Tenant screening is one of the most important parts of the leasing process but a new survey of Do-It-Yourself (DIY) landlords shows that your neighborhood may be in danger.
Have you ever wondered why some property owners/managers require personal information such as credit reports and a personal background check on ALL people over the age of 18 and some don’t require much at all? Why do some landlords require references, personal and past landlord information and even request income verification while others are more relaxed and satisfied with just meeting you? Often it can be a tell-tale sign in the difference between a DIY (do-it-yourself) landlord and a professional property management company. Thorough screenings of prospective tenants can help avoid problems in the future such as late rent, damage to the property and evictions. And as one recent survey on landlord practices shows, some landlords may be putting themselves and their neighbors and communities at risk.
Conducted by an independent Boston based research firm, Liminality Inc., the survey included a national probability sample of more than 150 DIY landlords nationwide and showed some disturbing statistics concerning the lack of tenant screenings, which included criminal background checks:
- Only 44% of DIY landlords conduct sex offender checks
- Only 51% of DIY landlords conduct criminal background checks
- 23% of DIY landlords sometimes or never conduct credit checks
- Only 51% of DIY landlords contact past landlords for references
Why are background checks so important for our neighborhoods and communities? Without thorough screening, criminals – who are likely to commit crimes again in the future – can easily move in next door completely undetected, potentially putting families at risk. Rates of recidivism, or the act of criminals committing another crime, are high, according to a study from The Bureau of Justice Statistics published in 2014 that tracked 404,638 prisoners from 30 states who were released from prison in 2005. That study found 76.6 percent of the tracked criminals were re-arrested within five years.
The survey was conducted on behalf of Real Property Management and found that 21 percent of DIY landlords sometimes or never conduct background checks on their prospective tenants. The survey also shows that DIY landlords have lenient or non-existent policies when it comes to tenant screening, which suggests criminals – including sex offenders – could be living next door*. Please check with your local legal counsel on local, state, and federal laws and ordinances.
Verifying income, references, previous landlords, and conducting credit and background checks are just part of the process and system that a professional property manager will have in place before they consider leasing to a potential tenant. Upon qualifying an applicant, they ask themselves, “Will this tenant be a risk to the owner or the rental property they will be leasing?” “Will this tenant be a risk to the neighborhood or the people of this community?” It is not an emotional decision for the professional manager because it’s a business decision. The property manager knows the importance of the screening process, which most likely yields a good, quality tenant who will take care of the home, pay their rent on time and not be a risk to the neighborhood.
A common problem many DIY landlords face is not having the essential resources or knowledge for properly managing their rental property. Understanding the many tenant-landlord laws, Fair Housing Regulations and guidelines, knowing what questions to ask and not to ask a potential tenant and where to go to perform criminal background and credit checks can be overwhelming for any landlord.
When a criminal or undesirable person learns their background will be checked, they turn to a property owner who is not so diligent. Because there is no screening process in place and no rental standards, many DIY landlords tend to just listen to their gut feeling about a potential tenant and rent to the “nice couple” with the “clean car” and “fancy clothes”. What they don’t know is that many renters prefer DIY landlords because of their leniency and purposefully avoid professional management companies because they have something to hide, whether it’s bad credit, an eviction, or a criminal background or sex offense. And because all too often the DIY landlord is caught in the ongoing struggle of paying two mortgages, they can become desperate to find a renter and will often turn a blind eye to red flags like, “Can I pay the deposit in two payments” or “Yes, I have bad credit but it’s because…”. DIY landlords get caught up in the stories, people tug at their heart strings, and it costs them to not follow a process or at least look into these potential tenants from a credit, income and criminal stand point.
Of course you can’t tell who has a criminal record by just looking at them and often times, the neighbors are more concerned about the upkeep of the neighborhood and the curb appeal of the rental home. While those concerns are important for property values, appearance shouldn’t be the only criteria. A good and professional property manager will consider the applicant on paper first and having high rental standards in place ensures a quality tenant. Income criteria, pet standards, and deposit requirements are a few rental standards that should be set in place and upheld each and every time you need to find a new tenant.
It is a common practice for some DIY landlords to forgo a full deposit payment up front in order to quickly secure a tenant who is ready to move in immediately. These landlords sometimes have financial problems due to the property sitting vacant, so they rush through the process out of desperation, possibly renting to someone who will likely have trouble paying rent on time. In the end, this becomes a costly choice simply because they didn’t do the footwork in the beginning.
A landlord’s job is not easy, especially for those who live out of state or a significant distance away from their rental home. Many rental home owners are opting to hire professional property managers, like Real Property Management, because the everyday stresses, like showing a home, rent collection, Fair Housing laws, repairs and evictions are too much to handle. No landlord purposefully wants negligent tenants or criminals living in their home or endangering their community, but it happens, and as the survey has shown, it happens more often than we realize, especially among those who are not disciplined about background checks.