Sometimes, you may rush your tenant screening to fill a vacancy fast. However, you may end up with a bad tenant who is expensive to manage. Taking your time to screen a client will save you a lot of money.
According to reports from Shelterforce, about 90% of landlords use some form of screening technology to select tenants. While tech makes screening fast, you shouldn't rush the process. It's better to have an empty house than have a bad tenant.
An empty house will only cost you a month's rent. However, a bad tenant can cost you thousands in unpaid rent, repairs, and legal fees. Verify your prospective tenant's income and rental history before you give them keys to your house.
Why Is a Bad Tenant More Expensive Than a Vacant Unit?
An empty unit hurts because you lose a month's rent. While it's bad, the loss is known and predictable, unlike a bad tenant. Here is why a bad tenant costs more.
Eviction and Legal Costs Add Up Fast
Evictions aren't cheap. NC Newsline reports that you can spend about $2,500 to $8,000 on average for a single eviction. If you get a bad tenant, you'll have to spend money on:
- Legal fees
- Lost rent
- Turnover costs
These are expenses you never budgeted for. If your tenant contests the eviction, your legal costs will increase while your unit gets you no money.
Lost Rental Income
Evictions can stretch over several months. During these months, you may not receive any rental income. Once the tenant leaves, you'll spend more vacancy time working on repairs.
Property Damage and Turnover Expenses
Malicious tenants do a lot of damage to your property. They may make holes in walls, ruin floors, or break fixtures. Because of the extensive damage, you'll have to spend on:
- Repair bills
- Deep cleaning
- Replacing appliances and fixtures
Your security deposit rarely covers your whole bill. These damages can easily cost you thousands in maintenance. You also have to pay for standard turnover costs, which are very expensive.
What Are the Most Common Tenant Screening Mistakes?
Rushing your background checks can lead to many mistakes. Here are common mistakes you can make while screening your future clients:
Depending Only on Automation Tools
Automation screening tools will give you a single score based on a tenant's credit. If you only use this score to get a tenant, you may get a bad one. Relying on the score alone means you ignore reports on eviction filings and rental history.
Skipping Income and Rental-History Verification
As a landlord, you may focus only on credit and criminal checks but fail to review income. Assessing your tenant's ability to pay rent means contacting previous landlords to confirm they've been paying on time. However, most landlords don't confirm this.
Make sure you ask former landlords the following questions:
- Did this tenant pay rent on time?
- Is this tenant destructive?
- Did they give you proper notice?
- Would you rent to them again?
Former landlords will answer you honestly if you ask. You should also confirm their bank statements, pay stubs, or employer contact before you accept the tenant's application.
Inconsistent Screening Criteria
When you use different screening standards for different tenant applicants, you create fair housing risk. Without formal criteria, it's hard to show you made decisions to accept or reject a client based on legitimate, non-discriminatory factors.
What Should Thorough Tenant Screening Include?
The best way to deal with tenant vacancy is to invest in qualified tenant screening services from a reputable Charlotte Property Management company. Here is what your thorough tenant screening should include:
A Complete Rental Application
Start each screening with a rental application that collects your applicant's income, employment, references, and rental history. With this information, it becomes easier to evaluate your prospective client.
A Proper Background and Credit Check
You want to know your future tenant's financial reliability before they move in. A solid background check and credit review will help you know if you can rely on the applicant to pay rent.
Verified History and References
Don't take applications at face value. Contact the previous landlord and verify their employment. Your prospective client's past behavior strongly indicates how they'll conduct themselves in the future.
Frequently Asked Questions
How Long Should Tenant Screening Take?
A thorough tenant screening can take a few days. The actual timeline will depend on how fast their references, previous landlords, and employers respond.
While you may get fast results on a criminal record check, it takes longer to confirm rental history and employment. Don't rush this step. To keep the screening process running smoothly within the timeline, set clear expectations with your applicants.
How Do I Handle an Applicant With a Criminal Record?
Focus on relevance and recency. Ask about the nature of the record and how long ago it happened. You can also confirm if the applicant has evidence of rehabilitation and whether they pose a safety risk.
A small misdemeanor from years ago is different from a recent felony. Follow your written policy, and document your reason for renting to or declining to rent to a client. If you're consistent, you'll protect yourself under fair housing rules.
Can I Reject an Applicant Based on Their Credit Score?
Yes, you can reject a client because they have a poor credit score. Your applicant's credit history is a non-discriminatory factor you can use when deciding whether to rent your unit. Once you choose this standard as a criterion, you should apply it uniformly to every applicant.
Should I Screen Every Adult Who Will Live in the Unit?
Yes, you should screen every adult who'll live in your unit and is responsible for the lease. It ensures all your tenants meet a consistent standard.
Protect Your Property With Qualified Property Management
It can be tempting to rush your tenant screening and fill up your empty unit. If you get this eager, try to slow down. A thorough background check may take time, but it'll protect your property and your money.
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