Having a bad tenant is a landlord’s worst nightmare. However, it is very difficult to spot bad tenants even if they are properly screened. Applicants tend to put their best foot forward and try to hide the factors that would make them fail a tenant screening. This is precisely why the tenant screening process is essential and property management companies need to have a property tenant screening process in place to be valuable to property owners.
The screening process can vary widely depending on which property management company that you choose. It is important to find out how much protection your property management company will provide to you and what they will do if tenants, later on, turn out to be bad tenants. Be sure to be clear on a property management company’s eviction policy as well to be able to recover from a tenant screening that fell through the cracks. It is wise to ask for a copy of the rental application they use to see what qualifications they are looking for from tenants and to be sure they are asking the right questions.
Be sure to ask the following questions to assess what sort of tenant screening process and protection a prospective property management company will provide you:
Will They “Hold” a Property for a Tenant, and Take it Off the market Before a Lease Is Signed? If so, Do They Charge a Fee?
There should be a fee so that you are protected if the lease signing falls through. Ideally, your property should not be taken off the market until a lease is signed and the deposit is paid in full. Your property management company should try to get as many qualified applicants as possible before trying to take your property off of the market. This way, they have a list to call in case a prospective tenant backs out.
What Systems Do They Have in Place to Protect Against Rental Scams? Have They Ever Been Tricked By One?
Rental scams have become more common. What will happen is they will copy your advertisement, break into your home, and show the unit so they can collect a security deposit and run. This is why not revealing the unit’s precise number is wise and also why it is best to not use a lockbox to show your unit.
What Methods Do They Use to Screen Tenants?
The more comprehensive units they use to screen tenants, the better. Former landlords should be contacted, income, employment, credit report verified, personal references should be contacted, and the application information should be verified for authenticity. There should also be a check for no bankruptcy or evictions. There are many tricks in this area and the property manager needs to have their tested methods. If they are using a third party for tenant screening find out who and why they use them instead of doing the tenant screening in house.
Which Tenant Qualifications Are Most Important to Them? Will They Consider a Tenant Who Meets Their Qualification in Some Areas But Not in Others?
Ideally, you only want people who are serious about their job or schooling to be brought into your property for a showing. The lesser an individual has to lose in life, whether it be career, family, money, personal pride, or reputation, the less you can expect from them as a tenant.
Do They Provide You With Tenant Information So You Can Approve or Deny Each Tenant?
This may sound ideal but in practice, it is not a wise idea. Tenant screening is what property management companies have expertise in, and it is what you are paying them for. If you don’t trust them to perform this critical function, then you should hire someone else. When owners get involved in the screening process, the possibility of discrimination increases. Fair housing violations lead to lawsuits that can cost a great deal of capital. This is a substantial liability for both you and the property management company. Allow the property management company to handle all tenant applications and screening processes for your protection.
Do They Shift Their Approach if They Are Attracting the Wrong Applicants?
It is quite simple for a property management company to advertise and receive applications. What is not easy is to receive applications from several candidates that meet the property owner’s desired criteria. When working with a property management company, you want them to be proactive on your behalf. What this means is that they need to be assessing whether their current marketing efforts are working in securing the right kind of applicants for your property. If their advertising is attracting the wrong candidates, then they need to shift gears until they are getting at least two or three potential realistic candidates for your property. The property management company that you choose has to know that if you have a bad tenant, they also have an additional headache that they do not want. Ask property management companies that you are interviewing about their approach when they are running into roadblocks in the tenant recruiting and screening process. By doing so, you will have a clear picture of how much your property management company is going to be an asset to you in the future.
Other Important Miscellaneous Questions to Ask
- What do they charge tenants for their application fee?
- Do they require the application fee to be paid in certified funds?
- Do they require each adult that will be renting to complete their application?
Screening your tenants is something that needs to be carefully managed. One of the only ways you can be sure that a prospective property management company will be the right match for your needs is to examine the organization’s background, staff, size, customer service, portfolio, and qualifications. To learn more about how to properly examine a potential property management company that you may want to work with, review the next section of our guide.