Tenants have an important part to play in your real estate investment. Without them, you wouldn’t be able to own a profitable property, let alone be a landlord. After all, tenants are what separates you from a regular homeowner. Plus, there’s a good chance that you rely solely on rental income to set things in motion. Without tenants, you wouldn’t be able to purchase more properties, conduct repairs, pay your mortgage, and more.
Unfortunately, some tenants end up being troublesome. Instead of doing what they’re supposed to do, they end up going against what’s written in the lease agreement. Eventually, you’ll find yourself having to deal with tenants that are breaking, not making, your real estate venture.
Hence, if you want to avoid horror stories involving tenants, you need to thoroughly screen your rental applicants. If you do not conduct a background check, you unknowingly put yourself, your property, and your entire community at risk.
In this article, we’ll go over the reasons why it is vital to screen potential tenants. Furthermore, we will also give an overview of the advantages of enlisting tenant screening services from a South Florida property management firm.
Why do you need to screen your tenants?
Every landlord wants to ensure that there are no vacancies on their real estate investment. It’s tempting to fill your units fast, however, you should also be aware that your potential tenants may not be as responsible as they seem.
Conducting a background check is one of the best decisions you can make – here are a few reasons why:
#1 To know that they can make their rent payments
Will the potential tenant be able to pay their rent on time? If you want to avoid tracking down your tenant every month, check that they can actually make their rent payments. Ask yourself, “What is their financial situation like?” or, “Where do they work, and how much do they make?”. At this stage, it would also be wise to get a credit report which can tell you about the tenant’s debts, credit score, and so on.
Pro Tip: If you reject a tenant’s application due to their credit score, just make sure that they know why, otherwise they may claim that they were discriminated against. You should also consider hiring a property management company that can professionally handle the documentation for you.
#2 To know the kind of tenant you’re renting to
As a real estate investor, it is your duty to protect every tenant. If you don’t conduct a background check, you risk renting out your unit to criminals. In case something happens to your other tenants, you will be held liable for your negligence. And although not all convicted tenants are a risk, it would be wise to know their whole history so you can make a better decision about who should be allowed on your property.
#3 To prevent tenant turnover
Every property owner and property management agent will agree that tenant turnover is a draining process that should be avoided at all costs. When a tenant leaves, you’ll have to spend a lot of time and money to find a new tenant. Fortunately, you can prevent tenant turnover by looking for tenants that are more likely to stay for several years.
What is a tenant screening service?
Tenant screening isn’t easy, which is why property owners often prefer to enlist the services of a property management firm. By doing so, you’ll be able to get the cream of the crop when it comes to tenants. You can rest assured that they’ll allow only trustworthy tenants into your rental unit.
Here are some reasons why you should hire a property management company to conduct tenant screening for your South Florida rental property:
#1 Tenant screening can be time-consuming
Are you struggling to find information on your potential tenants? If you’re self-managing your property, it can be a challenge to obtain details about your tenants, including their credit reports, criminal records, and so on. It can be tiresome and time-consuming to have to verify their information by yourself. If you work at an incredibly slow pace, it’ll take you ages before you find a good tenant.
On the other hand, a property management company compiles all of the information for you, so you don’t have to think about the time it takes to obtain it. Plus, property management agents know where to look, so they can find your tenant’s information in no time.
#2 Tenant screening has to follow the law
You always need to follow the law when it comes to conducting tenant screenings. Keep in mind that your applicants need to consent to background checks. If you fail to follow the federal and state regulations, you’ll find yourself in legal trouble. The two most important laws you need to be familiar with are the Fair Housing Act (FHA) and Fair Credit Reporting Act (FCRA), but be sure to consult a tenant screening service to find out if other rules apply to your property.
#3 Tenant screening should be consistent
Another advantage of enlisting the tenant screening service of a property management company is that it’s consistent. How you screen one tenant should also be how you screen the rest of your tenants. In other words, you shouldn’t be biased when it comes to checking your tenant’s background. If an applicant claims that they faced discrimination (e.g. you conducted a criminal background check on that one tenant only), you will find yourself in court.
A property management company takes this stress away by making sure that tenants are screened by the book. They won’t make biased decisions based on assumptions about the potential tenant. Instead, they’ll offer you factual information.
How does Luxury Property Care conduct tenant screenings?
At Luxury Property Care, we are a full-service property management team that provides tenant screening services for South Florida real estate investors. We have developed a strict tenant screening process that thoroughly checks each applicant’s background, including their credit report, criminal record, rental history, income, and more.
With this information, we’re able to narrow down your options to make sure that your future tenants will take care of your property as if it were their own. For more information, feel free to call us at (561) 944 – 2992 or contact us online today.