Landlords understand that consistent rental payments are crucial for profitable investments. When tenants don't pay on time, or properties sit vacant, it may lead to lost profits.
So, what's the secret to keeping your rental property profitable? The answer is renting only to top-notch tenants. You can achieve this by conducting a thorough tenant background check on each prospective renter.
Intrigued by how a tenant background check works? Read on, to find out more.
What is a Tenant Background Check?
A tenant background check entails a thorough investigation into a potential renter of your property. Essentially, you're collecting data to gauge the likelihood of timely rent payments and proper property care.
Background checks are vital in the rental process, pinpointing red flags early on. Discovering evidence of possible late payments allows you to rent to another prospective tenant, sidestepping the issue of late payment.
Tenant background checks are important, because once you've signed a rental contract, renters gain legal rights. If you find out someone you're renting to is an unsavory character after the tenancy agreement has been signed, you may struggle to evict them.
Doing a Credit Check
One of the most crucial parts of a background check is the credit check. This involves investigating factors like a tenant's credit score, debt levels and payment history.
If you find out someone has run up a huge amount of debt, you likely don't want to rent to them, as the debts may interfere with prompt payments. You may also look at factors like payment history. Even when someone doesn't have an excessive amount of debut, they still could have a history of not paying rent.
Criminal Record Check
One mistake landlords often make is not looking further than the credit check. While credit checks are important, you should also consider criminal history. A criminal history suggests a potential tenant may not take good care of your property, and may cause problems in the local community.
For example, a background check might reveal an applicant has a history of criminal damage. While this tenant may pay rent on time, if they cause thousands of dollars worth of damage, the repair costs mean you might still lose out on investment returns.
Eviction Records
Another frequent mistake is thinking a criminal background check is all you need to check an individuals' character. It's very possible to get evicted from an apartment without doing anything criminal. This means you also need to look up past eviction records.
Eviction records can be hard to acquire if the eviction history is from outside the state. You'll often need to enlist professional investigation services to get a comprehensive picture of rental history.
A Comprehensive Tenant Background Check is Crucial
In conclusion, the importance of a thorough tenant background check is vital for landlords who want to guarantee profitable rental investments. By carefully vetting new tenants via credit checks, criminal record checks, and eviction record searches, you significantly reduce the risk of signing a tenancy agreement with a bad tenant.
Doing a comprehensive background check is a difficult process, so it makes sense working with experienced professionals. PMI Austin has decades of experience doing such checks for landlords like yourself. Contact us, and let's protect your investment.
