December 30th, 2008
titleCredit Checks For Rental Properties - The Key to Landlord Tenant Screening/titlepAs an attorney and real estate investor for over ten years, I have learned (the hard way) that the pennies you save up front by foregoing a proper credit check and/or tenant screening could cost hundreds or thousands of dollars in lost rent, damages, and repairs./ppbProper Tenant Screening Is the Key To Protecting Your Real Estate Investment/b/ppI have found over the years that applicants with positive credit histories are much more likely to be good tenants. These applicants pay their rent, take care of the property and generally value their reputation. To the contrary, those applicants with negative credit histories are much more likely to:/ppul liFail to pay their rent in a timely fashion;/li liHouse unauthorized pets or additional tenants in violation of the lease;/li liFail to keep the rental unit and appliances clean and undamaged;/li liConduct unlawful activities on the premises./li/ul/ppNow that I conduct a proper tenant screening, including a credit check for my rental properties, I have been able to minimize my property management nightmares./ppHere are my tips for tenant screening:/pul liAlways get an application. Make the tenant fill out an application and return it to you at a later time. Generally, where a tenant that goes to the trouble to fully complete the application and return it to you, he demonstrates a certain degree of responsibility./liliInform the tenant of your intent to run a criminal background and credit check on him in conjunction with presenting the tenant the application. Tenants with adverse criminal or credit histories will not bother filling out and returning the application to you./liliCharge a nominal application a target=_blank href=http://www.ehow.com/how_7450_run-credit-checks.html?ref=fuelutm_source=yahooutm_medium=ssputm_campaign=yssp_art##fee/a to help cover the costs of running credit checks on prospective tenants. A questionable applicant is less likely to spend the money where he knows that the results will be negative./liliVerify the applicants employment status and bank information. Contact employers and financial institutions. Contact former landlords as well./liliOrder credit reports. Submit requests to major credit reporting companies such as Equifax or Trans Union. Verify the applicants credit history and possible evictions or convictions./liliWhen the tenant arrives, try to peer into the window of the applicants vehicle. A messy car is indicative of a messy rental unit./liliIf the applicant requests to pay the deposit in installments, I have found that this indicates that the applicant will have trouble paying rent in a timely fashion./liliWhen interviewing a young applicant, give preference to applicants that show up with parents. They may be an additional source of rent if the applicant defaults. They can be added to the lease as a guarantor./liliDo not accept pets. No matter how little they claim the dog is, you will go to the unit and eventually find a pit bull inside./liliDo not believe stereotypes. It is false that persons of certain races and creeds make better tenants than others. Good and bad tenants come in all colors, races and creeds. Judge them according to their past actions, not the color of their skin./liliDo not discount HUD. In my experience HUD tenants have been my best tenants. The tenants take care of the property because they do not want to be evicted and removed from the HUD program./liliALWAYS, ALWAYS, ALWAYS run a credit check for your rental properties. The few dollars spent up front will save you hundreds or thousands later./li /ulpDouglas E. Manning is an attorney, entrepreneur, real estate investor, and personal development coach. Learn more about conducting credit checks and tenant screening at a TARGET=_BLANK href=http://www.squidoo.com/Credit-Check-For-Rental-PropertiesCredit Check For Rental Properties/a on Squidoo./pbrbr