Even in the best of times, fiscally responsible property managers consider running a tenant screening report of critical importance. According to real estate investor Joe Killinger, determining a tenant applicant’s credit report and employment status is only the first part of the rental contract equation. What does a credit report really indicate? It only gauges the possibility of a prospective tenant paying their rent on time. What it can fail to account for is if that tenant will actually be a responsible tenant. What this means is, running a full tenant report that includes a credit check and a full background check, is absolutely essential if a full picture of the applicant is to be had.
But what about in the time COVOD-19? Should the criteria for screening potential tenants be ramped up? The answer to that question is a resounding yes. Under normal conditions, it’s customary to screen tenants for pay stubs which verify their employment, and employment means they can pay their rent on time. But because of the COVID-19 pandemic, millions upon millions of people have not only lost their jobs, many of these people will never be going back to their original place of employment again. Because of this sad reality, rental property managers need to increase their efforts when it comes to tenant screening. However, if at the same time, property managers are realizing a slow market and an in increase in vacated units, there can be the tendency to relax the screening process. But this sort of thing can come back to haunt managers in the form of unpaid rents and tenants, who by law, can’t be evicted.
Here’s what rental managers should look out for, and/or be wary of, when vetting a potential tenant during the COVID-19 crisis:
Fraudulent Applications
Application fraud is said to be on the rise. Not only that, tenant applicants willing to commit fraud are getting creative about it. Non legitimate and falsified paystubs are a big problem, but so are folks who are assuming false identities. Some desperate people will actually go so far as to assume a dead person’s identity in order to sign an apartment lease they have no intention of honoring. Another thing a property manager and/or a professional tenant screening service should look out for, is people who hijack their children’s credit score and use it in the place of their own.
How are tenant screeners dealing with these problems? By increasing their verification efforts. For instance, rather than accepting a photocopy of a check stub, it is now better to insist on physical checks. Photocopies can be doctored while there is less of a chance of falsifying an original, physical paystub and/or check.
Occupancy Expectations
What property manager doesn’t wish for full occupancy? But what good is full occupancy if your tenants can’t pay their rent, or worse, have no intention of paying their rent? If a good sized portion of renters suddenly find themselves without a job, and rental assistance and government stimulus is being delayed or nonexistent, the financial risk for property managers increases greatly. What’s worse, even if government stimulus payments are made to unemployed tenants, there exists the real possibility that the money will not go to rent, but to other necessities, like food, auto repairs, clothing, or medical expenses.
The financial risk for property managers only increases with new COVID-19 outbreaks, making increased tenant screening all the more imperative. In the long run, it might be more beneficial for property managers to have a vacant apartment, than one that’s leased to a tenant who cannot possibly pay their rent. Tenant rights laws vary from state to state, but during the pandemic, it’s very difficult if not impossible to evict a non-paying tenant.
Going with a Professional Tenant Screening Company
Property managers might believe they are perfectly capable of screening potential tenants, but they are also busy with other day to day chores, like scheduling maintenance, sending out bills, collecting receivables, keeping the website up to date, and even scheduling parking lot repairs and lawn services. But by hiring a certified professional tenant screening outfit, accuracy in vetting is said to increase significantly. While property manager focus on other daily routine tasks, tenant screeners can identify potential tenant risks, which will help managers in making the decision to present the applicant with a lease or not.
Property managers should look for professional tenant screeners who have access to payment history databases that not only provide accurate credit scores, but also criminal background checks. Taken altogether, a professional screener can best predict not who can pay their rent, rather who will pay their rent on time.
COVID-19 has presented a real challenge for property managers who wish to seek full occupancy for their apartment complexes. But never before has it become vitally important to increase the tenant vetting process. In the final analysis, hiring a professional tenant screener to access an applicant’s background is not only worth the fee, it can save property managers loads of money and significant heartache. What’s more, it can increase the chances of finding the perfect, long term tenant.
