GET STARTED:-503-447-7735
Info@PortlandRentalManagement.com

Tenant Screening Mistakes You Don’t Want To Make

PROFIT - COMMUNICATION - PEACE OF MIND

Tenant Screening Mistakes You Don’t Want To Make

tenant screening

Tenant screening is the ‘life blood’ of owning rental properties in Beaverton, Portland Oregon or elesewhwere nationwide.

Sadly, many landlords make the mistake of not doing enough during the tenant screening process, or they ask the wrong questions and end up with unqualified tenants.

Before screening your next tenant, read these top tenant screening mistakes that you don’t want to make

Tenant Screening Mistakes To Avoid

1. Opting out of screening altogether

It’s tempting to allow applicants to skip the screening process, especially if you’re desperate to place the renter (the unit has been vacant). Still, it’s in your best interest to screen properly, even if it means letting the property sit empty for a few more weeks.

Let me give you a personal example.

I bought my first multifamily housing for $85,250. I put $15,000 into it, and the renovations were finished the day before Thanksgiving.

Want to guess how many people move between Thanksgiving and New Year’s Eve?

Yeah, not many.

I finally got a serious inquiry the day after Christmas from a woman named Kelly.

I decided not to charge an application fee, and I told this applicant to just print her free credit report from annualcreditreport.com.

She emailed me back and said she was having problems getting the credit report, but she knew it wasn’t good. I asked for a phone number so we could talk, and she emailed me back to say that Verizon wouldn’t let her have a cell phone because of her credit score.

I asked what her credit score was, and she was right about it not being good—it was 480.

By way of reference, I’ve seen people go through bankruptcy with a credit score of 550.

But here’s the deal: She had the first month’s rent, and I needed someone in this place months ago.

So I let her have the place. She promised she would get me the deposit within a month.

Shocking as it will be for some of you, she didn’t pay rent on time, and I had to evict her.

The moral of the story is this: No matter how desperate you are for a tenant, do NOT opt out of the screening process—in fact BiggerPockets makes it easy to screen tenants with their partner, RentPrep. Get the credit checks early. In the long run, it will not only save you money but also from having to take too many aspirin to ease your headaches.

2. Choosing an inaccurate screening service

Unfortunately, not all screening companies are created equal. Is it better to go with automated, instantaneous screening results or hand-gathered and verified results that take a longer period of time?

Princeton study found that human nature tends to choose instant gratification over sound decision-making. David Laibson, a professor at Harvard University, expounds upon this study, stating, “Our emotional brain wants to max out the credit card, order dessert, and smoke a cigarette. Our logical brain knows we should save for retirement, go for a jog, and quit smoking.”

When it comes to tenant screening companies, they are built to maximize profits, which means satisfying the emotional brain seeking instant gratification.

A good example is if someone invited you over for a meal and gave you the choice of a good home-cooked dinner or a packaged microwavable dinner. Which one would you choose? Most likely, you would be willing to wait for the homemade dinner because you know it is the healthier, better option.

However, when choosing a tenant screening company, landlords don’t have a frame of reference for instant background checks. So, they will choose instant gratification because it appeals to the emotional brain.

Instant solutions use less data and are saturated with errors and false positives regarding a tenant’s background since there’s no set of eyes to double-check the work. Instead, you will want to opt for a company that ensures an accurate screening report because they:

  • Manually access databases
  • Hand-compile reports
  • Fact-check the data for compliance

So, just like a home-cooked meal, your best option is to wait for those accurate results.

3. Not reading the credit report

This may go without saying, but if you are going through the entire process of getting an accurate credit report, make sure you actually READ the results.

While the credit companies do us this great service of condensing a person’s entire credit history into a single number, keep in mind that each person and their set of circumstances is unique and should not solely be reduced to a number.

For instance, if the applicant’s credit score is low because they have one huge debt that they ignore because they know they’ll never be able to pay it off, yet they still pay all of their monthly bills, then this person is still a great tenant option.

Another thing to keep in mind is don’t trust an applicant to bring in evidence of their own FICO score. Allow me to introduce you to a little program called Photoshop. Yes, people do use it to fake all kinds of documents. Never trust a tenant’s paperwork—it exists to be verified, not to be used as-is.

More on Bigger Pockets

Contact Rent Portland Homes – Professionals

For more property management tips, or to learn more about the services that we can offer you, contact Rent Portland Homes – Professionals today by calling us at (503) 447-7735 or click here to connect with us online.