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According to Super Lawyers, it can take anywhere from several days to months to evict a tenant. As you can imagine, it can be a nightmare scenario, plus it leaves one of your units occupied when a better renter could have housing.
One way to avoid this headache is to have a thorough screening process. That way, the chances of an irresponsible tenant getting through are lower.
However, tenant screening can be quite lengthy and can sap a lot of your energy too. For these reasons, you might be considering outsourcing this task.
Is that a good idea though? We think so. Read on for all the benefits you can get from outsourcing tenant screening.
Time-Saving and Efficiency
As we've mentioned in the introduction, tenant screening is time-consuming. This is because there are multiple steps in place to filter out bad renters, such as:
- Collecting applications
- Verifying employment
- Contacting previous landlords
- Running background checks
- Analyzing financial history
Professional companies often use automated systems and databases, which significantly reduces the tenant screening processing time. While you'd have to sit there and manually review every application, a third party can quickly get through these papers in no time flat.
The result is a complete report with whittled-down recommendations, and this can help you make quick decisions. These experts can even help you with tasks like:
- Property maintenance and repairs
- Marketing vacant units
- Tenant relations and lease management
This will free up tons of time and allow you to focus on other important tasks, such as expanding your real estate portfolio.
Comprehensive Tenant Background Checks
A property management company can get their hands on information you'd never even think of, much less have access to. They'll have the resources to conduct thorough background checks, consisting of the following elements.
Credit Checks
Professional screening businesses will get detailed credit reports from major credit bureaus. They'll then scan through the following for potential red flags:
- Payment history
- Outstanding debts
- Credit utilization
Criminal History
A criminal history isn't always an indicator that someone is a bad renter. However, this information may help paint a larger picture of whether a potential tenant will be responsible.
A tenant screening service will check criminal databases on not only the local level, but also state and federal. That way, they can identify any felony or misdemeanor convictions. They may even have sex offender registry searches.
Rental History Verification
If someone's been evicted once, there's a good chance they'll be evicted again. So while someone may seem fantastic, you never know if past evictions are lurking in the past.
You can play it safe by having a professional company delve into a potential renter's eviction reports if there are any. They can pull these documents from court records across different jurisdictions.
In addition, they can contact previous landlords to confirm whether or not someone was an excellent tenant. For example, these professionals will ask if the person adhered to lease terms, had any complaints or damages reported, and if they paid rent on time.
Employment Verification
Having a job teaches you responsibility, and that translates into being a good tenant. A steady job history is a positive sign, as that means the person is great at carrying out their responsibilities. However, people can lie on their tenant applications, which means you'll have to verify what's on paper.
Instead of wasting your time on calling employers manually, hire a screening company. They can check a renter's job status, salary, and stability. In some cases, they can even detect fake pay stubs or falsified employment claims.
Legal Compliance and Reduced Liability
You want to be thorough with your rental application process, but you don't want to overstep your boundaries either. Not only can you break people's trust, but you might also break laws. The main ones include:
- Fair Housing Act (FHA): No discrimination based on race, religion, national origin, sex, disability, or family status
- Fair Credit Reporting Act (FCRA): Regulates the use of credit reports; landlords have to notify tenants of adverse actions
- State and local rental laws: Some have restrictions on things like criminal background checks or income verification requirements
Keeping up with the various rules and regulations can be tiresome though, and you've got better things to worry about. The experts you hire will stay up-to-date with all relevant laws, which will reduce your risk of discrimination claims or legal penalties. With their aid, you can deny applicants based on their screening results, and you'll get legally compliant adverse action notices.
Faster Turnaround and Tenant Placement
The fact is, the more vacant units you have, the more rental income you'll lose. If it gets bad enough, you'll fall behind in mortgage payments, utilities, and maintenance.
Professional screening companies draw upon their expertise to process applications quickly. On top of their automated systems, they'll use strict criteria to help you select renters with good financial habits, stable incomes, and positive rental histories. In turn, you'll see fewer problematic tenants, which means your units will stay occupied for longer.
A lower turnover rate also means cost-effectiveness for you as well. You won't have:
- Lost rent from non-paying tenants
- Property damage that exceeds security deposits
- Legal costs from eviction proceedings
- Turnover costs (i.e. cleaning, repairs, re-advertising your property)
Outsourcing Tenant Screening Is a Good Idea
Tenant screening is a necessity if you want to have high-quality tenants who will treat your property with respect and pay rent on time.
While you can take care of this process yourself, why would you when there are third-party services available? Not only will you save time and energy, but you'll have a better flow of outstanding renters in your units. As a result, you'll see less of a hit to your passive income and you won't have to work hard for it either.
Get in touch with us today if you'd like more information on outsourcing property management. We at Provest Realty Inc. have over 39 years of combined experience and offer free market analysis for our clients.
