If you own a rental property or are considering renting out one you own then you have probably heard that you should do a tenant background check.
There are many ways to do this, but you also have to keep in mind that tenants have rights too, and that you have to be very careful with any information you collect from them.
As a landlord myself, I started out by trying to do this all the right way and found an application for renters online for them to fill out. But if you are asking for private information from them then you need assure them that it will remain private with you.
I had a tenant that wanted to rent from me but was scared to give me too much private credit information. She told me her last landlord had basically given it to other people and then she started getting calls from loan companies and mortgage companies offering deals and when she checked her credit record, these companies had actually checked her out around the same time. This landlord was the only person at that time she had given her information to.Credit: morguelfile.com
I was skeptical at first and thought it was just a “story”, but I liked this person and felt she would be a good tenant and so I phoned her last landlord who told me she was a great tenant but he had decided to sell and that is why she had to move.
I gently questioned him about what she had told me, and he sheepishly said he had done the tenant background check through a “friend” who was also a private mortgage broker.
So, he now had her information and abused it. This made me very angry.
So, I decided after that, that I would not do full checks like that. I would follow my own “check list” to decide whether a person would make a great “potential tenant”.
You can have someone who has the perfect credit score and pays the rent that can still be a nightmare to you as the landlord. It is not the only “check” you should do.
This is my way of checking them out and protecting their privacy at the same time.
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I find out where they are working and then I phone the company to make sure they actually work there. Sounds silly, but you will be amazed at how many people will lie with this part. I watch their face as I read their basic application which includes employment and then right there in front of them I pull out my cell phone to phone their employer to confirm they work there. If they squirm, they may not be the right person for your property.Credit: morguefile.com
Pay Utilities Under Their Own Name
I got this advice from my lawyer. When renting out a house especially, tell them they must take over the utilities in their own name. He told me that is the best free credit check yet, as utility companies are very particular about who they sign up. If your potential client has done a runner from paying the electrics or the gas or doesn’t pay bills, they will not be able to sign up.Credit: morguefile.com
If this person asks you to include them in the rent, then show them the door. I was advised that this should be the first question, and hand them the application from the utility company. One person who looked at the property had a great job, looked clean, liked the place but turned to mush when I mentioned paying the utilities under their own name. She instantly asked if I could keep them in my name and then she would pay them to me separately, don’t fall for that.
Ask them why they can’t put them in their own name. They will come up with some story about a disagreement with them, or not bother to tell you they had not paid the last batch. The utility companies will not go after the landlord, they go after the tenant.
Many landlords worry that if the utilities are not paid that it will affect the landlord’s credit rating and it will not, but it will affect your house if they get shut off.
So, just make sure you are informed by them if they don’t get paid so you can start eviction proceedings, but you are not responsible for any unpaid utility bills that are not in your name.
This can be the quickest tenant background check ever without evening getting their social insurance number.
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Check with a Couple of Previous Landlords
Not just the most recent. Actually ask for the names of the last couple of places they have lived. The latest one could be in a hurry to get rid of them so may lie and tell you how great they were. If you can, try and drive by the last place to get a feel for the type of places they had rented.
The previous landlords will have more to say about them then the latest one. You can even check with some of the neighbours if you were concerned at all.
Must Be Able to Pay First and Last Up Front – You don’t want to hear; well can I give it to you in installments? Can we hold off for a bit? Do not waiver on this one. One potential tenant of mine started whining that they would have too much money going out the door for first and last and deposits on utilities. Do not fall for any sob stories. This is a business, and many will try and play on emotions. I am a sucker if kids are involved, so I make sure and bring my hubby or my grown son to any of these meetings, so I don’t make the wrong decision.
Trust Your Gut
You can do as much tenant background checking as you want, and unearth all the past landlords, and check out their workplace, but if your gut tells you something is wrong, then go with it.
My gut has been pretty bang on so far. At the end of the day, these people are living in your house or property, if you don’t think they can take care of it, or you don’t get that “warm and fuzzy” then don’t rent it to them. You don’t need to be best friends with them, but you need to have a good working relationship.
So, for me personally I never asked for full disclosure of social insurance numbers or bank accounts, I follow my own list above, and it has served me well. Both sides have rights and neither one should be abused.