When screening tenants for your apartment building or condominium, make sure you are in compliance with federal, state and local ordinances. When running a credit report on a potential tenant, you must follow the Federal Fair Credit Reporting Act. Make sure you obtain a signed disclosure and release form from the potential tenant before running the credit report. Depending on your location, if the potential tenant is paying the screening fee, make sure you are in compliance with local regulations regarding price and stay transparent by given them an itemized receipt for the screening fee transactions. Some locations have a maximum amount you can charge a tenant, so check locally and assure you are in compliance.

What to do before you apply for an Apartment
For tenants, we recommend checking your credit report you apply for an apartment. If there are any discrepancies on your record, clear those up as fast as you can. You are able to dispute charges on your credit report if you believe they are incorrect. You can also attach a personal statement to you credit report explaining anything you believe requires a good explanation. Be aware of what is on your credit report, including bankruptcies, tax liens, civil judgments, which are public records, and also any unpaid bills. Don’t be caught by surprise while you are applying for the apartment of your dreams, or worse, be in a desperate situation and need an apartment, today. Clean up your credit situation and be prepared to explain any discrepancies to the management company. Make your bring in the management company or landlord information from your previous locations, and make sure they will be good references for your past rental history. Following these steps will help you obtain that apartment.

In these times of recession, you’re bound to see poor credit scores and derogatory credit information on your potential tenant’s credit reports. Many tenants are property owners who are somewhere in the mess of foreclosure or attempting a short sale. They can be desperate to find housing and that’s why they are applying to rent your property. One thing to be aware of are tenants who claim their poor credit score is due to their foreclosure strategy. In order to qualify for a loan modification they actively refuse to pay their mortgage and thus their score suffers. They claim they really are sound financially but are strategy trying to get off mortgage. If this is true, consider the implications. No matter how unfair the mortgage situation might have been for them, the fact is they are refusing to pay a financial obligation that they agreed to. They read the loan docs, (or they were supposed to) and a notary notarized their signature. Even if you agree that their situation was unfair, do you agree with their payment strategy? Now consider if they have elected not to pay a large bank with the full weight of a huge financial institution behind them, why would they pay you, a property management company, or a single property owner?   Proceed with caution.

While many property managers run tenant credit checks on prospective tenants, they are many other background check searches that provide additional insight into your tenant’s background.   First off, a credit history report is a valuable tool for evaluate your tenant’s past fiduciary responsibility.    You will see a FICO score, giving an overall portrait of your tenant’s creditworthiness, as well as any public records such as bankruptcies, tax liens, and civil judgments, and any open trade-lines and any charge-offs.  You can determine how much they are paying on monthly credit card bills as well as other long term loans such as auto loans, real estate, school loans, etc.   Calculate how much they are paying on a monthly basis, then compare to the pay stub they provided to you.  Does it add up?  If it doesn’t, proceed with caution.  

Employment Verification

If you are concerned about the pay stub’s validity, verify your candidate’s employment status.  You can contact the employer directly, or use a third party background verification service such as Corra Group, to contact the employer and verify job title, current job standing (is the tenant laid off, and they handed you an old pay stub?) as well as salary information.   Employers are increasingly not releasing compensation information, but verifying the current employment status should be good enough for your purposes.

County Civil Lawsuit Searches

You might find it a good idea to check for County Civil Lawsuit Searches in the areas where your candidate has resided.  Check the Credit History Report header which will show your tenants previous addresses.  Check the courthouses in the area where they have lived, the Civil Higher and lower courts.   You’re looking to see if your candidate has been listed as a Plaintiff in any civil matters.  That means the tenant has filed a case.  If they are listed as a plaintiff in several cases, proceed with caution.  You may be the next defendant.   If the tenant is listed as defendant, check out court records and find out why the subject is a defendant.  Was it another apartment management company?   It’s good to know what you are dealing with before the property is rented.

Thought we’d share with you some video that a landlord took of the inside of apartment, showing apparent damage caused by a tenant. Interesting discussion from various landlords, including the idea that you should inspect your property every six months to keep tabs on the condition of your asset.   Keep in mind that tenants who get evicted don’t have much of an interest in cleaning up the property before they leave.   We recommend you screen your potential tenants for previous eviction records before you allow them to move in.  While you cannot predict what will happen once they move in, at least you will know if they have a history of evictions.

 It’s also important to contact their previous landlords and see what additional information can be gleaned.  Hopefully you will find a good tenant. Good luck!

Some readers have asked some important questions regarding the effectiveness of background checks in the tenant screening process.   One major issue to trying to figure out an accurate, current portrait of your tenant’s fiduciary and social responsibility.   What happens if you run a credit report that shows low risk, good credit?   They might have great credit up to the moment, but do they still have that job?  Are they still receiving a paycheck?    Even with a signed release form it can be tough to obtain the information you need to make a wise decision about your tenants. 

