Owning a home may be part of the American Dream, but it’s far from the reality. More people are renting today than at any point since 1965. In fact, nearly 37 percent of all households in the US are paying rent on apartments, houses, or other rental homes — which means that landlords are managing more than 112 million properties.
Ideal tenants will stay in a rental for several years, take good care of the property, and, most important, pay their rent in a timely manner. Unfortunately, though, average rental turnover is 50 percent, and the internet is filled with landlord’s horror stories of terrible tenants. If you’re a landlord, you want to do anything you can to avoid those scenarios. Targeted marketing and thorough, fair tenant screening throughout the application process can help to improve your chances of success.
Start with an effective advertisement
How and where you market your rental property depends upon a number of factors, but, of course, the more widely you advertise, the more applications you’re bound to get, and more applications mean a better chance of finding a great tenant. Because 77 percent of Americans spend at least some time online every single day, listing your property on the web is one of the best ways to broadcast your vacancy. Services such as Turbo Tenant help you create an appealing listing that they will share on your behalf on multiple rental lists, social media, and even Craigslist.com. To maximize your opportunities, couple this strategy with tried-and-true marketing such as putting up flyers on college campus billboards or coffee shops, placing an ad in the local newspaper, or asking your existing tenants for referrals.
Perform a criminal record check
Instituting a policy that asks potential tenants to agree to a criminal background check is perfectly legal as long as you can prove that your policy has a legitimate purpose and protects the safety of other tenants and the condition of your property. But — and this is a very big “but” — you have to be extremely careful how you let a criminal record affect your decision of whether or not to rent.
First of all, an arrest on a record doesn’t always mean that a person was convicted of a crime. They charges could have been dropped because the person was innocent. Next, even an applicant was convicted, the nature of the charge — and the amount of time that has passed — should be taken into consideration. For example, declining an application based on a DUI conviction from 20 years ago doesn’t make sense. Lastly, your decisions based on criminal records should be consistent and in no way purposely or inadvertently discriminate against a certain population. If you turn down a Hispanic male because of a five-year-old burglary charge, you must also turn down the application of a white female with a similar charge.
Check the applicant’s credit report
As with a criminal record check, your policy for checking an applicant’s credit must be sound and non-discriminatory. Two main components are in a person’s credit record: their credit score and their credit report. Although financial institutions often have policies that eliminate applicants based solely on a credit score being above a certain threshold, reading and interpreting an applicant’s entire credit history — regardless of their score — can be telling. While bankruptcies, repossessions, foreclosures, credit card charge-offs or tax liens often indicate a serious financial issue, missed or late payments or a large medical debt are easier to understand, especially in the context of the applicant’s explanation of an unexpected layoff or medical emergency.
Before putting any sort of screening policies in place, it’s helpful to review your rights and those of the prospective tenant in regard to the Fair Credit Reporting Act, which covers not only credit checks, but any type of consumer reporting, including criminal background checks and rental histories. In many cases, an applicant who is denied a rental based upon information you’ve discovered in one of these reports is entitled to a notice of adverse action to explain exactly what factors contributed to the denial.