Minimising risks with proper tenant checks
The majority of tenants are reliable tenants and manage their tenancies well, but many landlords will have experience of problematic tenancies. Even if you’re able to find individuals who are willing to pay more for shorter lease terms, there’s nothing like having a consistently trustworthy and reliable long-term tenant who won’t keep you up at night worrying about missed payments or damage to your property.
You have a few choices when it comes to finding a new tenant for your rental property. If you’re working with a property management company, they'll probably handle everything for you. And if they’re a large company, you might not have any say in who actually ends up staying in your property. To an extent, this doesn't matter as long as the management company will take responsibility for the property and handle any tenant issues on your behalf.
You can reduce the risk of rent arrears and the like by carrying out background checks before proceeding with the contract. There are a large number of external agencies and even landlord organisations that provide such services.
If you choose to manage the property yourself, however, you’ll find that you’ll need a way to find and vet potential tenants before they move in. If you’re in this situation, we have a few useful tips that can help you along the way.
1. Request an Application
Requesting that each prospective tenant complete an application is good practice. You can get a template online easily or create one yourself on Word or Google Docs.
As well as ensuring people are committed enough to fill in an application so you’re not wasting your time on people who are not likely to rent from you anyway, it helps to systematise information processing and gather all the necessary facts you need to make your initial assessment about someone’s suitability for your property.
Choose an application that encompasses financial information, employment information, and personal information. You will also want to state that a background check, criminal history report, or credit check will be carried out.
State clearly that by sending the application through, the tenant is granting authorisation for a check into their financial, employment, and personal history. Important elements to include in the application include:
2. Run a Credit Check
With the help of a company like HomeLet, you should be able to carry out a financial background check easily enough. This will show you details about the tenant’s previous credit history. It’s prudent to look for a history of late payments, collection accounts, credit card accounts or major issues such as bankruptcy.
A few late payments in the past does not necessarily imply a bad tenant, but several issues could help you determine whether there may be any problem regarding payments in the future. If the tenant has substantial unpaid loans or several unpaid balances, they may struggle to keep up with the rent payments.
3. Contact the Tenant’s References
Contacting references is something to take up each time.. You can ask the tenant to give you a copy of a recent payslips for proof of income.
4. Run a Background Check
Several companies offer services for a basic background check and will provide you with an eviction history, criminal history, credit history, and various public records. A full check might include the following:
5. Meet them yourself
Meeting someone in person can tell you a lot about them. While you should avoid making things too "personal", you should try to choose someone you can maintain a good ongoing relationship with, hopefully for years to come.
If someone has little to no financial history because their circumstances have changed, or they're new to the country, or they’ve just graduated, you may want to meet them to get a clearer picture about their situation.
For instance, you may want to make allowances for someone who has just moved to a city and has got their first job, even if they don’t match your usual set of criteria.
Discover our Inventory App
If you’re currently looking for new tenants for your property, consider how one of our free tools can help you effectively manage your property.
Our app supports the full inventory report cycle: inventories, check-ins, check-outs and mid-term inspections that can help you keep things running smoothly once you’ve found the right tenants for your property.
Dan, 21 May 2021
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