The portrait of the American Dream is changing, and more Americans are eschewing the stability of homeownership for the flexibility of renting. This is great news for landlords and property management companies who have seen more competition for renters in today's post-pandemic market.
The growth of the rental market doesn't mean you should take rental applicants on blind faith. Conducting an insufficient tenant background check can lead to a massive loss to your portfolio. Read on to learn how to properly screen your applicants!
Importance of Background Checks
Many landlords like renting out their homes based on interviews with prospective tenants. It'd be nice if the first impression people gave us was an accurate representation of their ability to afford and maintain your property. Unfortunately, many landlords find themselves evicting tenants-a very costly process.
If last year's trend of record-high eviction filings in Denver continues, it's more important than ever for Denver landlords to seek out well-qualified tenants through background checks.
What to Run
There are multiple things you want to look for when screening tenants. This may involve using multiple screening tools in order to get a holistic portrait of a potential tenant. Consider working with a property management company to help streamline this process.
Credit Check
The first thing you should check is your potential tenant's credit history. The higher their credit score, the higher the likelihood that they'll pay their rent on time every month. The best way to predict that is by looking at their payment history on their credit cards.
Look out for red flags on credit reports like foreclosures, bankruptcies that haven't been discharged, and vehicle repossessions.
Rental History
Rental history is another important part of the picture because it tells you how they've treated their landlords in the past. There are databases that cover rental histories, but you may want to contact previous landlords yourself. Ask about their payment history, the state of the apartment when they moved out, and if they had any complaints.
A positive rental history sometimes balances a poor credit history. Consider letting someone rent with a higher deposit.
Criminal History
Finally, run a criminal history check. Many landlords won't rent to someone who has a felony conviction. Others choose to prohibit renters who have certain types of criminal records.
You should also stay on top of local laws. Some areas prohibit people convicted of sex crimes from living within a certain radius of schools and parks.
Want to Run a Thorough Tenant Background Check?
Running a tenant background check is the best way to give yourself peace of mind. You won't have to worry about unpaid rent, property damage, or safety risks to others in the area. If you want to make sure you have access to the best screening technology, then hiring a property management company is a great option!
Are you looking for a full-service property management company that knows everything about the Denver rental market? PMI Cedarbolt is the company you need to take your rentals to the next level. Contact us today to learn how we can help you!
