A credit report alone is not sufficient for screening a tenant

rental property trashed by bad tenants
But they had a good credit score.

I last wrote that you should never accept a credit report provided by the applicant due to easy online availability of fake credit reports.

In this post, I would like to explain why even a valid credit report is inadequate by itself when screening a rental applicant.

Credit reports do not contain enough information to properly evaluate an applicant.

The applicant’s income, in addition to eviction and criminal history are very important when considering a potential applicant and none of these are found in a credit report.

Typically the required income to rent ratio is 3 to 1. If the rent is $1000 per month, then the income for all the renters need to be at least $3000 per month.

I am often asked about verifying income. We recommend that the agent or owner ask for 3 consecutive pay stubs. If the applicant is self-employed, then request the 3 most recent bank statements to verify  the income deposits.

This method is far easier and quicker than attempting to get salary or wage information from the employer. Many large employers will direct you to a third party that requires a fee for income verification.

An eviction report is extremely important.  A person who was evicted in the past, is likely to be evicted again. Having to evict a tenant is time consuming and costly.  You also need to take the repairs into account. Most evicted tenants don’t exactly leave the property “broom clean move-out” condition.

Don’t think a criminal report is important? Think again. I was speaking at a real estate investors group about tenant screening best practices.  An elderly landlord told me a very scary story. The tenants in one of his properties stopped paying rent and would not respond to his phone calls. He went to the house to ask about the rent, was beaten severely by one of the occupants and ended up in the hospital for 2 weeks.

It was discovered after the tenant was arrested that he was a convicted felon.

A criminal background check would have identified his criminal history and saved the landlord from the pain and suffering of the beating.

Here are some more stories that will help convince you about the importance of tenant screening. http://buildrealty.net/blog/2014/12/21/6-insane-landlording-stories-that-prove-the-importance-of-tenant-screening/

No tenant screening process will be 100% effective. But a comprehensive background search can significantly reduce the number of problem tenants.

Jay Apple is co-founder of tenantmagic.net  www.tenantmagic.net

Paper rental applications? Do you know what century we’re in?

It never ceases to amaze me the number of agents, landlords and property managers that still use paper applications.

In my last 2 posts I covered how paper applications can complicate Fair Housing compliance and the create personal data security problems.

Today we will look at how time consuming paper applications are and how they make  your business look antiquated.

Paper applications, whether they are handed out or a downloadable pdf, require the agent/owner/ property manager to enter all that information into the background screening program. (If you are not screening your prospective tenants, then you are just asking for big trouble.)

Typically this can take up to 10 minutes or more per application, which  adds up when you have multiple vacancies.

Paper applications are usually accompanied by paper checks or credit card information application fees that need to be written out and then entered into a payment system, again requiring even more time with data entry.

Still not convinced? Do you still feel that all this paper and redundant data entry is really not that big of a deal?

Then consider the image that you are portraying to your prospective tenants. If you are using paper applications and collecting fees with paper checks you are giving people the impression that your business is not up to date. What are going to think about your property and its maintenance?

Using a reputable online application and screening company makes sense on so many different levels. The amount of time you save and the how you present yourself and business are just two reasons to switch.

Jay Apple is co-founder of TenantMagic www.tenantmagic.net, an online rental application and background screening provider that is free to real estate agents, property managers and landlords.

Personal data security dangers with paper rental applications

In my last post I discussed the fair housing compliance issues associated with paper applications

In this post we will look at applicant personal data security dangers that are prevalent with paper rental applications and how to keep applicant data secure.

According to the FBI, identity theft is the fasted growing white-collar crime in America.

Believe it or not there are still many real estate agents, property managers and landlords that use paper rental application.

There are 2 variations of these

1) An actual paper application that is handed out at the location or available on line and then downloaded to be completed. The completed application is then hand-delivered, emailed or even faxed back to the office.

2) An online fillable pdf.

Both present serious security problems as they are ultimately printed out to be viewed and distributed.

A paper application contains the applicant’s name, date of birth, current address and social security number.  I have also seen credit card information on an application

This is everything an identity thief needs to wreak havoc with an individual’s ID.

Paper applications are not easy to keep secure and away from prying eyes. I have seen them laying out in the open at many offices. These offices typically have a steady stream of people regularly visiting them. There are also cleaning and maintenance people that could access them, especially when the offices are closed and no one else is around.

Fillable, on-line pdfs present an additional security problem when there are multiple applicants. Many times the co-applicants are required to complete the same application as the primary applicant on the same form. The primary applicant will complete his/hers then the co-applicant will continue with the same application. This allows the co-applicant to see all of the primary applicant’s personal information. This is a cause for concern when the applicants don’t know each other all that well.

The solution to resolving these security issues associated with paper applications is to use a secure on-line application program.

Make sure it has the following features-

–  Individual applications (that can then be combined for review) for each applicant.

–  The ability to capture an SSN for screening purposes, but not make it visible to anyone after it is entered.

–  Access by permission only. If more than one person needs to review the application, each needs to have their own log on credentials.

Paper applications are obsolete and provide a tempting target for identity thieves. Many of the personal data security issues associated with paper rental application can be greatly reduced by using a reputable on-line rental application and background screening service provider.