How to Screen Tenants Properly
If you have an investment property or are considering purchasing one, the American Apartment Owners Association (AAOA), recently released a study of 11,000 of its members. The organization wanted to determine what its members are doing in addition to running a standard credit or background check when seeking to find a renter for their property. The lessons offered should prove valuable, as many landlords are failing to ask for important documentation which can help screen out tenants who may default on their rent or need to be evicted. The AAOA was surprised to discover that considerable percentages of the respondents failed in three distinct ways concerning documentation which can help to avoid timely and expensive outcomes. Here are the recommendations to keep in mind.
1. A landlord should confirm that the prospective tenant is employed in the place and at the salary that he/she claims. It is, therefore, imperative to ask to see paycheck stubs to confirm that the source of income exists and that it is in the amount stated. Also, confirming the amount of income will determine if the tenant can, indeed, afford the apartment. The higher their debt to income ratio is, the higher the risk of defaulting on the rent.
2. When screening a tenant, ask to see the social security card. The card is the best form of identification, showing the state where it was issued and the tenant’s legal name. Importantly, should the tenant vacate his residence without paying the rent owed, a collection agency would have a far better chance of locating the individual and collecting the owed rent if they have the social security number (SSN). The SSN can also be used to locate the tenant for the purpose of serving him with a summons. Amazingly, the survey found that a full 67% of landlords do not ask for a SSN.
3. Always ask to see the driver’s license. Like a SSN, a drivers license is a solid form of government identification which provides and confirms certain information (date of birth, most recent address). These pieces of information are vital when conducting criminal and eviction background checks. Be sure that the information on the social security card and the driver’s license match perfectly.
Taking the time to conduct these measures can save thousands of dollars in legal fees and collection agency costs.