Real estate is one of the biggest investments anyone can make. The rent tenants pay ensures a steady stream of income and a larger return of investment. But you could also easily make less by letting in questionable tenants.
Without a proper background check and screening process, you might let in a tenant who’s unable to pay on time or a criminal who could depreciate your property’s value. The last thing you want on your property is a history of illicit activities.
Protecting Your Investment
Before anything else, you have to make sure the tenant can pay the rent. In competitive real estate marlets, property owners sometimes take in tenants with questionable financial histories. Look into the tenant’s employment and credit records as part of the background check. A steady source of income and a good credit staning are solid indicators that they can comfortably honor their financial obligations.
Their credit history should show little to no late payments. It’s normal to be late sometimes, but regularly missing the payment deadline could mean he or she cannot pay rent on time. Looking into their credit score lets you lessen the risk and protect your own property.
You can also look into their living history. Try to get in touch with their previous landlords to see if the tenant left in good terms. Ask about other details as well, such as how they took care of the place and if they were able to pay the rent on time.
A thorough tenant check also avoids any discrimination charges from prospective tenants that you turned down. If you don’t have any basis for rejecting a tenant, he or she may think the rejection was based on their gender, nationality, religion, or age. You could be charged for discrimination and end up in a costly legal battle. You need to support rejecting the tenant with documented facts and evidence to avoid unwarranted legal penalties.
Apart from legal issues, screening your tenants can also prevent problems that can lower property value. Background checks can lessen the probability of misconduct and evictions. The volume and amount of rent lowers when you keep evicting tenants. You’re at a greater advantage and will earn more from your property with tenants that can stay long and pay the rent on time. Remember that like every investment, real estate comes with its own set of risks. You increase risks by not double-checking a potential tenant’s behavior.
Like all other processes, you’ll have to do the paperwork when you let in the right tenant. Screening your tenant lessens any prior procedures during the application process, allowing you to get the information needed on the applicant. You hit two birds with one stone with a proper background check.
If you’re juggling a day job and/or a family with managing a property, you probably won’t have enough time to screen all tenant applications. Thankfully you can easily hire investigators that can perform thorough background checks and provide the information you need to make a sound decision. These service providers are able to identify out high-risk renters and narrow down your list to the right kind of tenants.