If you own a property and want to rent it out to someone, you’ll want to conduct a tenant screening. A tenant screening report will help you establish good prospects to let your property out to. It’s a process that many people undertake to assess whether or not a prospective tenant has a good record for renting properties, giving the property owner peace of mind when it comes to rent collection and general good renting practices.
What information is in a tenant screening report?
As a property owner and a landlord, you will obtain a significant amount of personal information when a potential tenant applies to rent your property. A tenant screening report will look at aspects like credit records, criminal records, previous renting history, as well as eviction history.
The information supplied to property owners in a tenant screening report is potentially sensitive, therefore what an owner does with that information needs to be well-handled. Landlords need to carefully consider the information they are given and make sure they are legally allowed to obtain the information they request.
Some countries do not allow property owners to get the information they may want, therefore it’s important to check what information you can ask for before starting the tenant screening process. For example, some countries may not allow property owners to ask about criminal records.
Is a tenant screening report the same as a credit report?
A credit report is slightly different from a tenant screening report. Rather, a credit report is a kind of screening report, but they look only at the financial status of a prospective tenant. They can form part of the tenant screening report to give the property owner an indication of whether or not the applicant can afford to live in the property. Effectively, it shows that they are likely to pay rent on time.
As a property owner, you have to be sure a tenant can pay, or else, you may run up costs yourself and make a loss on the property you’re renting out. If a person has a good credit record of above 600, it’s less likely they will miss rental payments.
Several factors go into credit reporting and these need to be considered on a case-by-case basis. For example, if a prospective tenant has a poor credit score owing to high hospital bills, it’s unlikely they will miss a rental payment as these are usually once-off costs.
What information does your tenant need to provide?
Before you begin the tenant screening process, you need to give the prospective tenant an application form. An application form will give you all the information you need to perform tenant screening. If you’re outsourcing the tenant screening process, you will have to give this information to the company you choose.
On the application form, you will need to ask for the applicant’s contact information, proof of their monthly income, or proof they can afford to pay rent, references, rental history, the number of people who will be occupying the property, and criminal status.
This information will give you a good idea about the type of tenant a person will be, allowing you to decide whether or not you want to rent your property to them. The information you get on the application form will allow you or an outsourced company to run the necessary credit and criminal checks during the tenant screening process. If the tenant screening report meets the criteria you require to lease your property, you can approve the prospective tenant’s application.
Which tenant screening reports should a landlord get?
Knowing what information to get from a tenant screening report is important before you begin the process. There are three main reports which form essential components of the overall report.
Credit checks will provide the aspect of the report that proves a person can afford to live on your property. A full credit report will give the prospective tenant an overall score between 300 and 850, which will give landlords some indication of how good they are at making payments on time. A good report will also look at the tenant’s income and current credit limits.
Criminal Background Checks
Before you choose to conduct a criminal background check, you need to ensure you are legally allowed to do so in your country and city. Some regions do not allow landlords to do criminal background checks for the purposes of renting a property.
Upon gaining criminal information the onus is on the landlord to determine whether or not they want to allow the application to lease the property. It’s good information to have when considering others who also live in the neighborhood or apartment block.
If an applicant has a history of eviction, they become less desirable as a tenant. Evictions are costly processes to go through and the financial burden always falls on the landlord. Aside from being financially draining, evictions also take a lot of time and energy to complete. If someone has been previously evicted, it’s also important to take into consideration the circumstances under which they were evicted. Remember, late rent payment is not the only reason someone can be asked to leave a property.
What is the cost of tenant screening?
As a property owner, you are fully entitled to do tenant screening yourself, in which case it won’t cost you anything. However, with the help of professional advisors, the screening is often more thorough and you’ll get professional advice before approving a tenant.
Professional tenant screening services can cost anywhere between $25.00 and $75.00, depending on the type of reports you require. This is also usually the responsibility of the applicant to cover. Getting the applicant to cover the fees of a tenant screening means you won’t have to, but also displays a degree of financial stability.
Is tenant screening worth the cost?
Although it may seem like a lot of time and paperwork, conducting the tenant screening process could save you a lot of time and hassle in the long run. It will also give you, as a property owner or manager, the peace of mind you need to rent out your property without worrying about severe damage or whether or not you’re going to get paid rent or not.
With Hospira’s property management software, you will be able to create application forms and manage the information you get before tenant screening. The data from the report is also captured and laid out in a comprehensible format, making it easy for you to make informed decisions on tenants.
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