Tenant Background Checks: Cost and Savings

How important is Tenant Background Screening? On a scale of 1 to 10? Maybe an 11?

With the slow recovery of from the Great Recession people are still renting in great numbers. Even with steady work, an $8,000 tax credit and low priced homes on the market, it remains a challenge to purchase a home. However, in fairness to my many realtor friends, it is not impossible. Individuals that qualify are buying second and third homes and renting them out. And people are renting them.

So here is the thing: Are you doing a rental screening on these secondary properties?

Most multi-family units conduct screening of some sort. It protects current tenants and the property owner, as well as the renter. Rental background checks come in many shapes and forms but should include the following:

• Rental Credit Report with Fico Score -

Why? Another obvious one.

• Evictions Records Search -

Why? Obvious, right? A search of evictions and unlawful detainer records, in states and counties where information is available, may contain court filed, plaintiff and defendant names, case numbers, filing dates and judgment details

• Bankruptcies, Judgment and Liens -

Why? Another report that points to financial wherewithal.

• Sex Offender Registry Search, National and State -

Why?  Another obvious one.

• County Criminal Records Search -

Why? – Utilizing the Social Security Number Trace to discover county of residence one can then conduct County Criminal Records Searches based on those counties.

• National Criminal Records Search -

Why? This is a key supplemental report that will show any negative activity that occurs outside a county of residence.

• Social Security Number Trace -

Why? This is a critical tool used in discovering residency patterns. A SSN Trace shows county of residence as attached to a particular SSN. One can trace county of residence and show years at that a specific residence. In addition, potential AKAs and alias used against that SSN will be shown.

It is important to understand the background of those that rent YOUR property. It is an important asset that should be protected. The equity in rental properties often serves as a retirement fund for the owner. Yet, if you rent to the wrong individuals not only do you risk loss of income but value in that home. You can also endanger neighbors surrounding that property. A thorough Rental Tenant Screening can help insure a safe environment as well as an on-going financial return.

One should also consider the same steps when renting a room or a “mother-in-law” apartment.

Knowing who you rent to is extremely important, for obvious reasons. But a renter should do more than just meet an individual and have them fill out an application. Recently a friend of mine did only that and after several months of non-payment had to deal the repercussions and cost of eviction. The damage to his property amounted to several thousand dollars. The renter, a seemingly nice and responsible individual, had previous evictions as well as judgments. That’s an expensive lesson to learn.