“This article mentions several tips as to screening that can assist in minimizing risk. The article not only recommends utilizing background checks but, also fraud checks. I urge readers to review their screening process and make changes as needed. As always if I can be of assistance they can contact me direct at 810-714-4513 or email@example.com.”Charley Staab, CIC
As a landlord, you likely perform some type of tenant screening to help identify tenants that protect your investment. But, do you really utilize the best tenant screening processes? How can you be sure? Statistical information shows that despite actively screening tenants, landlords often don’t do enough to mitigate risk. To a landlord, risk is real and always looming. In our current economic climate, you know that no matter how careful you are there is always risk and something may happen. Any tenant can default on a lease and not pay rent.
Some investors managed to generate profits even while the market has struggled to recover. How? By sticking to some simple tenant screening and being proactive.
A recent My RIE Advisor webcast discussion with industry experts titled “Tenant Screening Best Practices” illustrated how fraud and lax tenant screening can negatively impact a landlord’s time, resources and finances. However, the discussion also highlighted tips and strategies landlords can use to avoid these pitfalls.
According to one expert, applicants who have something to hide are very good at using tricks and fraud to hide or misrepresent information that may clue you in on their previous bad behavior. For example, eviction records are only associated with a name and not address, and in some cases, it can be difficult to match common names with default legal action without a social security number or date of birth associated with that default action. To complicate matters background checks for criminal records are not linked to an address, only to a name and date of birth.
People skilled at fraud commonly use maiden names or exclude dates or digits in their date of birth or addresses and become adept at misstating information to try and pass a tenant check.
While background checks search records, it has progressively become more important to run checks to detect fraud as well, which include cases of identity theft. More advanced background and tenant check software is able to detect fraudulent activity and raise potential red flags allowing landlords to be more diligent in their screening. Searches utilizing various combinations of the applicant’s information can identity inconsistences in applications, credit reports and public records.
In conjunction with proper screening and hiring a skilled property manager, consider rent default insurance and take comfort in knowing you are protected against rent default. Even with risk mitigation steps, there’s always a chance that the unknown will happen and a renter will stop paying rent, costing the property owner and property manager in lost rent and legal fees for eviction. The insurance reimburses landlords for unpaid rent in the event of a covered default, as well as up to $1,000 reimbursement of certain legal costs for eviction becomes necessary.
From: Tenant Screening Best Practices by Aon Rent Protect
Apartment Management Magazines , volume 48, Number 10, October 2013