Landlords have many tools available to them when it comes to determining whether an applicant is eligible to rent a particular property. Use the five following suggestions to help bring in the right tenants for your property:
Rent-to-income Ratio
Spending a third or less of one’s income on housing is a typical recommendation for sound personal financial management. Landlords have several ways to verify an applicant’s income. The easiest is to just ask. This method however has an obvious drawback. The applicant may not provide an accurate number. Requesting a pay stub or a copy of a W-2 form is better, but anyone with a little bit of effort can create fake documentation.
Check writing history
When a business takes a check from someone and presents it to their bank for deposit, the bank against which the check is drawn may not honor the check if there are not sufficient funds in the account to cover the amount of the check. Banks use the term non-sufficient funds (NSF). Other common terms are bad check, bounced check, returned check, and hot check. Consumer reporting agencies can provide information on whether your applicant has presented a hot check in the past. A history of presenting bad checks can be an indicator of financial difficulty.
Eviction history
If past experience is predictive of future behavior than no report is more relevant than an applicant’s eviction history. Eviction filings and the subsequent legal process are public record and are reportable in most cases. A record of an eviction filing means another landlord in the past had to initiate the legal process of eviction – whatever steps you take before going to court – another landlord has been there before with this applicant. An eviction record with a judgement in favor of the landlord means that the eviction process ran its full course and the tenant was removed. How long ago in the past the previous eviction occurred should be considered, but an applicant with a history of defaulting on his or her obligations presents a higher risk.
Criminal history
Criminal background checks are useful in identifying those individuals who, though able to pay their rent, might bring unwanted activities such as the production or selling of illegal drugs. Landlords can run a basic background check that will cover a broad area – sometimes called a nationwide or multi-jurisdictional search, but those checks might not catch everything. There is no one single database that has every criminal records. National databases have better coverage in some areas than in others. Running a county level criminal search in the places where the applicant has previously lived will result in a more thorough search.
Scoring Models
Many landlords are using scoring models to tie all of those criteria together to develop a recommendation based on a set of criteria. A scoring model allows a landlord to use a simple, points-based system to either award or deduct points for certain criteria.
Protecting rental income, protecting the property and protecting the quality of living in apartment communities are among the landlord’s priorities. Finding a quality background screening company that understands these priorities and can deliver quality information in a timely manner is important. PeopleFacts has been helping landlords make informed leasing decisions for two decades and continues to serve landlords with a single rental home and property management companies with thousands of units all across the country.
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