Tenant screening is one of the most important parts of the leasing process but a new survey of Do-It-Yourself (DIY) landlords shows that your neighborhood may be in danger.
Have you ever wondered why some property owners/managers require personal information such as credit reports and a personal background check on ALL people over the age of 18 and some don’t require much at all? Why do some landlords require references, personal and past landlord information and even request income verification while others are more relaxed and satisfied with just meeting you? Often it can be a tell-tale sign in the difference between a DIY (do-it-yourself) landlord and a professional property management company. Thorough tenant screening can help avoid problems in the future such as late rent, damage to the property, and evictions.
Conducted by an independent Boston based research firm, Liminality Inc., the survey included a national probability sample of more than 150 DIY landlords nationwide and showed some disturbing statistics concerning the lack of tenant screenings, which included criminal background checks:
- Only 44% of DIY landlords conduct sex offender checks
- Only 51% of DIY landlords conduct criminal background checks
- 23% of DIY landlords sometimes or never conduct credit checks
- Only 51% of DIY landlords contact past landlords for references
Why are background checks so important for our neighborhoods and communities? Without thorough screening, criminals can easily move in next door completely undetected, potentially putting families at risk. It is always a good thing to get the full picture. Laws are ever-evolving, a recent memorandum was issued by the U.S Department of Housing and Urban Development. It was in regard to prospective tenants when the criminal background is part of the qualifying practice for Property Management businesses.
A survey was conducted on behalf of Real Property Management Excellence and found that 21 percent of DIY landlords sometimes or never conduct background checks on their prospective tenants. The survey also shows that DIY landlords have lenient or non-existent policies when it comes to tenant screening. Do you really know who lives next door?
Verifying income, references, previous landlords, and conducting credit and background checks are just part of the process and system that a professional property manager will have in place before they consider leasing to a potential tenant. Qualifying a tenant is not an emotional decision for the professional manager, because it’s a business decision. The property manager knows the importance of the screening process which most likely yields a good, quality tenant who will take care of the home, pay their rent on time and not be a risk to the neighborhood.
A common problem many DIY landlords face is not having the essential resources or knowledge for properly managing their rental property. Understanding the many tenant-landlord laws, Fair Housing Regulations and guidelines, knowing what questions to ask and not to ask a potential tenant and where to go to perform criminal background and credit checks can be overwhelming for any landlord.
When an undesirable person learns their background will be checked, they turn to a property owner who is not so diligent. Because there is no tenant screening process in place and no rental standards, many DIY landlords tend to just listen to their gut feeling about a potential tenant and rent to the “nice couple” with the “clean car” and “fancy clothes”.
What they don’t know is that many renters prefer DIY landlords because of their leniency and purposefully avoid professional management companies because they have something to hide, whether it’s bad credit, an eviction, or a criminal background. And because all too often the DIY landlord is caught in the ongoing struggle of paying two mortgages, they can become desperate to find a renter. Do not turn a blind eye to red flags like, “Can I pay the deposit in two payments?”. DIY landlords get caught up in the stories, people tug at their heartstrings, and it costs them to not follow a process or at least look into these potential tenants from a credit, income, and criminal standpoint.
Of course, you can’t tell who has a criminal record by just looking at them, and oftentimes, the neighbors are more concerned about the upkeep of the neighborhood and the curb appeal of the rental home. While those concerns are important for property values, appearance shouldn’t be the only criteria. A good and professional property manager will consider the applicant on paper first and having high rental standards in place ensures a quality tenant. Income criteria, pet standards, and deposit requirements are a few rental standards that should be set in place and upheld each and every time you need to find a new tenant.
It is a common practice for some DIY landlords to forgo a full deposit payment upfront in order to quickly secure a tenant who is ready to move in immediately. These landlords sometimes have financial problems due to the property sitting vacant, so they rush through the process out of desperation, possibly renting to someone who will likely have trouble paying rent on time. In the end, this becomes a costly choice simply because they didn’t do the footwork in the beginning.
A landlord’s job is not easy, especially for those who live out of state or a significant distance away from their rental home. Many rental homeowners are opting to hire professional property managers, like Real Property Management Excellence, because the everyday stresses, like tenant screening, showing a home, rent collection, Fair Housing laws, repairs, and evictions are too much to handle. No landlord purposefully wants negligent tenants or criminals living in their home or endangering their community, but it happens, and as the survey has shown, it happens more often than we realize, especially among those who are not disciplined about background checks.
We are pledged to the letter and spirit of U.S. policy for the achievement of equal housing opportunity throughout the Nation. See Equal Housing Opportunity Statement for more information.
