Have you had a terrible experience with renting out your property to tenants recently? Have tenants not been paying their rent on time? Renting to an applicant always carries risk. But as an operator, there are things you can do to reduce the risk of getting a bad tenant. At VERO we are in the business of screening tenants and our experts will walk you through the basics of effectively conducting a tenant background check. When done properly, a background check, income verification, and identity verification can reduce the chance of going through an expensive eviction process.
As a property or leasing manager of multifamily properties, you must run background checks on your prospective tenants to avoid the headache of application fraud, filing lawsuits, damaged property, and lengthy cumbersome evictions. The applications you receive may not always be honest, which is why tenant screening will help you identify any major red flags, such as criminal records and adverse credit histories.
Whether you haven't ever run a background check at all or want to know where exactly you went wrong previously, we have identified some of the most important things to check on every application.
Before you can jump straight into tenant screening, you must get signed consent from your prospective tenant first. This makes sure their privacy is protected. Otherwise, you may risk getting dragged to court. To avoid this, seek permission in the rental application form you provide your potential renters.
Checking for employment verification is critical when conducting a tenant background check. In some cases a high net-worth individual may not require this, but for the most part this will be one of the first checks you want to run. Usually, in rental applications, you request your prospective tenant to provide their current employer’s contact information. Then, you can either choose to contact the employer directly via call or email to confirm the tenant’s claim or ask for additional supporting documents for proof of employment. However, do your research as well! For example, your potential renter may have a friend pretend to be their employer. So, check to see that the number is legitimate. Or ask the employer to send you an email from a company email address.
Running just an employment verification isn’t enough! It is best to run an income verification as well to make sure the potential tenant has a steady stream of income. As many operators have learned the hard way, just having a job may not be enough to qualify an applicant. Income is an important factor because after all, they are your source of income!
First, request a salary verification letter. This will confirm their salary and how long they’ve served the employer. And you’ll be able to evaluate their employee performance to help you make an informed decision. You should also note whether their job is full-time, part-time, temporary, or permanent. As an operator, you may also run a credit check to reveal any underlying financial problems the applicant may be experiencing as well as their debt-to-income ratio. However, credit checks in some states are restricted, so you'll have to verify whether you're eligible to do this in your state. If you run credit checks it is very important to make sure you run checks on all applicants. If you do not you are inviting illegal discrimination allegations.
As a leasing manager, you want to be as thorough as possible when running a tenant background check. So, apart from asking the basics such as employment history and income verification, there are other questions you might be tempted to ask in order to make a final verdict. However, there’s a fine line between valid questions and intrusive ones. So, tread carefully!
You can ask your potential renter for criminal records and how many people intend on staying within the multifamily property. You can also ask whether they smoke, do drugs, or have any pets.
It would be best to avoid all questions that interfere with the tenant's rights and privacy, such as their nationality, race, religion, sexual orientation, gender identity. Even asking about marital status and familial status can get you in trouble even though these might seem like harmless questions.
When renting out a property, you need to ask for additional supporting documents along with the rental application form to filter out unreliable and non-serious applicants.
When leasing your property, be mindful of federal regyulations that affect housing. These laws are in place to protect the tenants and the property owner alike.
Well, that was exhausting! And all that screening work probably took you anywhere between 6 to 14 days, or much longer if you’re doing it all by yourself. What’s worse is that you’re still very much susceptible to application fraud and troublesome tenants. Fortunately, new technologies are emerging which make it possible to automate all of the screening work we described. These same technologies also eliminate any chance of application fraud and make sure your data storage complies with FCRA regulations.
VERO is the leading leasing and renting software for operators. Their technology automates and simplifies every workflow involved in screening and leasing properties. Automation is key to reducing vacancies and reducing risks, because when your team is reviewing rental applications, any kind of negligence or human error could lead to costly evictions. VERO aims to save money and precious time by automating the entire process. This means no handling piles of documents which could get lost. No picking up the phone to talk to an employer. No sorting through bank and credit reports. VERO connects directly to employers and banks in order to build a complete picture of the applicant which is fully validated and stored securely online.
Thorough tenant background checks mean you’re checking for employment verifications, income verifications, criminal records. This can take a lot of time and you don’t have days to wait around and sift through applications. While other rental agencies take around six days for prospective tenants to submit their applications and execute the lease, VERO approves and executes leases in under 30 seconds.
VERO sends an online application to the prospective tenant and requests their employment details. Our proprietary technology verifies the information and runs necessary background checks on the potential tenants instantly. Once you provide your approval, your property has been rented!
VERO takes all the protective measures discussed in thei article and follows all regulations to ensure the security of your tenant’s sensitive data. What makes VERO unlike any other is that it's transparent, and everything is happening in real-time. You'll be able to see the current status of every deal; you'll be notified when a potential tenant submits, views, or accepts their lease. VERO's cloud-based platform collects the rental fees and transfers them directly to you.
No more paperwork, no more long calls to make for verifications, no more application fraud. It's simple, seamless, and effective. Screening and reviewing an application is all instant and right at your fingertips. VERO is your modern leasing solution.