Tenant Screening – Things Tenants Won’t Tell You! (Part 5 of 5)

October 26, 2009

Landlord Tenant Relations

Tenant screening can sometimes be very time consuming if you do a thorough job of it, but it’s well worth your time if it prevents you from having to evict your renters in the future.   Don’t misunderstand me – most applicants I’ve encountered are great and honorable people, but sometimes you come across a bad apple that will end up costing you thousands and thousands of dollars.  If you want to learn how to avoid these “bad apples”, tune in for the 5-part daily series about tenant screening.

Once all of the information listed in Tenant Screening – Don’t Let Them Lie To You! (Part 1 of 5) is collected, here’s how I proceed with verifying it:

Tenant Screening – Always, Always, Always Review the Credit Report:

The information you discover on the credit report can make or break the deal.  I give credit reports about 50% of the total weight in my decision making, regardless of how well everything else checks out.

Sometimes there are judgments or evictions your prospective tenants did not tell you about.  They could have credit card payments amounting to almost more than their total monthly income.  Or you could find out that even though the prospective tenants have high earnings, they have never made one payment on time, and have a large number of collection accounts on their record.

Tenant ScreeningIn general, I evaluate each credit report on a case-by-base basis.  I overlook certain conditions, such as medical bill collection accounts, if it is obvious that the applicant had a medical problem and could not work for a period of time.   If there are other bills that were accruing during that time period, I might overlook those, as well.

One of the other things I might give renters some slack for is a foreclosure of a property purchased during the peak (2005/2006).  To confirm that it was a purchase and not a refinance, I do access the tax records once again.   If the property was refinanced, as opposed to purchased, it tells me that the applicants are not handling their finances properly, and I most probably will NOT approve their application.

This concludes our series of Tenant Screening tips, but I would welcome any additional tips or comments you might have.  Sharing this type of information will hopefully save us, landlords, lots and lots of money over the years.

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