Credit Reports:  In the recession, it is not enough to review a prospective tenants credit report.   You need to verify that your tenant can continue to pay the rent.   Make they sure they sign a release form and obtain employment and income verification.   Some employers are hesitant to provide information about their employers work performance but they will provide employment status, position, and sometimes date of hire.   Ask your tenant to provide you with a current pay stub.   You should be able to tell from the paystub how long they have been working for the firm.  Cross reference this with employment verification.   A good background checking firm, such as Corra Group, can provide a thorough employment verification for you and will get all the information that an employer is willing to release.   They can also provide access to credit reports at a reasonable price.  Keep in mind you will need to pass an onsite compliance inspection that usually costs around $57.00.    Depending on how many units you have to rent, this may be worthwhile.   Also, you can charge the cost of the credit report to the prospective tenant.   If the tenant brings in their own credit report, try to determine the chain of custody.  Perhaps they order it on their laptop in your office?

If you are having trouble getting any information from previous landlords, you may want to par down a bit and just try to verify length of residence.  Then run an Eviction Search on your prospective tenant to determine if any problems occurred.   Between the eviction search, paystub, verified employment and residence, you should have a good portrait of your prospective tenant.

Payment Terms-  Renters have been paying later and later in the month, eking out precious days to save month.  Make your maintain strict compliance with your rental agreement and subject to the laws of your community, state and country.   Maintain correspondence with your tenants and enact late fees as needed. Stay out in front of a potential problem by keeping those lines of communication open.   If you suspect there’s a problem, learn your rights.  Study your landlord laws and determine what you can do and when you can do it.   For example, you might want to determine if your  tenant has totally vacated the premises.  Determine what is your legal right to inspect.   As far as receiving payment from tenants, most people hate having to obtain an official check or cashier’s check each month.  If your tenant has shown good faith in the beginning, try allowing them to pay with a check, they will appreciate it.  If it bounces, move back to cashier’s checks.  If your tenant can pay with direct deposit, try to make it an automatic deposit that occurs on a certain day of the month.   You will appreciate the consistency and so will your tenant.  Their may be fees associated with the automatic deposit, and again, you can pass the cost onto the tenant.  Also, there are services that allow tenants to pay over the phone, with credit card, etc.  you can provide your tenants with this option.

Good luck and happy renting!!

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According to CBS, a resident in Chicago has been sued by her management agency for posting a Tweet on Twitter accusing her management company of being OK with moldy apartments.   The suit alleges that the twitter post is a defamatory statement.

Search of the subject’s name on Twitter shows the dialogue is just starting about this subject.   Currently her name is becoming a cautionary tale among twitters, but it should be curious how the case plays out. 

From a tenant management perspective, a business should always consider the ramifications of a defamatory lawsuit.  The CBS article about the lawsuit has reached the lofty Internet heights of the Drudge Report and presumably the whole world is now aware of the situation.   Had the company done nothing the defamation (if real) would have been limited to her twitter followers.  Now with the media falling in love with Twitter and composing non-stop love puff pieces about its technology, this management firm has become a potential worldwide tweet target for an army of  tech-heavy populists.  Some public relations professionals content that even bad news is good news (but they might be just selling their Crisis Management capabilities)   The lawsuit might force the tenant to stop tweeting, but the unintended bad PR might sink the firm.

We all have horror stories about nightmare tenants; sometimes no matter how promptly you provide service and repair, your tenant will continue to complain and complain, etc.  We remember a recent decision by Sprint Wireless to cut off 300 of its own customers.   After a study of their customer relations Sprint realized that these 300 users were responsible for a huge amount of their customer service budget. By cancelling their business relationship with these customers Sprint saved money and was able to provide better customer service to their remaining millions of customer who do not hassle their customer serciceagents.  With this in mind it might be worth considering how much your nightmare tenant is costing you.

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Chicago Sun times discusses the pros and cons of renting out your old home while you wait for it to sell.  In this tough selling environment, renting your home can be a good source of income to cover the mortage.  However, becoming a landlord can be a time consuming task if you haven’t done it before.

Rental income can cover some or all of the mortgage payments, freeing you from having to dole out the entire amount each month. You might even make a profit if your monthly expense is low enough.

The problems arise from the human element of dealing with your tenants.  It’s best to learn the local laws regarding your rights and responsibilities.

Disputes with tenants over tenant rights and unpaid rent could require legal representation and legal fees. – State, local and federal statutes must be understood and followed, with failure to do so often resulting in fines.

Always establish and maintain lines of communication with your tenants, and make sure they understand the terms of the lease.  One of the best ways to protect yourself from problem tenants is to run background checks on them.   With a signed release, you can run your prospective tenant’s credit history, criminal history, and eviction records.  Most background checks for tenant screening are instant, but you can also conduct a more thorough review of county house records if you feel it is important.  The credit report will provide you with valuable information about your tenant’s financial responsibility.   

 
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Whether you are a large industrial and commercial landlord with offices all over the country, or the tenant with a house or a couple of apartments to rent out, Tenant Checker is designed to service all your needs.
Tenant Checker is powered by Corra of the Corra Group, the company responsible for employment background checks and corporate investigation and research.
Welcome one and all.
As you all know, renting to the wrong people can be a costly error. There are costly legal considerations, exposure to litigation and any number of occurrences that can aggravate your day.
So check them out before you rent.