog on that as well, but you really need to do some sort background on the pets they’re going to be bringing into the home and animal screen the home.
FAIR HOUSING RULES:
The sixth thing here is fair housing rules. If you, as a property manager or a DIY landlord, own more than four homes or you’re a real estate agent and you’re managing just one home as a licensed realtor, you have to follow all the fair housing guidelines. That’s a three hour class in itself that’s taught to a real estate agent. There are a ton of them out there and, again, we have a whole other blog on how to abide by fair housing, but it’s tough to do here in two minutes, but you have to abide by all the fair housing guides.
WARNING SIGNS TO LOOK FOR:
Now the last thing I’m going to tell you is some of the warning signs you look for bad tenants. If they come to you and say, “Hey, I have full cash, I can pay cash up front right to you for the entire term of the lease”, there may be some warning signs there. If they have an urgency, “I have to move right now. My owners selling the property, it’s closing right now”, whatever, if there is a huge sense of urgency to get into a home then that may also be some warning flashes. So slow down and make sure you screen everything properly. Some other warning signs if you’re doing any of this background, look at social media, there’s so much out there you can just do with a Google search or an online search you can do of somebody outside of these things that will throw up some flags for you as well. So, that’s it in a nutshell. We have a ton more blogs. If you have any questions whatsoever, feel free to contact me anytime, I’m happy to answer your questions.