Which is more important for a landlord: making a profit at all times or finding the right tenant? As you probably know from experience, these two things are deeply connected.
There is one easy way to solve the dilemma of finding a perfect renter who’ll dutifully pay you rent in full and on time. And that’s tenant screening. But, some people can argue that the act of screening renters has its own problems and drawbacks. We’ve created this article to shed light on the most popular tenant screening myths and encourage landlords to leave them behind.
Tenant Screening is Expensive
Some landlords might be turned off when they see prices for tenant screening services. You can pay anywhere from $15 to $75 for processing a single tenant, which might feel too much if you have to go through even just a few applicants.
In fact, many states allow landlords to charge an application fee, which is aimed specifically at covering the costs of background and credit checks. Also, you can use some platforms, where a landlord can simply send a screening request to their potential renters. This way, a tenant will pay for the screening through the platform after filling out the necessary information. And you don’t even have to worry about starting your potential cooperation by asking for an application fee.
Go With the Tenant Who Has the Highest Credit Score
If you have a few tenant screening reports in front of you, you might be tempted to go with the person who has the highest credit score. After all, that should mean that they are the most responsible people and already adept at handling their finances.
However, we recommend spending a few extra minutes of your time and reviewing the report in full. While the person with the highest credit score is generally more likely to pay their bills on time, you may still face other issues accepting this tenant. Their financial stability does not rule out them being a difficult renter. Anyone can throw loud parties, demolish your place, or simply be impossible to reach; being a good tenant does not necessarily correlate with a good credit score.
Also, if you get an application from a younger tenant, they might have simply been unable to build their credit score thus far. It’s almost impossible for a person with a student loan in their twenties to have impeccable credit, as the best scores require lengthy credit histories! So why not give them a chance if they seemed like a great fit during the interview?
That’s why, even though we always emphasize the importance of running a tenant screening process, we also don’t deny the importance of listening to your gut!
You Can Skip Tenant Screening Altogether
Among all myths surrounding tenant screening, this might be the most dangerous one. Even though most property managers understand why screening potential tenants is important, one out of ten landlords still skips this step!
If you are still deciding whether or not you should go through the effort of a tenant screening, there is a simple answer for you. Your rentals are your business, and in business, you always want to avoid losses. If you neglect a background check, you miss your chance to verify the information your potential tenant gives you during the interview. This can lead not only to headaches and problems in the future but also to significant financial losses associated with evictions or unpaid rent.
So, although tenant screening will not give you a 100% chance you’ll end up with a perfect tenant, it will definitely increase your chances. And, if you have a perfect tool to protect yourself against potential issues, why not use it?
Tenant Screening Hurts Tenants’ Credit Scores
Some renters (and landlords) can be reluctant to run tenant screening as they might believe it can impact a tenant’s credit score. Your applicants might even use that reason when asking you not to screen them.
This can be the case in some instances, but it depends on what type of credit check the tenant screening provider runs. There are two types of credit checks — the hard pull and the soft pull. The hard pull takes place when companies such as credit card issuers or lenders check if the person is eligible for a loan, mortgage, or a new credit card. A soft inquiry happens when the person checks their own credit or if it’s a part of a general background check done by a new employer or, as you could have guessed, a potential landlord.
What can you do as a landlord if you’re worried your applicants could be concerned with this issue? Choose the right background check company and double-check that they perform a soft credit check. That way, you can assure renters their credit score will not be hurt if you run a tenant screening.
It’s Better to Have Any Tenant Than a Vacant Rental
Many experts in the rental business claim that the worst thing that can happen to a landlord is if their rental remains empty. Every week of looking for a tenant will cost property managers both time and money. So, it’s only natural that landlords aim to find a new tenant as soon as possible to avoid losing money.
You might be tempted to skip the tenant screening or interview processes altogether if the rental market is quiet and getting a new renter takes longer than usual. Or, maybe you decide to go with a less-than-average tenant so that you don’t have to deal with the trouble of going through more applicants any longer.
As a matter of fact, it could cost you more money in the long run. First of all, the average cost of eviction equals at least two months’ rent. Also, at stake might be unpaid rent, property damage, and plenty of other issues. For these reasons, we’d recommend you to think twice before giving up on finding a tenant who feels like the right fit.
Mariia serves as editor-in-chief and writer for the Rentberry and Landlord Tips blogs. She covers topics such as landlord-tenant laws, tips and advice for renters, investment opportunities in various cities, and more. She holds a master’s degree in strategic management, and you can find her articles in such publications as Yahoo! Finance, Forbes, Benzinga, and RealEstateAgent.