Why tenant credit check is important for landlords?
Remember, it is your investment that you need to protect from a bad tenant. It only takes one bad tenant to make your life miserable.
Today’s world is a lot more uncertain than it has ever been before. For a variety of reasons people now migrate from place to place a lot. This puts landlords and property managers in a challenging position when it comes to choosing the right tenant for their vacant property. Proper tenant screening is important to identify a good tenant that is good for your property.
Property owners want to make sure that the tenant will pay the monthly rent on time, will keep the property unit in good condition or as a bare minimum, will not destroy the property. However, how would you know who is the right person to hand over the keys of your investment property? How would you know their previous rental history, if they are employed or have not been evicted from a previous rental property?
Property managers or landlords should not judge a prospective renter by their outfit or behaviour or by meeting a few times. You must do a thorough background check using the best software tool available in the market. Imagine renting out your property to a sweet talker. Because of his polite behaviour and sweet talk landlord was convinced to give him an extension on monthly rent payment and he disappears one fine night without paying rent and leaving the house an absolute mess.
Property owners do not like vacant properties. After all, it costs a lot of money to purchase and has fixed monthly maintenance cost including mortgage payment. If a property is vacant for a month, owners not only lose the expected profit from the rent but the capital investment as well. So, landlords rush to rent properties without proper tenant screening. However, by doing that they basically put the property, rental income, and possibly surrounding neighbours at risk. Proper background check can help owners avoid certain types of risky tenants and minimize risk on their investment properties.
The “Professional Tenant”: The “professional tenants” are the one who clearly understands the clauses of Canadian ‘Residential Tenancy Act’ those go against residential landlords and their goal is to live in a rental unit without paying rent for the longest time possible. These ‘pro renters’ understand the complicated process of tenant eviction and take full advantage out of the situation.
Usually, a professional tenant will have a lot of eviction notices on his or her record and the screening report will easily prove to be an effective method of avoiding such tenants, thereby reducing the risk to the landlords and their properties.
Check for the Wrong Fit: A landlord should be careful to rent someone who might not be a good fit on the same premises. For example, you have a condo in an area that is full of seniors. Placing a tenant with young kids might create a problem for them. So, asking about family members and meeting with them could be a good idea.
Income verification: Rental business depends on the monthly rent income. One month of miss payment could double up pressure on the investors. This is especially true for small investors who might have borrowed capital using a line of credit or group investors who could have created capital funds from their personal savings. Nowadays, there are many online tenant screening tools to verify the income of prospective renters.
Police record: Renting to a tenant with police record is the last thing a landlord would do, unless too desperate to rent the property. I am not judging a person regarding their police history. Do not get me wrong, however, there is astigmatism when someone finds out that neighbouring tenant has a police record. If you like a prospective renter with police history, do more investigation. With him or her permission perform enhance background check. If he or she does not want to give consent for an enhanced background check, then avoid renting to that prospect.
Social liars: Many times, people lie on or hide different matters just to sign the rental lease agreement. For example, you do not want to rent the property to a pet owner. When asked about pet ownership, renters might lie having a pet, because they know that once the lease is signed, they cannot be evicted for having a pet according to the residential tenancy act in many Canadian provinces. The good news is that there are some Artificial Intelligent (AI) powered tenant screening services that can validate this information for you.
A tenant background check is very important in the rental business in any country. Yes, it is really tempting to rent a vacant house or condo as quickly as possible but sacrificing tenant quality can be harmful to your business. You can now perform enhanced tenant background check for free which includes Equifax credit report, eviction report, rental history report and much more. Remember, it is your investment that you need to protect from a bad tenant. It only takes one bad tenant to make your life miserable.