The Importance of Tenant Background Checks
Are you planning on investing in your first Portland Oregon rental property? If so, even though you may be eager to rent that property out ASAP, the reality is that you can’t rush the screening process, especially when it comes to background checks in Portland Oregon.
Background checks are important because they ensure that you will screen the most qualified tenants and avoid renting to individuals who are not qualified.
Sadly, despite the wide variety of resources that owners can use for background checks, many owners still are ‘on the fence’ about background checks and they skip this important part of the tenant selection process.
In this article, we will offer you several reasons why background checks are important, and we will also offer you tips that you can use for successfully checking the background of tenants for your rental property.
Background Checks Bring Long Term Tenants
One of the most important things that you want as an owner is long term tenants because this ensures that you won’t have to go through the tiresome process of screening and placing new tenants every couple of years.
Protects Your Best Interests from Liabilities
Another important aspect of conducting tenant background checks is that they protect your best interests and help you to avoid the hassle of renting to someone who could potentially be a troublemaker or liability at your rental property.
Eliminates The Chance of Renting to Evasive People
Tenant background checks are also effective at potentially stopping evasive individuals from renting from you as well because they know that the background check could potentially expose something that they are hiding once you review their history.
Remember, for your best interests, and the safety of your tenants, it’s always advisable to check the background of each tenant even if they urge you to do otherwise because you don’t want to violate Fair Housing Laws.
Provides Insight into A Tenants History
Let’s face it, we all have a past, and the background check will reveal a tenants complete past including if they’ve moved every couple of years, changed jobs frequently or if they have a high debt to income and may not be able to pay their rent on time each month.
Taking that deep dive into the tenant’s history will also help you to know if the tenant had to move due to their job and you will be able to analyze their complete history, rather than only making a decision on their application based on what they listed on their rental application.
Tenant Background Check Tips
#1: Develop Written Qualification Criteria & Document Them
As a landlord, you have to decline an applicant from time to time. Sometimes, that applicant may be a member of a protected class under federal or state housing regulations. If an applicant accuses you of housing discrimination, you’re going to want to be able to show them a race-neutral, gender-neutral, disability-neutral, familial-status-neutral criteria written in advance. And of course, you’ll want to be able to show how the plaintiff didn’t meet these perfectly legal tenant screening criteria.
#2: Verify Income Sources
A generation ago, it was very difficult to create a fake pay stub. However, now that everyone has a computer, a scanner, and photo editing software, it’s a snap to forge or alter a pay stub. Sites like www.stubsamples.com and www.speedystub.com allow small business owners, contractors, and others who are frequently paid in cash—many of whom are legitimate applicants—to create their own pay stubs. However, it’s a simple matter for anyone to generate entirely fraudulent pay stubs for the purpose of deceit.
To reduce the risk of being conned by a fraudulent pay stub, consider asking for three months of bank statements as well.
#3: Check Out Social Media Profiles
If you can find the applicant on Facebook, Instagram, or LinkedIn, take some time to scroll through their account. Does their information match their employment and residence history? Are there references to committing a crime or being incarcerated? Do they affiliate with any hate groups or gangs? Know the warning signs.
#4: Contact Two Previous Landlords
Remember, their current landlord may speak of them in glowing terms just to get rid of their worst tenant. If the tenant is trashing the place, is a chronic late payer, or is generating complaints, the current landlord has every incentive to give a superlative reference just to get them to pack up and leave. Call their previous landlord, if possible, to get a less biased reference.
#5: Run a Background Check on Each Adult Applicant
Both spouses and roommates should get their own background check. Stay alert to attempts to substitute a relative’s background check information in place of the actual applicant.
#6: Don’t Offer Leases Without a Completed & Signed Rental Application
Often, someone who fails to complete an application in full is hiding something. If you need to conduct an eviction down the road, you may need that application in order to show that the tenant lied. If you allow them to turn in an incomplete application, you open yourself and your other tenants up to risk, and you lose important documentation if it comes to an eviction.
#7: Don’t Make Written Comments on the Application Other Than Those Pertaining to Your Rental Criteria
A comment like “Credit score of 560 is less than the 620 required” or “Income is less than the $4,000 per month required to rent” is fine. However, if a plaintiff’s attorney gets ahold of the tenant’s application and finds that you’ve written “Two small children” on the application, that’s probably enough for them to go after you on a housing discrimination claim.
#8: Hold on to Applications for Several Years
The specific time frame depends on the statute of limitations in your state. However, be sure to keep them under lock and key. These records contain sensitive, personal information on each applicant that they’re depending on you to secure. Access to these records should be on a strict need-to-know basis.
#9: Beware of False Positives
If a tenant has a common name, it’s relatively easy for an innocent person to get flagged. If an otherwise good tenant is coming up hot on a criminal background check, look at the mugshot and basic biographical info to be sure that it’s the same person.
#10: Use a Property Manager
A professional, experienced property manager offers important benefits for the landlord. First, you don’t have to spend time dealing with unserious or unqualified applicants. Second, a qualified and experienced property manager is likely to stay up to date on the evolving laws and regulations that govern housing discrimination. They can prevent landlords from making common mistakes, like posting discriminatory language on housing ads that can cost careless landlords tens of thousands of dollars in fines and court costs. Third, if the property manager makes a mistake, they generally carry substantial errors & omissions insurance that can protect you if their error results in liability to you as the landlord. This is a vital consideration. You can ask for proof of E&O insurance when you interview and contract with a property manager.
Contact Rent Portland Homes – Professionals
At Rent Portland Homes – Professionals, our team will save you the time, money and hassle of conducting background checks yourself.
You can count on us to screen and place the most qualified tenants in your rental property.
Besides background checks, we also offer full-service property management including dispossessory eviction, rent collection, maintenance, customer service and more!
Learn more about the services we can offer you by contacting us at (503) 447-7735 or click here to connect with us online.
